Sorry to Get You All A-Twitter, but Google Is Not in “Late-Stage Talks” to Acquire the Hot Microblogging Service
by Kara Swisher
Posted on April 3, 2009 at 4:52 AM PT
While the “news” that Google was in “late-stage” talks to acquire Twitter, which TechCrunch reported last night, certainly sounds exciting, it isn’t accurate in any way, according to a number of sources BoomTown spoke to close to the situation.
In fact, Twitter and Google (GOOG) have simply been engaged in “some product-related discussions,” according to one source, around real-time search and the search giant better crawling the microblogging service.
Said a source close to Twitter: “There was a discussion with [Google executive Marissa Mayer's] group about real-time search and about product stuff. It was a couple weeks ago. It was very preliminary…and that was that.”
More importantly, said another source about the idea of an imminent acquisition or serious or even early talks: “Seriously, no negotiations, no deal, nada.”
So for all those Twitterers madly typing 140 characters and caught up in the grand idea of Twoogle, we return you to your regularly scheduled tweeting.
Of course, there has been a lot of analysis, put forth by many, including me, that Google should think about acquiring Twitter.
It is the microblogging service’s likeliest acquirer, in fact. And there is no question Twitter is being watched closely by Google.
But sources at Google stressed that a strong partnership–especially in light of the growing size of the Facebook social-networking site–is what the company is most interested in at this point in time.
That could change at any time, of course. Google or anyone else could plunk down more than $1 billion in cash, and I cannot imagine Twitter’s investors would or could resist. Nor should they.
And what if, for example, Microsoft (MSFT) offered some huge cash payday for Twitter? In that case, I am certain Google would jump into the faceoff, backing up a giant Brinks trunk to the door of Twitter’s San Francisco offices.
And the reaction such an idea has gotten with this round of rumors will surely be studied at Google.
But this is all just pure speculation and should be couched as that. And that does not mean there are talks going on now, as TechCrunch reported so firmly.
And that’s also true for a range of other companies–from Microsoft to Yahoo (YHOO) to News Corp. (NWS) to Time Warner (TWX) unit AOL to Cisco (CSCO) to Comcast (CMCSA) to the big telcos–that would also be interested in buying Twitter or partnering with it.
And Facebook already tried and failed to buy Twitter last year, which BoomTown chronicled in a post in November, for $500 million in cash and stock of the social-networking service.
Why? Because although Twitter is still small, with seven million users, it has a definite momentum in the red-hot real-time online status update space.
And while I give it a hard time for its utter lack of a business plan or revenue to speak of, the well-funded Twitter is also at the beginning of a long runway of possibility that could yield it a higher price later, if it so chose to sell at all.
Moreover, if Twitter’s investors and founders wanted to sell, they wouldn’t have taken a recent round at $230 million valuation, because it would imply a $750 million to $1 billion purchase price, and no one could pay that right now.
Even the mighty Google could not–which does not typically overpay for companies.
More likely, Google would surely get killed by investors for spending that much on a revenue-free company, especially since it is still getting beat up for the pricey YouTube deal it made when times were great.
Lastly, Twitter’s founders have expressed the desire to take the company out for a longer ride, even if some of its investors would love to cash out if offered a crazy price.
“Why would the company do something like this right now?” said a source close to Twitter, in a typical sentiment. “The company’s on a tear right now.”
In fact, last night in an appearance on “The Colbert Report,” Twitter co-founder Biz Stone explicitly said Twitter planned to be a “strong, profitable, independent company.”
While entrepreneurs have said this and then quickly sold out, it is not the case now for Twitter, unless it got some insane offer, said numerous sources.
TechCrunch, which slapped a loud headline on its first post, “Sources: Google in Late-Stage Talks to Buy Twitter,” then changed it to “Sources: Google in Talks to Acquire Twitter (Updated).”
What’s next? “Google and Twitter Have a Lovely Organic Lunch and Discuss Trading T-Shirts (Updated Update)”?
The TechCrunch report, penned by Michael Arrington, also added a let’s-just-cover-all-our-bases update at the bottom of the ever-changing post that then hedged the news it had just hyped.
This is not new for the tech blog, especially related to Google.
On July 28, 2008, TechCrunch reported: “Google In Final Negotiations To Acquire Digg For ‘Around $200 Million,’” and said there was a letter of intent signed.
While the pair did hold ultimately unsuccessful talks, they never got even close to final.
And on February 6, 2008, TechCrunch had a post with the headline, “Rumor: Is Google About to Buy Bebo For $1 Billion To $1.5 Billion? Or Will it Be MySpace?”
Hmm, not so much on the about to buy Bebo. In fact, Google was never in what could be described as serious talks, and Bebo was sold to AOL, the lone bidder, for $850 million a month later.
Thus, the third time is, no surprise, not a charm either.
Please see this disclosure related to me and Google.
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Comments
I’ve been wildly commenting this morning that Google would kill Twitter if it acquired it, because Google freezes membership while it integrates, and that’s horrible for a social product like Twitter. I’m actually glad the rumors aren’t true, although I’d like to see Twitter in the hand of responsible management.
But who would that be? Not any of the people who could afford to buy it, or into whose strategy it would fit.
Posted by francine hardaway at April 3rd, 2009 at 5:53 amF:
I think the people running it right now are terrific.
Posted by Kara Swisher at April 3rd, 2009 at 5:59 amParty pooper!
But seriously, I can certainly see why Google would rather buy Twitter now, before the company gets any more expensive. They paid a pretty penny for YouTube and perhaps have learned to move more quickly on popular technology they can’t compete with themselves.
Why would Twitter sell now if its value can only go up? Well, they could implode: for all of Twitter’s accelerating traffic and relentless buzz, the company still seems far from figuring out how to monetize any of it. And there’s much larger Facebook, looming over Twitter and copying some of its successful ideas. I don’t know how risk-averse Twitter is, but I’m sure the decision makers there recognize the high variance on the company’s set of potential outcomes.
I’m sure Twitter would gladly accept $1B, but am equally sure Google’s tastes aren’t that rich.
http://thenoisychannel.com/2009/04/03/twoogle/
Posted by Daniel Tunkelang at April 3rd, 2009 at 7:06 amThis seems to be like some kind of soap opera. Why does everyone want a happy ending here? “Twitter marries Google after Facebook looked down on her and being lonely for so long”. Or so the rumors say. Maybe I have to swallow my words some day but I don’t see Twitter working with Google and still being the same old Twitter. Granted that Google has an eye for the right moment and most of the time for several reasons everything they touch turns into gold or a very good golden imitation, but to see Twitter on your Google apps, say, next to Orkut, would really take the cake. The famous uncertainty of the company as to the course their ship should take would leave them stranded on some desert island instead of the promised land well-meaning oracles predict. We need some freshness in emergent social networks, there’s no need to transform, associate, matching, marrying them to the rich experienced partner. On the other hand it is very difficult to say no and not succumb to a bulgy wallet.
Posted by Carlos Lorenzo at April 3rd, 2009 at 8:30 amIt sounds like you are on the Money here Kara, but Mike is probably doing something quite clever – MAKING the news.
Lot’s of attention and a response from you is a win for TechCrunch. Your story is more about techCrunch than it is about the talks.
And as for Twitter, the very fact that ANY discussions are taking place was broken by …….. yes TechCrunch. That those talks are less developed than the initial story suggests isn’t really the point. And if I were Microsoft, or Yahoo, or AOL, I would be making sure I am having the Twitter guys in my office, like Marissa is.
So…. this is evidence of what? TechCrunch as a catalyst for activity. Bebo and Twitter should be paying TechCrunch…
. Of course, they aren’t.
Disclosure … I’m a business partner in TC.
Best
Posted by Keith Teare at April 3rd, 2009 at 9:34 amKeith Teare
Biz Stone was just on the Colbert Report the other day stressing that they want to become a profitable “independent” company. So it struck me as fishy when Techcrunch published its post on this matter.
Posted by Bjorn Tipling at April 3rd, 2009 at 9:48 amKeith:
I like you a lot, but TechCrunch saying there were late-stage acquisition talks and saying the companies think about partnerships is a world of difference. Twitter meets with a lot of folks, and this is not news.
But it would have been an interesting story, so why not just stick with that and not overreach without reporting.
It was quite easy to find out the TC piece was full of holes.
Then they backpedaled and kept changing the story. Yuk.
Posted by Kara Swisher at April 3rd, 2009 at 3:07 pmYou are so right, I just read about the 1 billion post and also commented.
Thing is that what I am sencing is that Michael Arrington is trying to promote twitter and set some base price even though it’s not worth it. Same thing we can say for iPhone the first year it was what &700 ? now its $99 and just because people brag about it how good it is for that price people bought it. Yet I am sure Google is no stupid B2B property and there is no way in hell they are going to even pay $500 million I mean we are talking about 140 service with no ads here..
Posted by Joe Shmoe at April 3rd, 2009 at 3:33 pmAnyways great post and bitch slap on Michael arrington.
I guess it makes a lot of sense for Google to acquire Twitter. However, I don’t think it’s not a good move for Twitter. Twitter, by itself has a lot of potential to take on Google. Twitter is the future search engine with real-time results. It’s not there yet, but has a great potential. Instead of selling it to Google, I would say, it should focus on acquiring some companies like Summize (now Twitter search) what they did a year back. In fact, I found this article in http://www.boilingpage.com, one of my favorites, that tracks popular webpages in Twitter and has a almost real-time webpage search engine. This website is amazing and very addictive. Twitter should acquire such companies and move forward strongly.
My few cents..
Posted by Chris Brown at April 3rd, 2009 at 6:15 pmKeith – TC’s ability to “make the news” is largely due to something called credibility. Their current, trend of slackly researched, sensationalized posting might be clever as you put it for the short term buzz, but clearly in a longer term perspective this is going to hurt their credibility and momentum. Take a look at the TC’s 3 month traffic, the trend is already evident.
PS. is it now necessary to disclose being “business partners”
Posted by harmony jones at April 3rd, 2009 at 8:13 pmtechhunch is all about hype…he’s spoofing headlines to get attention…ignore techhunch
Posted by Sam Harrison at April 7th, 2009 at 12:22 pmand, yes, i mean “tech hunch” as in made up garbage
Posted by Sam Harrison at April 7th, 2009 at 12:24 pm