Twitter Boss Dismisses Acquisition Talk

The CEO of Twitter, Dick Costolo, has attempted to end speculation that his company is an acquisition target for Google or Facebook.

The Wall Street Journal rekindled the rumour when it said Google and Facebook help low-level talks with Twitter about buying the company for $8 billion (£4.9 billion) to $10 billion (£6.2 billion).

Costolo, speaking at Mobile World Congress in Barcelona 14 February, said “I don’t know where these things come from. It’s just a rumour.”

Acquisition Target?

Costolo, who took the helm as CEO from co-founder Evan Williams in October, has frequently downplayed acquisition talks, noting that Twitter’s goal is to remain independent and grow a large business.

The company in December banked $200 million (£124 million) funding that valued the company at $3.7 billion (£2.3 billion). To wit, $8 billion (£4.9 billion) to $10 billion (£6.2 billion) offer appears handsome.

Still, in a world where money talks, not every company is like Twitter or Groupon, which thumbed its nose at a $6 billion (£3.7 billion) tender offer from Google last December.

It’s easy to see why Google and Facebook, whose rivalry has intensified as the social network has lured eyeballs from the search giant, would be interested in Twitter.

Twitter has 200 million users, accounting for 130 million tweets per day. According to eMarketer, Twitter is on pace to make $150 million (£93 million) in advertising, or triple its 2010 earnings, in 2011. The upside is great.

Best Fit

One interesting question is which company Twitter would best fit: Facebook or Google. Facebook, one could argue, already has the communication tools, including status updates and chat, that might make Twitter unnecessary.

Yet Forrester Research analyst Augie Ray sees Twitter as being quite attractive to the social network’s designs because Twitter’s trove of data about people and their interests would well fit Facebook’s business model.

“What is less clear to me is the benefit Twitter would receive, outside of cash of course, for merging with Facebook,” Ray told eWEEK. “Given their commitment to their product and vision, one of the concerns those at Twitter may have about Facebook may be the autonomy they’d be allowed and how Facebook envisions integrating Twitter into the Facebook experience.”

Ray said an acquisition by Google might make more sense for Twitter given Google’s self-service platform for ad purchasing. Twitter is currently developing its own self-service platform for its Promoted ad products.

Google Catch-up

There is a Catch-22 with the Google-Twitter tie. Google has lagged in social software, which makes Twitter more desirable for the search engine.

However, Twitter executives know full well the risks of joining Google after the web giant let the early social location service Dodgeball languish before founder Dennis Crowley left to form the highly-successful Foursquare.

In any case, if Twitter is firm in its resolve to stay independent, the story is a non-issue. But if it is wavering in its resolve at least it appears to have exit options.

“Twitter must make some decisions as to how quickly they can scale, the risks they may encounter, and the benefits that could come from combining with another organisation and getting access to their technology and user base,” Ray said. “It can be hard for a company that has just $100 million (£62 million) to $150 million (£93 million) of revenue (reportedly) to turn down an offer of $8 billion.”