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Should Google acquire Twitter before IPO?

Twitter is gearing up for its IPO, now reportedly valued at $1.6 billion. But with Google’s own social networking efforts lagging behind that of Facebook, should the search giant acquire Twitter and merge it with Google+?


Twitter is getting ready for its initial public offering, and as of latest estimates, the IPO is now valued at about $1.6 billion — a bit higher than the $1 billion conservative estimate that analysts have earlier suggested. But even as the public anticipates Twitter’s launch into the public markets, there is one looming question: should Google offer to acquire Twitter in order to better compete against Facebook?

Michael Arrington thinks so. In Uncrunched, Arrington points out that Google+ is hardly a dominant social network, even though it is claimed to be #2 after Facebook. In fact, the only reason that Google+ has gained traction in terms of nominal user counts is that everytime one authenticates to a service that uses Google, it is done through Google+. Take for instance Hangouts, into which Google has folded its own Talk and other chat services.

Arrington even likens this scenario to Google acquiring YouTube back in the mid-2000s, when the search giant had its own Google Video offering. Today, YouTube is still dominant, and Google has been able to deeply integrate YouTube into its menu of services.

Twitter has filed for an IPO with 70 million shares, valued at $17 to $20 per share, putting the company’s valuation at a ceiling of $1.6 billion. This, Arrington says, is “pocket change to Google,” and the company could use Twitter to hedge its social networking bets against Facebook and its kin.

Still, Twitter’s executive team is not likely to consider an acquisition anytime soon, although its corporate board would be bound to consider any offer as a fiduciary duty to shareholders. But whether Twitter actually goes for IPO or gets acquired by Google (or perhaps any other bigger company), it would have a big impact on the company’s strategy as a player in the social media industry.

At the very least, data from Twitter’s firehose and its user information would well be worth tens of billions to Google, says Arrington. Meanwhile, Google may be able to offer Twitter significantly more than the $11 million market capitalization it could raise through an IPO. It could be a win-win situation.

Should Google acquire Twitter?

Source: Uncrunched

J. Angelo Racoma
J. Angelo Racoma has written extensively about mobile, social media, enterprise apps and startups. Angelo develops business case studies for Microsoft enterprise applications and services. He is also co-founder at WorkSmartr, a small outsourcing team.

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