Crank up the tech rumor mill: Microsoft and Google are scrambling to prepare rival bids for Digg, the community-based content-ranking website, TechCrunch blog reports.

TechCrunch's Mike Arrington, the subject of a recent Q&A with Portfolio.com's Lloyd Grove, writes that Google and Microsoft are weighing offers close to $200 million.

That is short of the $300 million that Digg and its investment bank, Allen & Co., had floated late last year as they actively sought to recruit a suitor.

Google and Microsoft both declined to comment on whether they are interested in Digg, issuing identical statements that they do not address "rumors or speculation." 

There are, to be sure, skeptics. Tech analyst Rob Enderle, based in Silicon Valley, suggested that rumors of an impending deal for Digg could have been strategically planted by either Google or Microsoft—or Digg, itself, for that matter.

"Digg is the big player in the space and just the rumor that one of these companies might be interested could get the other salivating," Enderle said. "They are, oh, just a tad bit competitive."

"On the other hand, I've seen companies themselves start these rumors and Digg doesn't seem to be pulling the interest it did last year," Enderle said. "So, given that perception, I wonder if Digg or someone connected to it is trying to create a feeding frenzy."

Fred Wilson, a venture captialist in New York, mused on his blog that Digg and its financial backers are motivated to sell: Traffic appears to have flattened, he said.

"Regardless of who buys Digg, it's clearly a good time to be selling it," Wilson wrote. "Maybe last year would have been an even better time. It's never clear when the perfect time to sell is until it's passed."  

If one actually appears, a bidding war between Microsoft and Google—already locked in a struggle for dominance in advertising on the Web—comes as Digg is in the midst of some fundamental changes.

Founder Kevin Rose is planning changes during the next few months to give individual users more control over how they view stories on the Digg site. The changes would shift power away from the core of loyal and fanatical users—so-called Diggerati—that have made Digg so popular.

The problem for Rose, however, is this: The same user devotion that made Digg a hit threatens to manifest itself as a backlash. Digg's user base is already known for protesting every change in the website's algorithm for ranking articles, videos, and graphics; the more radical transformation that Rose is proposing is bound to leave many in the Diggerati crying foul.

At stake is a website with considerable traffic. Alexa ranks Digg as the 28th-most-popular website in the U.S., ahead of the New York Times, LinkedIn, and AOL Instant Messenger.

Little more than a week ago, however, Rose discounted the idea of being acquired by a gigantic suitor in an interview with Cnet.

"The thing is that at Digg, if you were to talk to the other employees and look at what we're doing, we're very much focused on being independent and creating a quality product," Rose said at one point.

He later added: "I've had several friends that have been acquired by the Yahoos and Googles of the world, and while there is some upside in certain things, for the most part, it slows things down. You can't get a product out the door fast enough."

Speculation about Digg's sale goes back at least to October 2006, when the New York Post included it in a list of potential takeover targets following Google's acquisition of YouTube.