Benner on Tech: Investors Love Twitter Rumors

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
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People are Talking About…

Twitter’s stock price rose about 4 percent yesterday on rumors that two different companies, including Google, are thinking about buying the company. Basically, rumors that Twitter will be managed by an entirely new set of executives boosted its valuation more than anything the company has done lately. 

This isn’t the first or last time that rumblings about a possible Google-Twitter deal will surface. They’ll end when Wall Street comes to terms with the idea that the company will never be just like Facebook. Or they’ll end with Google actually purchasing Twitter. In short, these rumors may never end.

If you find these rumors interesting, you should read the Guardian’s breakdown of just how expensive this deal would be for Google.

Twitter is currently valued in the region of $33 to $34bn … For Google to buy Twitter now it would have to pay a healthy premium over and above the current market value, which would put it in the region of $50bn. Google has a sizeable cash stockpile of over $60bn.

Would it really be a great idea for Google to spend five-sixths of its cash on a platform with relatively slow user growth that’s still trying to figure out its business plan? It would be a horrible idea. And paying with a lot of stock or borrowed money in this very hypothetical instance is only a good idea insofar as it’s better than blowing your entire cash load on a single acquisition.

The latest Google-Twitter rumor also gives us yet another reason to compare Google to Microsoft. Business Insider smartly points out that when Bing flopped, Microsoft tried to buy the number-two competitor Yahoo to compete with Google. So since Google’s social network has flamed out, the thinking goes that it might want to buy the number-two company to better compete with Facebook. (As it turns out, Microsoft was saved from what would’ve been a disaster of a Yahoo deal. As former Microsoft Chief Executive Officer Steve Ballmer said at the time, "Sometimes you're lucky.")

And say that these rumors do come true … I wonder what happens to companies like Dataminr that built businesses on top of Twitter’s data firehose. A company like Google might want to keep selling the data, but it also might want to do something with the data itself. It might not hurt those companies, but who knows? I do, however, doubt that any of those startups are stressing about it too much right now.

White House Hacked

Russian hackers have been linked to the breach of a non-classified White House computer network. Officials are emphasizing that no classified information was compromised, even though this attack is really sophisticated. This is the sort of thing that should freak people out because attackers got into a White House network. But it’s also a reminder that all of the big superpowers are playing cyberspy and cyberhacker all of the time and that there are no codes of conduct for this war.

Ventureland

Dropbox announced a deal with SoftBank C&S to bring Dropbox for Business to one million Japanese users. (Tech in Asia) Jason Shah, the CEO of the meetings management tool Do, argues that Dropbox has to own the document collaboration space because storage is commoditized and files are being replaced by cloud-based documents.

Ride, a carpooling app from Uber's first technology chief Oscar Salazar, just kicked off. It’s majority owned by TPG Growth, an Uber investor. (the Wall Street Journal)

Square is getting into e-mail marketing for small businesses. (Fortune)

Uber is becoming a standard business travel expense, accounting for about half of rides tracked by Certify, a big provider travel and expense management software. Lyft rides accounted for 1 percent. (Bloomberg)

Concierge apps like Instacart and Magic could end errands. Well, sort of. “Even if tech’s men-children are the ones dreaming up these apps, my suspicion is that women have a lot to gain from them -- or at least the privileged women with enough disposable income to use them.” (New York Magazine)

People and Personnel Moves

Romain Voog, the former managing director of Amazon in France, will become chief executive officer of Global Fashion Group, a fashion website that came out of Rocket Internet. (Bloomberg)

Companies

Apple employees are getting an elegant new uniform so they can better sell luxury watches. Their bright blue T-shirts will be replaced by navy blue T-shirts. (Mac Rumors)

Google is working on a product that connects users of Google search with local service providers such as plumbers and electricians. (BuzzFeed) The FTC is reviewing complaints about the amount of ads on YouTube’s channel for kids. (Wired)

Informatica is going private in a deal with the private equity firm Permira and the Canada Pension Plan Investment Board in a deal valued at about $5.3 billion.

Microsoft could be working on a payments tool. (Ars Technica)

SoftBank subleased both office buildings it had leased in Silicon Valley, and some employees are going back to Japan as the company downsizes its presence in the area. (the Wall Street Journal)

Yahoo is reorganizing its top executive ranks, with Simon Khalaf, who heads Flurry, expected to take on new responsibilities that could include the Yahoo.com home page. Tumblr founder David Karp has been asked to report to a vice president in an effort to better integrate the blogging tool into the company. (the Information)

Security Watch

The U.S. kept secret records of billions of Americans' international telephone calls nearly a decade before the Sept. 11 attacks.  (USA Today)

Trustwave, North America’s largest independent security services company, will be bought by SingTel, a Southeast Asian telecommunications firm. (the Wall Street Journal)

Media Files

Sling TV’s streaming fail during the Final Four shows that over-the-top isn’t ready for prime time when it comes to airing big events. (Wired)

Tidal was trying to sell itself as the music streaming service with exclusive content, and then fans ruined it all by posting those special songs and videos on YouTube. (Digital Music News)

HBO badly wanted to win the streaming wars, but the arcane and crappy code used for HBO Go stood in its way. (Fast Company)

News and Notes

Silicon Valley’s elaborate perks weren’t really designed with parents in mind. Some workers say the culture is actively unfriendly to families. (the New York Times)

Drones are being used to herd sheep. “Most [sheep] seem to respect the drone, though some just look quizzically until it is ‘a foot away from them and then they realize, Oh crap. I got to run.’” (the Wall Street Journal) They’re also being used as big, flying billboards. (MarketWatch)

Female engineers work best in environments where there are other women. (Science News)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the editor on this story:
Maria Lamagna at mlamagna@bloomberg.net