In great news for Seattle Startups, Picnik gets picked up by Google in some interesting M&A activity, because everyone is going to be thinking of Flickr and SmugMug being right in the sights of Google. Online photo editing and storage just hit an air pocket.

Picnik was a clear winner in the Seattle 2.0 awards in 2009 (look for the 2010 awards as well, tickets are on sale here) because they are an awesome company with a cool software package suit that makes online photo editing and sharing very easy. With today’s acquisition by Google, it is looking like Google is taking a direct shot at Flickr and SmugMug which are the two best properties for storing pictures online (in the case of Flickr) and photo editing which SmugMug allows you to do in a limited fashion.

From the Picnik Blog today:

And all this leads us to today’s exciting news: we’ve just been acquired by Google! What does this mean for Picnik? It means we can think BIG. Google processes petabytes of data every day, and with their worldwide infrastructure and world-class team, it is truly the best home we could have found. Under the Google roof we’ll reach more people than ever before, impacting more lives and making more photos more awesome. Source: Picnik Blog

What happens from here should be interesting with Google’s ability to search and parse image data, adding to this the easy way to store and process and share images will give Google a leg up in the picture sharing and management space that they did not have before. While I will stick with SmugMug, and continue to use Flickr for the occasional pictures, Google just landed heavily in the picture sharing, storage, and processing market, with one of the coolest suites of software out in the market place today.

Good for Picnik, good for Google, this is going to be hard on Flickr and SmugMug in the future.