Right from the beginning, Google (Alphabt Inc. (NASDAQ: GOOGL)) has established a habit of acquiring potential companies to expand their reach on every platform and to every corner of the world. This time, it seems like the search engine mogul is eyeing the No.1 micro-blogging social network, Twitter Inc. (NYSE: TWTR), according to the rumours making rounds over the internet. According to a person familiar with the arrangement, Google has hired Lazard Ltd., to understand the viability of Twitter’s acquisition. The move has come at the time when rumours are making rounds on the internet about Twitter’s possible acquisition by Walt Disney Co. and Salesforce.com Inc.
If Google has got any plans to acquire Twitter, then this is the right time for the search engine giant to do so as Twitter shares are trading quite a low price compared to the same time last year. It is very likely that Google can easily close the deal within a reasonable range of about $50 billion to $60 billion. But then, this is not the first time that we are hearing the rumors about Google’s intention of buying Twitter. Over time, Google and many other tech giants such as Facebook Inc. (NASDAQ: FB) and Microsoft Corporation (NASDAQ: MSFT) have shown a keen interest in acquiring this trademarked 140-character message sharing tool which is today used by little over than 313 million users worldwide.
On the other hand, many analysts believe that Twitter could easily increase its valuation up to $100 billion, provided the micro-blogging network improves its user experience, monetize its user base effectively and becomes a mass-market service.
Is Google Rethinking Its Social Networking Ambitions?
Although, Google+ has got around 2.2 billion registered users, this social networking venture of Google has always struggled to stand firm in the minds of the people, as against the likes of Facebook and Twitter which are undoubtedly ruling the social networking industry. According to the latest data, only 4-6 million people are actively using Google+. It is quite evident that Google+ has not generated any fruitful result as the search engine mogul anticipated. They did create a spur after adding a linking feature between user’s Google+ profile and author profile in search results and thereby attracting a lot of online journalists joining Google’s new social network.
But after experimenting with the program for three years, the search giant decided to end the Google Authorship program owing to low adoption rates by authors and webmasters. Google follows a strict policy of shutting down all those projects that don’t meet the desired target or goal within the given time, and this has come true for many of its previous products like Orkut, Wave, Buzz, Google Health and Google PowerMeter, turning Google a graveyard for many products.
According to a recent study published by Eric Enge at Stone Temple Consulting, 90% of the total Google+ profiles over the web are inactive. Although Enge is sure that Google won’t be shutting down its ambitious social networking venture, he does believe that Google+ may die soon if the experts at Google don’t come up with new plans to revive it.
Can Acquiring Twitter Be The Solution?
If Twitter is up for sale, then this is, in fact, the right time for Google to make an attempt of acquiring the micro-blogging tool which is the hot favourite among social media influencers for its trademark 140-character messaging service. For one, Twitter shares are dropping which would cut down its overall market value and secondly, Google+ isn’t living up to its expectations in terms of engagement. Twitter’s share value also didn’t recover much after Dick Costolo, the former CEO of Twitter resigned from his post last year.
Google is also well aware that mobile is the future of the internet, and it has to come up with a plan to extend its ambit in the social networking segment just like it rules over the online search world. Given the fact that Google’s ad revenue from its cost-per-click advertising model has declined by 30% over the past four years, mainly due to the sudden rise in mobile users worldwide, the search engine mogul would need to come up with a workable strategy to dominate in the social networking space too. Twitter, with 313 million monthly active users who are sending over 500 million tweets every day, where mobile traffic makes up 80% of all monthly active usage, can be an ultimate solution if Google can manage to buy this most popular micro-blogging platform.
Google is focusing big on the social media platform now as suggested by Eric Schmidt, Chairmen – Google. Eric did admit in an interview with Bloomberg that it was a mistake on Google’s part for not anticipating the rise of the social networking phenomenon. He also said that Google, which relies on its advertising model for 90% of its income, is making amends for ignoring the social networking industry’s influence over the advertising market on the internet in the coming future amending their key limiter which is the rate at which they innovate.
At this stage, it is hard to say how things will be settled and in what shape in future, but one thing is sure; Google will have to act, and act fast. Facebook is closing the gap and has started eating into the online advertising market, once unanimously dominated by Google.