Today’s news that Microsoft is buying LinkedIn for $26bn has taken a lot of people by surprise. The next obvious question is who will buy Twitter, could it be Apple or Google?
The acquisition of LinkedIn by Microsoft, however surprising, makes perfect sense in terms of the kind of customer base Microsoft has always warmed to: the professional elite.
However, $26bn is an enormous outlay when you consider it amounts to more than a quarter of Microsoft’s annual revenues.
Drill further strategically and you will see that slivers from previous Microsoft acquisitions like that of Skype and Sunrise interlock potentially with a living and breathing dynamic platform or marketplace that may yield all kinds of insights and join business people together digitally. Consider it super-charged CRM, an evolved version of HubSpot or Intercom’s core product offerings, perhaps.
Time will tell if it delivers Microsoft CEO Satya Nadella the strategic turnaround he has in mind for the software giant or if it could it be another disaster like the acquisition of Nokia for around $8bn by previous CEO Steve Ballmer that Microsoft had to subsequently write-down.
But now that those birdies have come home to roost, the next big bird that could be fattened for the market is Twitter, which has been struggling in recent years.
Is Twitter ripe for takeover?
Despite its lack of success at growing its audience – its daily users were recently surpassed by Snapchat – Twitter has a loyal and dedicated audience of around 400m users and is a veritable hosepipe of information and analytical insights.
But last year it lost its CEO Dick Costolo, saw the return of Jack Dorsey and has been peddling fast to make sure it is on top of trends such as video and photo content. But it has seen significant leadership departures and has yet to deliver a user interface that cuts through the fast moving Twittersphere to make discernible sense.
Twitter’s life on the public markets has been harsh and exacting since the company peaked at $73 in December 2013, valuing the company at $50bn at the time.
Today, Twitter has a market cap of $10.4bn based on a share price of just under $15.
It’s ripe for the takeover.
But who will buy it? In one corner you could see traditional media stables like Rupert Murdoch’s News International licking their lips.
But what about Silicon Valley’s finest? Like Apple or Google?
The Apple scenario
Think about it, apart from some social features in Apple Music and handy notifications features in OS X, Apple has never set foot in social media.
The company is dead-focused on finessing its hardware ecosystem and at the same time building out the apps economy; last week it revealed it is changing the split from the sale of apps to 15/85pc for developers that hold on to their subscribers for more than a year.
But Apple is also facing declining sales of iPhone devices and the market is clamouring for Apple to reveal its next big trick in terms of hardware, be it a TV or an electric, self-driving car.
But what if the next move was social? A tantalising thought.
The Google scenario
And then there is Google, now a subsidiary of its parent company Alphabet, which briefly surpassed Apple in market cap recently.
Google is a lot of things, but its foray into social networking in the form of Google+ has been a marked disaster. While it has yielded technical marvels such as Google Hangouts and Photos, user engagement has been poor and hanging out in Google+ is a bit like meeting mates for cocktails in the Mojave Desert.
Google is trying to stay on top of all the trends in advertising – mobile, video, web – and the missing link is social.
It has the cash and it has the expertise to turn a buy of Twitter into a paradigm shift that could pay off handsomely in steaming a path into the next level of advertising: programmatic driven by analytics.
If the acquisition of LinkedIn surprised anyone, the surprise should be that no one bought Twitter first.