Earlier this week I looked at the reasons why Google should buy Twitter, given the recent rumours. Today it’s time to look at the other, and more likely side of the coin. Here’s why Google isn’t going to buy Twitter any time soon.
1. It’s too expensive. Google has never been shy of making acquisitions, even fairly large ones, but even at Twitter’s current low value, it would still be more than twice as expensive as their largest acquisition, Motorola… Which they later sold to Lenovo.
2. Deflationary impact on CPC. In Google’s quarterly earning calls, the continual decline in average CPC is a sore point. It’s likely that Twitter’s average CPC are currently very low, so combining them with Google total network of clicks will add further deflationary pressure to overall CPCs. I’m not saying I agree with this reasoning, but investors sure give Google a ridiculously hard time over it IMHO.
3 Twitter user growth is stagnating. The recent earnings call from Twitter scared investors with user growth of only 4 million (up to 288 million active) on the previous quarter. Perhaps the time to be acquired has now passed?
4. Huge integration nightmare. Twitter has a fairly complex tech stack so integrating it into the Google ecosystem, while not impossible (they manged it with YouTube, Android and are making good progress with DoubleClick), will certainly be a huge challenge. I also imagine the European Commission would have a field day inspecting any proposed deal, given the current scrutiny they’re currently dedicating to the search giant.
5. …and most importantly, the founders won’t sell. John Battelle summed this up perfectly; highlighting how the founders have already sold businesses to Google and are not in it for the money. That’s a pretty big barrier.