Alphabet Inc could finally be about to make a play for Twitter Inc . Although there have been rumors of such a deal for more than a year, it now looks increasingly likely as the benefits for both firms continue to grow. If a deal happens, Twitter might finally be able to make substantial profits, and Google would benefit from being part of a market that projections say will have nearly 2.5b users by the year 2018.
Alphabet Inc’s Google (GOOGL) needs a stronger social media presence
So far, Google has struggled in the social realm, with Google+ failing to take off despite spending several years and hundreds of millions of dollars trying to make it a success. Their reasons for wanting to break into social have only become even more compelling with time. An established and successful social media platform like Twitter could bring them right back into that game.
Google’s desire to have a social stronghold is not just about taking the wind out of Facebook’s sails – they want the real-time behavioral data that can be collected from social media users so they can use it to fine-tune their search results and ads. While Google can pay Twitter for access to its real-time user data firehose, owning it outright would give them a lot more control.
In addition, as social sharing continues to grow as a means of driving traffic for content and ads, Google is becoming more eager to boost its social presence.
Last year, early Twitter investor and former Google employee Chris Sacca told CNBC that Twitter and Google would fit together perfectly. He said: I think it’s a fantastic use of Google’s cash… From the Google side, it’s an instant fit. This is the thing Google has never had. They’ve never understood social, they have never understood those personal interactions. This bolts right in cleanly.”
Twitter’s live video platform Periscope could also play a key role in any potential deal. Even though Twitter’s number of monthly active users has been stalling, Periscope’s user numbers continue to climb. Periscope alone could end up being a huge moneymaker in the future. On top of that, Twitter’s revenue growth is expected to beat Google’s twofold this year.
Google, Twitter becoming increasingly friendly lately
Rumors that Google might acquire Twitter are nothing new, but the two firms have joined forces quite a bit recently, fueling rumors that an acquisition could be in the works. Last year, Google’s DoubleClick Bid Manager added Twitter inventory, and Twitter results started getting high billing in Google search results.
Earlier this year, Google and Twitter worked together on an AP tool that enables people to keep track of election buzz. The two firms also sided with Apple in its recent high-profile court case regarding breaking the encryption used on a terrorist’s iPhone. Last week brought news of Twitter being integrated with Google’s Accelerated Mobile Program (AMP).
If such a deal takes place, Google could monetize Twitter with its profitable ad programs. An acquisition could even see Twitter being incorporated into Gmail. While Twitter isn’t exactly up for sale, it is facing a huge deficit, which would make it likely to consider attractive offers like the kind Google could bring to the table.
Some people argue that Twitter Search’s real-time cataloging is a threat to Google search. While it’s unlikely to be widely adopted as a primary source of searching for info by users, Google certainly wouldn’t want it to end up in the hands of a rival like Microsoft.
While firms such as Apple, Microsoft, and even Amazon have been bandied as potential buyers, it is Google that could arguably benefit most from what Twitter can bring them. There is no question that Google can afford to buy Twitter, and now the question might well be: Can Google afford not to buy Twitter?