Why a Twitter Acquisition by Apple Makes Little Sense

Mathew Ingram at GigaOm highlights a scenario by financial analyst Barry Rithotlz in which he argues that given Apple’s massive hoard of cash, it should buy Twitter. Following Apple’s successive failures (or perhaps delayed successes?) in trying to get into the social scene, its deep partnership with Twitter is giving both Apple and Twitter a leg up in the social scene. Twitter CEO Dick Costolo revealed that it had a massive increase in the number of sign ups following Twitter’s integration into iOS.

A Twitter acquisition would actually put Apple in a difficult position with regards to its on and off negotiations with Facebook. It would also force Apple to attend to other mobile platforms especially its iOS arch nemesis, Android. While it’s not unheard of that Apple makes software for a competing platform, cue iTunes, Safari, and QuickTime for Windows, it did so to acquire a strategic advantage.

Apple’s largest acquisition so far is the purchase of NeXT, Steve Jobs’ other computer company, at over $400 million back in 1997, followed by Israeli flash chip maker Anobit at $390 million in February of this year. Twitter’s value is apparently $9 billion. While Apple certainly has the money, other factors would significantly be more important.

Apple had been trying to get in bed with Facebook for years but the two companies apparently kept clashing during the negotiations especially after Facebook released an app for the TouchPad ahead of the iPad despite the iPad app having been long awaited.

It’s difficult to tell what Apple would do with Twitter if it does plan to acquire the company but it will certainly be a very delicate deal. It will almost certainly jeopardize the negotiations with Facebook. Apple’s integration of Twitter in iOS is a big win for Twitter, but a Facebook deal would mean a huge win for Apple, so it may not make sense for Apple to acquire Twitter.

Additionally, Apple may not want to deal with having to support software for Android. Anything that Apple does so far has been to position itself as the more desirable platform or product. Supporting an Android app hardly brings anything of value to Apple, aside from advertising money and expertise, which will not be very significant as far as Apple is concerned, although it might be able to somehow tie that in to its unpopular iAds advertising platform.

A Twitter acquisition will not be an easy deal for Apple and it might be more beneficial for both companies to maintain their current relationship as separate entities, although Apple could always make an investment in Twitter the way it does with Akamai as an important backbone of its media delivery infrastructure.

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