Why The World Is A-Twitter With Acquisition Rumors

(MoneyWatch)  Google, Microsoft and Apple have all been rumored to be poking around at Twitter, the hot new social media sensation, with good reason.

Meanwhile, Google, Facebook and Twitter have been playing follow-the-leader with each other. Google recently introduced Profiles in an attempt to create its own social network before Facebook locks down every friend-seeking user on the Internet; Facebook, frightened that it's being eclipsed by Twitter, has reconfigured its user interface to more closely resemble the so-called micro-blogging phenomenon that has even Oprah in its thrall; and Twitter is improving its search capability in order to rival Google's.

Given that Facebook is a place for friends to gather in virtual space (and, since shopping is considered an essential social experience, maybe spend some virtual currency together), while Twitter is a place to broadcast instant news, and Google is a place to search for a nearby eatery or the answer to a trivia question, it's fair to ask why they're all jealously eying each other. The reason is that, while this might not be a winner-take-all situation, potential customers have a finite amount of time to spend online; thus, each company is vying to be the one place people land when they fire up their browser. That's the strategy behind iGoogle, the reason that Twitter hired Google's former design chief and that Facebook is wooing developers to its site.

Microsoft, which has been steadily losing search share to Google, and seems to have let the entire Internet thing pass it by, would gain instant street cred with an acquisition of Twitter, while Apple, which has so far flubbed its efforts at social networking, might hope to create an online hub for its horde of aficionados.
Of course Google, with a $117 billion market cap and nearly $9 billion in cash, is hardly trembling in its search boots at the prospect of a challenge from Twitter. But its success is fresh enough for its leadership to remember how quickly the tables can be turned on the market leader. Nothing says more about Google's power than the fact that its brand has become a verb ("to Google"). But it realizes that people are now "Tweeting" -- unless they're busy "Friending" someone on Facebook (not quite a verb form of the noun, but it's close enough).

As Dan McCarthy blogged:

What matters to Google is that content is getting organized in other places with a higher degree of personal intervention and intelligence. If Twitter and Facebook make a choice to further organize and leverage this content they can potentially disintermediate Google.

As Wikinomics editor Brian Gillooly noted, "Salespeople say that the cost of acquisition (or reacquistion) of a customer is higher than the cost of retention; the same logic likely holds for retaining audiences on social networking sites." The one metric financial analysts ogle where Google is concerned is its cost of acquiring search customers.

I'm not suggesting Google is going to acquire Twitter -- even if it wanted to, Twitter says it's not for sale -- but the search giant will certainly try to keep up with the Stones (and Williames and Dorseys), not to mention the Zuckerbergses.