Google-Twitter deal: good or bad ?

Techcrunch annouced that Google is in talks to acquire Twitter. While usually these "early stage talks" don't end up into a deal, would this be good or bad news. Obviously it depends from which perspective:

Twitter as a company: very bad
There is really a strong case for Twitter being able to make it very very very big: not only is Twitter the market leader in a new kind of fast growing web usage but also Twitter has the potential to perform a paradigm shift in terms of business model (more on this in another post later). Wouldn't it be a pity not to pursue this adventure. Under Google, Twitter will be just another service among others and will not have all management attention. This will hinder it's development vs. a standalone option (provided they have enough funding until it becomes profitable).

Twitter's founders: ???
It depends on what they want to achieve, on what is their objective: make big money now for sure or building maybe a major company in the web sector ?

Twitter's VC investors: very good
They'll make a hell of a lot of money with this sale... and in those days where VCs are craving for big exits (see Q1 09 numbers here) to show nice numbers to their LP's, it must be one of their only major exit opportunity.
I don't know if Twitter's VC can get a deal through without management approval but this could be (and I say "could be") a good example on how VCs may destroy a company's future due to misalignment of interests and timeframes.  

Google: good
Even if the price tag is very high or even way above Twitter "fair" valuation, they are basically killing a serious prospective competitor in search and thus keeping their quasi monopoly... this has unlimited value for them.

MSFT/Yahoo: bad
Twitter could be a shot for those 2 to come back into the search fight they lost. I wouldn't be surprised if they started an acquisition battle.

Facebook: neutral to good
With it's new design becoming more Twitter-like, Facebook is clearly trying to get onto Twitter. If they can't buy it and that Google hinders Twitter development, they should be happy with this deal

The web sector: very bad
Google again maintaining its predominance in the sector... and the less competition in a sector, the less performance/service/quality/innovation/etc. for all users...

Personnaly, I vote against that deal...for the web sector and for Twitter itself.

Those were my first thoughts. What are yours?

UPDATE: here is an answer by Twitter that doesn't say much except for one sentence "Our goal is to build a profitable, independent company and we're just getting started".

Comments

[Mark MacLeod]

I don't think the deal will happen because of price even though it makes strategic sense.

I would love to see Twitter keep going as an independant company. With the amount of VC$ they have raised and with the signal Google has sent recently re: their appetite to buy (low) and why (waiting for prices to hit bottom), I don't see the deal happening.

[Wallen's]

@ Mark, that's a fair point. As I mentioned at the beginning of the post the vast majority of "early stage talks" don't yield a deal at the end for all sorts of reasons... most of which relate to non-business issues (at least this has been my experience in big corp world)

Regarding price I don't know the numbers both parties are considering but Google could have a higher wilingness to pay because they would benefit from a strategic premium by simply controlling a serious prospective competitor. It has done such "overpriced moves" for strategic reasons in the past, e.g., the $1bn AOL deal back in 2005 which was highly criticized at the time as being overpriced but that allowed Google to reach a tipping point in terms of search market share.

Having said that they could try to wait for further decline in market prices but by doing so they are taking the risk by leaving ample time for other bidders entering the play.

[Healy Jones]

If I were Twitter I'd be thinking mainly about my real potential for monetization. If I really believe that I have a legit business model that can take advantage of my huge user base then I'd be much less likely to sell. However, if I feel that my business model is wishy washy or subject to too much risk then $1 billion in cold hard Google cash sounds pretty sweet.

[Wallen's]

Fully agree with you Healy. My feeling is that they can have a monetization model that is solid. If not, then yeah, sell... indeed for cash.