Over the past few days, there has been a ton of rumors and speculation regarding who is buying Twitter. Silicon Alley Insider has a very good post on why Microsoft must buy Twitter. Granted, they are looking at it from a search perspective, and that should be expected given Microsoft’s current search issues. I agree that Microsoft is one of the few companies that could afford Twitter, and they could use the boost for their search business. However, I am not sure if Microsoft will move quick enough or decisive enough to stave off other competitive bids.

So, who else can buy Twitter and why would it be a good idea? I wrote a post a month ago about this, so I am going to try to explain my thinking more this time. First, let’s assume the winning bid would be near $500 million. They have already ignored bids around $250 million and expressed interest in keeping it independent, so a big offer is required. So, who would be a potential acquirer?

IBM

Why it will happen: This would be a huge deal as IBM has not tried to get heavily involved in the social media space. This would instantly make them a leader. They would obviously push development towards enterprise usage as well to add another revenue stream to their services divisions.

Why it won’t happen: IBM has shown no interest in getting involved in major social media. They are doing some things with social networks, but they seem to be moving too slowly.

Google

Why it will happen: Basically, Google wants to own the internet and completely dominate search. Adding Twitter would be another step in this direction.

Why it won’t happen: Google has supposedly been scorned on a Twitter deal before, so they may not go back to it. They also failed to get Twitter competitor Jaiku off the ground, so they may not want to get back into microblogging.

[Update: Somehow I totally forgot Apple]

Apple

Why it will happen: It is the current hot rumor. They also have not done well in the web space, unless it was purely to serve their hardware needs.

Why it won’t happen: It does not look like Twitter is a real fit for Apple as they have made very few moves in the past to get into the website business. Plus, Twitter probably does not fit their design requirements, because it is not really that pretty a site.

Ask.com

Why it will happen: Ask could vault itself back into relevancy with a Twitter purchase, and start hooking Bloglines into the service as well.

Why it won’t happen: I am not sure they have the kind of cash needed to make this deal.

EBay

Why it will happen: EBay has wanted a new revenue stream in the social media space, and tried to make StumbleUpon become that. They recently let StumbleUpon go independent, so they may have been making room for something new. Hooking Twitter into EBay and PayPal would mean serious revenue gains.

Why it won’t happen: I do not think they want to take on another social media company, especially one that has less revenue than the one they let go.

Yahoo

Why it will happen: A Twitter purchase makes a lot of sense for Yahoo in terms of their social media and mobile direction. Having Twitter in your stable of companies along with Flickr and Delicious would make Yahoo the social media leader.

Why it won’t happen: Due to the massive reorganizations occurring, they are probably not looking to purchase anything right now. Twitter would be very expensive for a company who is cutting costs in an attempt to increase margins.

News Corp

Why it will happen: Old media is struggling to maintain relevancy with the younger crowd, and adding Twitter would ensure relevancy. We know they already use and love the service anyway.

Why it won’t happen: The price may be a bit high given that the MySpace purchase was not seen as a huge success. Reinventing MySpace may be enough work for their digital hands.

AOL/TimeWarner

Why it will happen: AOL is trying to make big moves in the social media space. They have redesigned pages and are integrating Bebo and SocialThing into everything they do. Adding Twitter to the mix could make AOL a leading destination again.

Why it won’t happen: There may be too  much overlap with what they have already purchased in Bebo and SocialThing. This is another area where other cost concerns may limit the amount of cash available for a purchase.

Telecom (like ATT or Verizon)

Why it will happen: An ATT or Verizon purchase of Twitter would be a major coup. Twitter is meant for the mobile world, so it would be a great fit from the functionality perspective. This would also give Twitter much more bargaining power when looking at text messaging rates.

Why it won’t happen: Most of the telecom companies have shown that they can not get out of their own way when it comes to integrating with the web.

Comcast

Why it will happen: With the Plaxo purchase, Comcast showed they are serious about being a major digital player. Twitter would fit with Plaxo and the whole Comcast direction. They definitely have plenty of cash for this type of deal as well.

Why it won’t happen: I do not have a good reason for this not to happen.

Cisco

Why it will happen: Cisco has been talking about getting more into the social media space. They are one of the fwe companies that could make a real push to have Twitter become infrastructure like email is. They definitely have the cash for this.

Why it won’t happen: Cisco has been talking about social media, but not doing a lot. I am not convinced they want a hot property like Twitter or something more reasonably priced.

Maybe Twitter Should Buy Someone

So, there are a lot of potential purchasers of Twitter, but maybe they should quiet the rumors by purchasing something that would be a great complement to what they are doing. There are two sites that have been rumored for sale or merger that could make an interesting partner for Twitter, Digg and StumbleUpon. Both sites fit the general social idea, and they could create a default news provider for Twitter. Granted, there would still be the questions of how they are going to make money, but the addition of Digg or StumbleUpon would give them more potential revenue streams.