Could Twitter be Sold - and What Would That Mean for the Platform?
Rumors about the possible sale of Twitter are gaining momentum, with Twitter shares soaring almost 20% on Friday - their highest leap in more than two years.
Speculation has been boosted on the back of reports from various sources that Twitter's board is looking to engage in conversations with potential suitors, including Salesforce, Google, Verizon and Microsoft. There's no deal imminent, but the rumors are certainly building, which suggests that something could be on the cards soon, with some even suggesting a deal could be in place before year's end.
Talks of a possible Twitter buyout, of course, have been swirling for some time, but they were recently re-ignited when Twitter co-founder and board member Ev Williams told Bloomberg that the company needs to consider all options, in regards to a possible takeover offer. Williams' statement is a strong sign that the platform's leaning towards an acquisition - that, along with the platform's ongoing growth problems all signal that even if such a move doesn't happen, they do at least need to assess what's on offer.
So what would an acquisition mean for Twitter? It largely depends on who the acquirer is, and questions thus far have centered on what each player might stand to gain from the micro-blog network.
To provide some context, here's the four major names being mentioned and the possible reasons why they might want to buy Twitter.
Salesforce - According to Business Insider, Salesforce's interest in Twitter largely evolves around the platform's connectivity and the ability for salespeople to use the platform as a prospecting tool. That, too, relates to Twitter's data resources, but the potential benefits for Salesforce - which builds software for sales professionals - likely center on the network's capacity to track real-time trends and facilitate conversations. Salesforce, too, is working on new artificial intelligence systems to boost their offering, which Twitter's 500 million tweets per day could no doubt also assist with. It's also worth noting that Salesforce recently missed out on purchasing LinkedIn, which was eventually snapped up by Microsoft.
Google - Of the four potential suitors, Google is the one that's come up most often as a potential buyer. The benefits for Google are immediately evident - over time, Google's been losing ground to Facebook in terms of discovery and audience retention (and worth noting, Facebook now sees 2 billion on-platform searches per day and growing), an issue Google's been working hard to counter, most notably with the creation of Google+. As Facebook continues to rise, Google has repeatedly tried to match them - even this week, Google released a new messaging app, Allo, which aims to claw back attention from Facebook's Messenger and WhatsApp. If Google could merge Twitter into their offering, that would add a more in-depth, functional social data element to their search results, and give Google a platform with which to stave off the growing threat of Facebook. The real-time data would also help fuel Google's analytical products and AI research.
Verizon - TechCrunch has reported that Verizon is also in the mix to make an offer for Twitter, with the company's recent acquisitions of AOL and Yahoo highlighting that the company's looking to expand beyond its traditional telco foundations. TechCrunch suggests that Verizon might purchase Twitter with a view to maintaining the platform in its current form, though Twitter's recent results might suggest that the network likely needs a more significant re-fresh and approach - difficult to see exactly how it fits within the wider product suite being built by the company.
Microsoft - And the last company reportedly interested in bidding for Twitter is Microsoft, which, as noted above, just recently purchased LinkedIn for $26.2 billion. Similar to Salesforce, Microsoft could be looking to use Twitter's real-time data stream to help fuel their analytical and customer service efforts - though TechCrunch does note that many of the reports around Microsoft's interest suggest that maybe they're only remaining involved in order to push the price up and keep it out of Salesforce's reach.
Based on all the evidence currently available, Google still seems the most obvious fit - but that's only on the surface without a real, in-depth understanding of each company's plans and processes, within which Twitter could be a fit.
The one key element that's most often over-looked in regards to Twitter is data. Twitter's real-time data stream is extremely valuable - more valuable even than Twitter themselves seem to have been able to realize. While various reports and studies have shown that Twitter data can be used to do everything from tracking earthquakes to managing flu outbreaks to preventing crime to predicting stock markets, Twitter's struggled to convert the power of such insights into a significant revenue opportunity. They've tried to rectify this with the acquisition of Gnip, through which they've slowly reigned in their data access in an effort to better monetize it by forcing third parties to pay for "full firehose" access, but the real-time, public nature of tweets often leaves them in a tight spot in regards to making money from this element. For example, the social media monitoring industry was effectively built on the back of Twitter data, yet Twitter often receives little to no money from those third party tools that track and alert users to relevant mentions.
But while Twitter hasn't been able to maximize their data as a significant revenue stream, those insights are of huge value, and will be a key aspect for any businesses looking to take Twitter on. With greater resources and data-matching capacity, Google, for example, could translate those real-time conversations into a powerful alerts tool, linked back to other data elements like Google Trends and Google News. That could be morphed into a more powerful news app, for instance, once which is tailored to your industry and niche and is able to use both Google searches and Twitter trends in conjunction to give users up to the minute insights.
Such a tool could be hugely valuable to business clients - and while Twitter's data is already being used in this way in things like Bloomberg's Social Velocity Tool to better track stock fluctuations, there's a wide range of ways such data tracking could be utilized.
An example of Twitter's integration with Bloomberg's trader console
The bigger question then relates to growth - Twitter's audience expansion has slowed significantly, to the point of stagnation in some markets. In order for Twitter's data resources to be of any value, they need people to keep tweeting, so ongoing audience growth would also be a key concern for any buyer. On this, the expectation has been that Twitter would be allowed to let their new set of live-streaming deals play out before any potential takeover, as a means for Twitter to see how the new option impacts on engagement for one, and for interested parties to better understand what it could mean for future growth.
Twitter's first NFL live-streams have gone off without a hitch, but the increased takeover speculation coming so soon after might suggest that despite their success, they're not actually shifting the dial in terms of audience engagement.
Twitter's invested a heap into live-streaming partnerships, an area where Facebook too is putting increased focus. And while there is a lot of potential there, particularly if Twitter's able to become a key viewing source (likely by linking the Twitter stream direct into viewers' TV sets), the threat of Facebook - and their significantly larger audience and resource pool - remains a concern.
But that said, a possible acquisition may just give Twitter the resources to remain competitive, even in the face of Zuck and Co - if Twitter doesn't see a significant boost in audience engagement as a result of their live-stream partnerships, then an acquisition is highly likely. It seems like the last big play in their current blueprint.
In terms of how an acquisition might change Twitter, as noted, it's impossible to tell at this stage, though all signs would suggest that it'd be in any new owners' interest to keep Twitter as it is and work to build the platform and boost engagement. That would actually be a good thing for users, as they'd get access to more tools and features - and any increase in engagement would obviously also make it a more viable option for advertisers. Really, a potential Twitter takeover seems much more likely to be a positive than a negative for the platform and for the everyday user - you can never know for sure how such shifts will play out, but the value of Twitter is in its audience. Without them, you may as well just shut it down.
The speculation about a potential takeover will continue on for some time yet, and I do think Twitter will be given a little more time to see how their live-streaming partnerships play out. But judgment day is coming, no doubt, and the suitors are gathering at the gate.
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