There are rumours circulating the net seemingly originating from Techcrunch that Google is in talks to buy Twitter - presumably for at least several hundred million dollars. While there’s no hard and fast evidence elsewhere for this yet, let’s remember that Twitter’s founders Evan Williams and Biz Stone previously sold Blogger to Google.
But, you may ask, and rightly so, how does Twitter actually make money? Well, it doesn’t. But for Google, it’s not about the revenue stream. It’s about value.
You see, even though Twitter doesn’t have any revenue stream, or any business model at all as far as anyone knows, it has a vast and growing user base and huge live search potential. It’s breaking news quicker than the BBC, CNN, Sky et al.
The search potential would be really interesting for Google. As Techcrunch’s Michael Arrington points out, the value of Twitter is that people talk about brands on it, constantly, and betray their lifestyle habits.
So companies can get a steady stream of user feedback, find out what their customers really want and what they really hate, and tap into their interests to market to them in a far more targeted way.
This is the direction Google is going in – tracking people’s interests and generating tailored recommendations to them based on their lifestyle. It harks a whole new age of marketing that the mobile and other technology worlds have been trying to tap into for some time.
But, as this intriguing article in the Guardian’s Technology sector points out, Google is realising that ambition by being completely transparent with users about what it’s doing. In this way, it can achieve its business aims – the most targeted marketing ever – while seemingly helping people. Behavioural targeting, of course, isn’t to everyone’s taste, and it’s a very hotly contested issue.
While a reduced clutter of advertising and more targeted marketing may be seen by some consumers to be preferable to a constant barrage of irrelevant ads, it may also prohibit small businesses in a couple of ways.
If Twitter is sucked into the Google umbrella Google has yet more of a monopoly on online advertising, assuming it starts trying to monetising it in some way. There’s a risk it may up the price of advertising and remove the ability small businesses currently have of advertising and publicising themselves for free through Twitter.
And limiting the amount of advertising white noise a consumer faces online may be detrimental to small businesses, who can’t afford the marketing research that will empower larger companies, so prohibiting them from advertising to the wider audience they need to generate sales.
This potential buy-out also goes to show that a company can still have huge financial value without even having a business model, let alone making profit – quite remarkable, really, albeit very rare.
And it’ll be really interesting to see what Google does with Twitter. Will it incorporate the real-news streams and search function into its own Google mothership – potentially seriously aggravating Twitter users who only want to Tweet on the original site, not some Google hybrid – or will it take the same stance as it has since buying YouTube – namely leaving the site completely as is but doing its own analysis and money-making thing behind the scenes?
Finally, as Michael Arrington also points out, Microsoft is going to be hit hard if Google buy Twitter. It’s basically already playing catch-up with Google, and losing out on another key search technology and user base could leave it limping miles behind. And let’s not forget Facebook, who also unsuccessfully attempted to buy Twitter earlier in the year for half a billion dollars and who operate in a very similar market.
Google’s buying everything that’s hot on the web right now. But will its ever-growing monopoly on new technology and the latest traffic hotspot sites be exploited to overcharge businesses and force them to play to its tune? Can a global conglomerate that is systematically buying out competitors one by one and monopolising the internet really hold true to its informal corporate motto “Don’t be evil?”