It’s difficult to understand why Google didn’t develop an online photo editor: it would’ve integrated with Picasa Web Albums, Google Docs and other Google services. Right now, Picasa Web Albums is just an online extension of Picasa, a popular software that lets you manage your photos. Unlike Picasa Web Albums, most Google services work online and don’t require additional applications.
Instead of migrating Picasa online, Google acquired Picnik, an online photo editor that already integrates with Picasa Web Albums and many other photo services.
“Today, we’re excited to announce that Google has acquired Picnik, one of the first sites to bring photo editing to the cloud. Using Picnik, you can crop, do touch-ups and add cool effects to your photos, all without leaving your web browser,” mentions Google’s blog.
Picnik will not be discontinued and Google promises that the service will continue to support all the existing partners, but I suspect that Flickr will no longer use it as the default photo editor.