From Google’s Official Blog:
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.
This should come as no surprise to anyone. Picasa Web Albums has fallen behind in terms of features when compared to other photo sharing sites. This was just an easy way for Google to get Picasa on par with the competition. Unfortunately for Google, I don’t think this is going to be enough to convince people to make the switch.