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Face book and Google fight to buy Twitter

Facebook has initiated a battle against Google to acquire Twitter for approximately $11 billion.

What’s truly amusing about this tale is that it’s a repeat performance. Negotiations regarding the sale of Twitter to one of these larger web powerhouses trace back to November 2008, when Facebook proposed a $500 million purchase offer, mostly in stock. Although the deal advanced to near completion, Twitter reportedly opted out due to the insufficient cash component offered. Later, in April 2009, rumors suggested that Twitter was deep in negotiations with Google, which was allegedly prepared to offer over $250 million in a combination of stock and cash.

This was prior to Twitter’s remarkable growth surge in mid-2009, when mainstream media became enamored with the platform’s dual role as a portal to celebrities and a platform for revolutionary movements. More recently, in November 2010, sources indicated that Google had made a “casual” offer ranging from $2.5 to $4 billion for Twitter.

It’s important to highlight that throughout all these conversations, and still true today, Twitter’s revenue has typically not been in line with its valuation. Fundamentally, the site has experienced losses each year since its inception.

Last year, the introduction of Promoted Products, Promoted Tweets, and Promoted Trends raised the site’s 2010 advertising revenue to roughly $50 million, as reported by eMarketer, yet the company still operated at a loss in 2010. Projections suggest the company’s revenue might triple to about $150 million this year, but that remains speculative. Ultimately, it hinges on whether advertisers choose to continue utilizing Promoted Products.

I’m rooting for Facebook. The potential merger could result in the largest time-wasting enterprise the world has ever encountered.

Stay tuned…

by John Jackson

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