The internet is alive with rumors that Google is in talks to acquire Twitter. This is not overly surprising as Google tends to make a run at many hot properties. The concern with this is that Google does not have a great record of integrating new purchases and having them flourish. They already bought and released the Jaiku microblogging site, so there should be some concern over what would happen with Twitter.
UPDATE: Kara Swisher has debunked the rumor in her post this morning.
However, that is not my point today. Facebook already tried to buy Twitter, but was turned down due to it being mostly a stock purchase at the original $15 billion valuation. Because of that, Facebook redesigned its site to be more like Twitter and FriendFeed, so they do not look like a potential suitor anymore.
When you really start to think about Twitter, the whole Yahoo thing starts to seem like Microsoft looking for incremental growth in the market of today, while neglecting the market of the future. If it continues to grow, Twitter promises something highly interesting to search — an immense database of public thoughts.
This would be a huge boon to Microsoft’s internet and search properties. However, Microsoft has not been able to get on its feet with the whole internet thing, so there are some concerns about whether they would know what to do with it. Who else has potential as a buyer? There are not many companies that want to pay $250 million for something with no real revenue stream yet. Let’s look at some of the likely industries and possible suitors.
The services industry sometimes makes a run at companies for odd reasons. Companies like IBM could think about a purchase, but services companies like applications they can immediately deploy in the corporate setting. There would be little benefit and a lot of work to really get Twitter into corporations. So, no to the services industry.
Internet companies are the most likely candidate. We already have Google in the running. Ask.com and parent IAC would be an interesting suitor, but probably do not have enough cash to make it work. A Digg merger would be a very interesting scenario, especially with the new Digg toolbar. An outright purchase would not happen as Digg has been valued around the same $200 to $300 million range. Another interesting suitor would be EBay. They already have StumbleUpon, and the addition of Twitter could bolster this purchase a bit. Having more integration between the two could make StumbleUpon a very intriguing property. Lastly, Yahoo could easily make a bid in order to leap ahead of Google and Microsoft in some way. It would also be an interesting move for them as they are making a big push in the social and mobile space. Yahoo is one of the few companies where Twitter really fits with what they are trying to do.
Another industry that would have high interest in Twitter is old media, or news corporations. Imagine if News Corp or TimeWarner/AOL picked up Twitter. It fits with the little bit of citizen journalism that they want to do, and they can continue with integrating it into broadcasts like CNN has done. Again, there are only a few companies that can afford the price tag, so it can only be a large corporation and not someone like the New York Times.
In the other category, we have mostly unlikely players. In Telecom, you could get someone like ATT or Verizon looking at them, but there is a definite fit problem. Why would they buy a service like that, and how would they capitalize on it? A great fit would be a marketing company, but I am not sure if there are large enough companies to afford the $250 million. I admit that I do not know enough about marketing companies, so I will not say anymore about them.
Two interesting potential buyers are Comcast and Cisco. Comcast is already making inroads in the internet space with their purchase of Plaxo. Twitter would be a fit with their direction, and they have plenty of money. With that type of purchase, Comcast could cement themselves as a major internet force. Cisco is another company with plenty of money that is trying to purchase its way into the internet game. Granted, Cisco runs a ton of the hardware that routes the internet, but they have just started playing the social media game. This is another case of a company making a statement of how serious they are about the social media industry.
Given all of this, who is most likely? Obviously, Google is the front-runner, but I would not be surprised to see other companies start making bids. I would love to see Yahoo make a run, but I do not think it is likely with all of the changes they have going on right now. I would definitely keep an eye on Comcast and Cisco though. They are definitely a “dark horse” in this race, but a Twitter purchase for either of them would be an absolute coup.
Let the Twitter bidding commence!