Google purchasing Riya?

Photo service Riya has been acquired was being acquired by Google for close to $40 million according to sources involved with the company. Riya uses face recognition technology to identify people in photos. The system can also recognize text such as street signs. Google likes using algorithms to solve complex problems, so the acquisition seems like a good fit. Om Malik has done some additional digging on the deal’s details.

Riya has approximately 12 employees in Redwood City and an additional 10 employees in India.

Riya is set to launch this week with a party in Atherton this Friday.

Update 12/24: Google pulled out of the deal during the due due dilligence phase in mid-December. Google had previously demonstrated the research of its Picassa team in photo recognition at the Web 2.0 conference in October and Riya would have worked into an overall recognition and annotation strategy.