Microsoft Shouldn’t Buy Twitter

Microsoft CEO Steve Ballmer left the door open to a possible acquisition of Twitter during an onstage discussion at the Search Marketing Expo (also known as SMX West) in Santa Clara, California on 2 March. Check out video from the event here, then compare Ballmer in that clip to images of him that I shot at the Consumer Electronics Show (CES) in Vegas back in January: the man really must love that red sweater.

Anyway, sartorial issues aside, it was Ballmer’s comments on Twitter that started the online community buzzing. “I would hate to not have that partnership,” Ballmer said, referring to Bing’s incorporation of Twitter feeds. “Whether we need to own the company or not I think is far less clear.”

Should Microsoft attempt to acquire Twitter?

I say no.

Let’s travel back to 2008, when Microsoft was attempting to acquire Yahoo for $44.6 billion (£29.6bn) in a mixture of stock and cash. That deal would have given Microsoft a more robust platform with which to challenge Google, but analysts immediately began ringing the alarm bells over the difficulties involved in one tech titan trying to swallow another tech titan virtually whole. Eventually, the potential acquisition fell through, and doubtlessly executives in both Redmond and Sunnyvale blew a sigh of relief.

A Twitter acquisition (that’s if the company even allowed itself to be sold; everything I’ve ever heard from Biz Stone seems to indicate that Twitter will remain independent until roughly the end of time) would be far less expensive for Microsoft, but, like a Yahoo takeover, it wouldn’t result in any tangible benefit that Redmond couldn’t acquire through its existing partnership.

After all, look what eventually happened with Yahoo: Microsoft signed a 10-year search-and-advertising deal that installs Bing as Yahoo’s back-end search engine, giving Redmond many of the benefits it would have earned via a straight-up acquisition deal, but at a fraction of the cost.

Of course, purchasing Twitter would prevent another company making a similar deal. But then you really need to think about Twitter’s actual worth. Although registered Twitter accounts have grown 1,500 percent in the past year, according to a recent missive by Stone, and Twitter employees now number 140-plus, there’s nothing to indicate that the micro-blogging service is anything other than a trend – last summer, a study by HubSpot found that more than half of Twitter subscribers didn’t actually Tweet. And as Google demonstrated with Google Buzz, creating a similar service isn’t terribly difficult in practice (although it risks having privacy advocates screaming bloody murder if you link it to peoples’ email).

Microsoft would likely be better served by holding Twitter to a partnership.