Google in talks to take over Twitter: report (Update)

April 3, 2009

Twitter co-founder Biz Stone said Friday following a report that Google was seeking to purchase the hot micro-blogging service that his goal was to build a "profitable, independent company."

Stone, in a brief post on the Twitter blog, said that "it should come as no surprise that Twitter engages in discussions with other companies regularly and on a variety of subjects.

"Our goal is to build a profitable, independent company and we're just getting started," Stone said in the post, which he called "a response to the latest Internet speculation about where Twitter is headed."

Stone's comments came hours after influential technology blogger Michael Arrington, writing on his blog TechCrunch, said Internet search giant Google was in talks to acquire the hot San Francisco-based startup.

Citing sources familiar with the matter, Arrington said the price was unknown but it was likely to be "well, well north" of the 250-million-dollar valuation placed on Twitter in a recent round of venture capital funding.

Arrington said Google would pay cash or publicly valued stock for Twitter, which turned down a 500-million-dollar takeover offer from social network colossus Facebook just a few months ago.

Arrington initially reported that Google and Twitter were in "late-stage negotiations" but he backed off that assertion slightly in a later post in which he said the acquisition talks were "still fairly early stage."

Kara Swisher, another respected Silicon Valley blogger, writing on her blog Boomtown, dismissed the report by rival TechCrunch.

"While the 'news' that Google was in 'late-stage' talks to acquire Twitter, which TechCrunch reported last night, certainly sounds exciting, it isn't accurate in any way," Swisher said.

Swisher said the two firms have held "product-related discussions" around "real-time search and the search giant better crawling the microblogging service."

"No negotiations, no deal, nada," she quoted an unnamed source as saying.

Twitter's potential as a real-time search engine has sparked recurring bouts of speculation that Google may be interested in buying the company.

"We've been arguing for some time that Twitter's real value is in search," Arrington noted. "It holds the keys to the best real time database and search engine on the Internet, and Google doesn't even have a horse in the game."

Google chief executive Eric Schmidt took some flak earlier this year for calling Twitter a "poor man's e-mail" but backed away from the description in later comments saying "we admire Twitter."

"We think Twitter did a very good job of exposing a whole new way to communicate," he said.

But he said Google was not in the market for acquisitions at the moment.

"I'm not sure prices are at their low yet," Schmidt said. "The situation globally is pretty dire. We are certainly looking. We haven't seen anything yet that was really exciting."

Twitter, which allows users to pepper one another with messages of 140 characters or less, has seen a dizzying surge in popularity since it was launched in August 2006, but has been unable so far to generate revenue.

Stone said last week that he expected to find ways to pump cash into the fast-growing free service, including possibly charging fees for commercial accounts used by businesses.

Stone this week also unveiled plans to feature a search box more prominently on the Twitter home page.

Jeff Mann, a vice president at market research firm Gartner, said a Google-Twitter deal makes sense.

"Twitter is attractive," he said, as a "constantly growing, twitching, seething real-time source of comments, news and opinions.

"The culture and ambitions of Twitter and Google match," Mann said. "Now is the time for Twitter to sell. It is at the top of its hype range now. Monetizing on its own would be a long, hard slog."

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Google chief executive Eric Schmidt recently dismissed Twitter as a "poor man's email" and shot down speculation the Web search giant was interested in buying the micro-blogging sensation.

That may no longer be the case.

Influential technology blogger Michael Arrington reported on his blog TechCrunch on Friday that the Mountain View, California-based Internet powerhouse is in talks to acquire the hot San Francisco-based startup.

Citing two sources familiar with the matter, TechCrunch said the price was unknown but it was likely to be "well, well north" of the 250-million-dollar valuation placed on Twitter in a recent round of venture capital funding.

Arrington said Google would pay cash or publicly valued stock for Twitter, which turned down a 500-million-dollar takeover offer from social network colossus Facebook just a few months ago.

Arrington initially reported that Google and Twitter were in "late-stage negotiations" but he backed off that assertion slightly in a later post in which he said the acquisition talks were "still fairly early stage."

But Kara Swisher, another respected Silicon Valley blogger, writing on her blog Boomtown, dismissed the report by rival TechCrunch.

"While the 'news' that Google was in 'late-stage' talks to acquire Twitter, which TechCrunch reported last night, certainly sounds exciting, it isn't accurate in any way," Swisher said.

"In fact, Twitter and Google have simply been engaged in 'some product-related discussions,' according to one source, around real-time search and the search giant better crawling the microblogging service," she said.

"No negotiations, no deal, nada," she quoted an unnamed source as saying.

Despite CEO Schmidt's protestations, Twitter's potential as a real-time search engine has sparked recurring bouts of speculation that Google may be interested in buying the company.

"We've been arguing for some time that Twitter's real value is in search," Arrington noted. "It holds the keys to the best real time database and search engine on the Internet, and Google doesn't even have a horse in the game."

After catching some flak, Schmidt also backed away from his dismissal of Twitter and said "we admire Twitter."

"We think Twitter did a very good job of exposing a whole new way to communicate," he said.

But he said Google was not in the market for acquisitions at the moment.

"I'm not sure prices are at their low yet," Schmidt said. "The situation globally is pretty dire. We are certainly looking. We haven't seen anything yet that was really exciting."

Twitter, which allows users to pepper one another with messages of 140 characters or less, has seen a dizzying surge in popularity since it was launched in August 2006, but has been unable so far to generate revenue.

But Twitter co-founder Biz Stone said last week that he expected to find ways to pump cash into the fast-growing free service, including possibly charging fees for commercial accounts used by businesses.

Stone, who unveiled plans this week to feature a search box more prominently on the Twitter home page, also said that Twitter remains focused on growth. The company has more than seven million users and claims a growth rate of more than 900 percent in the past year.

Jeff Mann, a vice president at market research firm Gartner, said a Google-Twitter deal makes sense.

"Twitter is attractive," he said, as a "constantly growing, twitching, seething real-time source of comments, news and opinions.

"The culture and ambitions of Twitter and Google match," Mann said. "Now is the time for Twitter to sell. It is at the top of its hype range now. Monetizing on its own would be a long, hard slog."

A sale of Twitter to Google would be the second deal between two of the founders of the micro-blogging service and the Internet search giant.

Twitter co-founders Stone and Evan Williams sold the blog-making website "Blogger" to Google five years ago.

(c) 2009 AFP