Social media platforms have traditionally been highly sought after technology assets. Microsoft acquired LinkedIn for €19bn in June, Yahoo bought Tumblr for €866m back in 2013 and Facebook spent €704m on Instagram in 2012. Facebook also launched the biggest technology IPO (initial public offering) in 2012 when its market capitalisation peaked at €95bn.
This makes the recent news of Twitter struggling to find a buyer all the more remarkable. Rumoured acquirers Disney, Apple and Google have all decided not to bid. Salesforce CEO Marc Benioff also claimed they had ‘walked away’ from the process. So why does a company whose share value reached €18bn in September, struggle to sell?
Firstly, it is perhaps worth noting that Twitter has never been profitable. TIME reported back in February that the company had lost a grand total of €1.8bn since its launch a decade ago. Yet many tech giants have bought unprofitable companies, for example Facebook bought WhatsApp despite the company never having made a penny.
Twitter’s user base is more of an issue. The platform has around 310 million users. But this pales in comparison with Facebook’s 1.1 billion. Even Snapchat, a much younger company, already has 150 million users. For this investment to work an acquirer needs to widen the user base, but the company has shown little innovation since it was founded. It has recently added live-streaming video however many argue this is not enough to significantly broaden its appeal.
Interestingly what is emerging as an even bigger issue is Twitter’s negative image. Whilst it has admirably aimed to create a real-time online feed that can connect people globally without pre-emptive mediation by editors or algorithms, this has come with a significant dark side. Trolling has become synonymous with Twitter and abusive comments on the platform have hit national and international headlines. In fact, Disney allegedly pulled out of a deal because of concerns around Twitter tarnishing its family friendly image. Whilst Twitter continues to assert that it is fighting the issue, it appears that it may be too little too late. One report last year suggested that 88% of abusive mentions on social media happen on Twitter.
As speculation mounts that the business is on the verge of implosion it starts to look increasingly likely that the hatred that it has failed to curb will be its undoing.