This is a good, clear explanation of Groupon's business model. I think one of the following must be true: 1) Groupon does not realize the Ponzi-like nature of their business, and this led them to turn down Google's offer. 2) They do realize it, but common sense was outweighed by hubris -- they thought they could keep it going until the IPO, or maybe the next offer from Google. 3) They're really, really smart and are working on plan B. That would be one hell of a pivot.

I'm betting on #2.