AP
At first, this idea sounds silly because
But it's not completely crazy.
First, as Arrington notes, Google has expressed interest in owning Twitter before, back in 2010.
The deal didn't happen, Arrington believes, because Google committed itself to Google+, its alternative social media platform to Facebook.
Now, Google+ runs far behind Facebook, Twitter, Instagram and the other social apps, by almost any metric - so Arrington argues that Google should bite the bullet and make a big buy, the way it did with YouTube back in 2006.
He also notes that the acquisition might be relatively cheap, because Twitter has priced its IPO at $17-$20 per share. That values the entire company at a maximum of $14 billion, according to Bloomberg, which expressed that cheapness in terms of a multiple of annual sales:
- Twitter: 9.5 times 2014 sales.
- Facebook: 12.9 times 2014 sales.
- LinkedIn: 13.4 times sales.
Google could step in with an offer of $20 billion - giving Twitter's current equity holders a nice premium. Google has $15 billion in cash in the bank, and makes about $15 billion in revenues every quarter - so with a little bit of financing this deal is well within Google's reach.
Arrington is actually wrong about the current purpose of Google+, however. No one really believes it's going to become an alternative to Facebook or Twitter. Arrington knows the current purpose of Google+ but doesn't seem to think it's significant:
Google+'s user numbers are juiced simply because Google forces the product on everyone, and if you use Google to authenticate yourself to third parties, you are using Google+.
That actually makes Google+ incredibly useful (to Google), not useless. Google right now is working on a plan to replace the tracking cookie as the way that advertisers target people on the web. You can bet that the new system will sync with your Google+ ID, and therefore with your Gmail, YouTube, Calendar and all your other Google services. In other words, Google+ could become very important to the way that all users are targeted with ads on the web - which is where Google's $15 billion in revenue actually comes from. Even if you don't use Google+ except as a login, the fact that your Google+ login might be generating a ton of data on your web usage is incredibly valuable to Google.
Twitter, even, may be forced to use the new Google cookie if it becomes widely adopted as a new standard by advertisers.
Twitter could use Google's adtech services as its back end for producing ad revenues. Twitter backed by Google across the wider mobile and desktop web sounds much more powerful than Twitter plus MoPub. Especially in light of the fact that MoPub has only $6 million in revenues.
Twitter is also sorely in need of more data. Right now, advertisers can target users based on keywords in their tweets, and based on follower lists. But Twitter knows very little about its users compared to Facebook. You can sign up to Twitter with an email account and a fake name. You don't even have to tell Twitter your location.
Now imagine there was ad targeting on Twitter powered somehow by Google's vast trove of user and search data.
Suddenly, Twitter powered by Google looks a whole lot more interesting than Twitter going it alone, trying to play catchup to Facebook and Google.