6 reasons Google should buy Twitter - TechCentral


6 reasons Google should buy Twitter


Talk of a Twitter buyout has been rampant in recent days, with companies including Salesforce.com, Walt Disney and Google all reported to be considering bids. While the search giant hasn’t officially confirmed its interest, analysts at Cantor Fitzgerald & Co say Google’s the best of the likely buyers.

Calling Google parent Alphabet “the one acquirer that’s most likely to bid and win this valuable prize, in our view”, the Cantor Fitzgerald team led by Youssef Squali said the tie-up would be advantageous from both sides. “Such an acquisition would be most synergistic for Alphabet,” they write.

Until rumours of a sale boosted its share price by more than 20%, Twitter had been hovering below US$20/share for much of the year, due to concerns over slowing growth at the social media company.

It has previously been reported that Google is working with advisers to consider a potential bid for Twitter, even if the company hasn’t confirmed it’ll bid. Here’s a look at the six major reasons he thinks this is the best buyout scenario.

Google would gain data on more than 300m people who use Twitter’s platform, helping it to increase the relevance of results on YouTube as well as its own search engine, and eventually improving Google’s ad pricing.

While Google recently started integrating real-time Tweets from Twitter, owning the service outright would make that function more tightly integrated into the platform. It could also hurt Google’s competition, as Squali says a partnership could mean Yahoo and Bing lose access.

“As Facebook continues to broaden Messenger’s addressable segments to include commerce and consequently search with a commercial intent, Google stands to lose a significant portion of its addressable market,” Squali writes. “We believe that owning Twitter and expanding its messaging service would make Google more competitive longer term.”

Cost efficiencies
This is a big one for both firms. Analysts at Citigroup issued caution last week on the lack of synergies in a Twitter buyout by Disney, but Squali takes the opposite view if Google were to acquire the company. “Among potential buyers, Google would be the one to realise the biggest cost synergies,” he says. “Other bidders may be able to reduce Twitter’s operating costs under different scenarios, but none would have as many synergies as Alphabet.” With perhaps the exception of Facebook.

Social media, take two
Remember Google+? If not, you’re not alone. One of Google’s most notable failures was the launch of its own social media platform a few years ago. If it were to buy Twitter, it could get another chance to foray into this space. Squali says the tie-up would immediately position Google “as one of the main global social platforms,” while also helping Twitter reinvigorate its own growth.

Video has become a big growth area, with Facebook pushing Facebook Live and Twitter inking deals with the NFL — a partnership it beat Alphabet to secure. The team says that Twitter’s live events coverage could do a lot of YouTube, and vice versa. “We believe that Google could leverage all that content in a more sizeable and monetisation-rich environment within YouTube,” the team says.  — (c) 2016 Bloomberg LP

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