Search giant Google is sniffing around these days for a good business, and they’ve apparently found one in Digg, technology blog TechCrunch reported. We’re talking about a $200 million acquisition to make a Google News – Digg combo, which for now remains just a rumor.

However, sources inside and outside Google reported stories about a letter of intent signed between the two companies, which puts them just weeks away from a closed deal, but also about a possible last minute interference from Microsoft.

Another reason to believe that these assumptions are not that far from reality is the obvious resemblance between the Digg voting system and one of Google’s experiments.

The same blog reported in March this year that Digg was caught between two Internet giants, Google and Microsoft, both on the verge of placing their bids. According to an inside source, Google was ready to pay $200 - $225 million at the time, while Microsoft was seeking a lower price.

The question is: will Google steal Digg right from under Microsoft’s nose? Digg has been reportedly earning $11.3 million in venture capital from the three year ad deal with Microsoft, which means the Google acquisition could fall apart at any time.

In case Digg decides to accept Google’s business proposal, the three year deal with Microsoft will expire. However, coming after an endless, unpleasant story with Yahoo, Microsoft will probably not tolerate another slap in the face by Google.

Digg is a 2004 online experiment that allows people to submit links, stories, votes and comments. Although many similar sites followed, including Yahoo! Buzz, Digg remains strong in its field, with a community of over 26 million users.