TechCrunch reiterates the rumor that Google is about to acquire Digg. "The two companies have reportedly signed a letter of intent and are close to a deal that will bring Digg under the Google News property. The acquisition price is in the $200 million range, says one source." While I don't find too many reasons why Google would buy Digg, it's clear that Digg and Google News don't have almost anything in common.
Google hand-picked more than 4500 sources and used them to cluster news articles. The idea behind Google News was to display different perspectives on the same subject and to rank them algorithmically. Even the homepage is generated automatically, based on the editorial decisions of the publication included in Google News. Last year, when Google News added comments, the feature surprised many people: the comments could only come from "people or organizations who were actual participants in the story in question".
Digg gets the stories from users, who have to manually submit each item. To be promoted on the homepage, a story has to be voted by a sufficient number of users, who can also post comments. "Digg is democratizing digital media. As a user, you participate in determining all site content by discovering, selecting, sharing, and discussing the news, videos, and podcasts that appeal to you," explains the site. Launched as an alternative to Slashdot, Digg expanded from technology news to general news.
To integrate Google News with Digg, Google would have to radically change its news site and this is unlikely. Besides, Google News could easily add a voting system and user comments like in the recent Google search experiment, without needing a site like Digg. If Google does acquire Digg, I think it's for mining a big amount of votes and detecting patterns that could be used to improve features like "edit search results". Digg is also a good platform for experimenting with filtering information, news recommendations and could be helpful in Google's new social quests.