Could Google or Tencent Beat Facebook to Buying Snapchat?
The mobile messaging service — which lets users exchange photos and video that disappear after a few seconds — is being courted by Facebook. It has long been an app that CEO Mark Zuckerberg lusted after.
Thursday afternoon brought another turn of the screw. Valleywag reported that Google could also possibly be considering taking a run at Snapchat, matching Facebook’s $3 billion to $3.5 billion offer. Google and Facebook aren’t commenting, but sources said that Google has indeed expressed some interest in a deal. Tencent, the Chinese consumer Internet company, has also been eyeballing the company, according to sources.
I don’t know Snapchat’s fate, and from what I’ve been told, Snapchat CEO Evan Spiegel himself is unsure of it. But it got me thinking — whether they’re in the running or not, which companies are most likely to go after the fast-growing Snapchat?
Let’s go down the list.
Zuckerberg wants Snapchat bad. So bad, in fact, that he tried — and failed — to clone the app outright. Sources familiar with the matter have described the Facebook CEO as “obsessed” with Snapchat and the idea of ephemeral messaging. They told AllThingsD that he has made multiple offers to acquire the company, some for more than the $1 billion he paid for Instagram last year.
Likelihood: Very High
Google may have Google+, but it knows it can’t hold a candle to Facebook or even Twitter when it comes to social mobile apps. Buying Snapchat could give Google immediate overnight relevance in social, while simultaneously dealing a blow to Facebook. Not to mention that $3 billion is a pittance for the highly profitable company to spend on an acquisition.
This is a good fit. Spiegel has described Tencent as a “role model” for Snapchat in terms of revenue models — potentially alluding to in-app purchasing possibilities for the startup.
And Tencent is indeed interested — if not in a full acquisition, then at the very least in a large strategic investment.
Likelihood: Very High
A dark horse, and at this point not an entrant as far as I’ve heard. Still, CEO Marissa Mayer has the cash to make the deal, and is no stranger to acquisitions. Plus, an acquisition of Snapchat could help to both bolster Yahoo’s mobile efforts — which are lacking — and burnish its less-than-cool image — sort of like buying Tumblr did.
Still, there’s no evidence to my knowledge that Yahoo has approached Spiegel or Snapchat about a potential acquisition.
After long considering killing off its direct-messaging feature entirely, Twitter woke up last year and figured out that people actually love sending private messages. Another satellite app acquisition — similar to the one it did with Vine — could make sense.
Problem is, the figures being thrown around for Snapchat now are way out of Twitter’s price range. They’re nearly double the amount the company just raised in its initial public offering. At this point, Snapchat is far too rich for Twitter’s blood.
Likelihood: Not at all likely
A caveat to many of the past week’s stories on this topic: It’s possible — if not likely — that the escalating prices and number of companies involved is largely due to jockeying from Snapchat insiders who stand to make hundreds of millions on the deal. Read each new report with that in mind.
Another thing to remember: Spiegel intends to raise yet another round of funding for his company at a hefty valuation. If another round goes through, there will likely be a secondary component to it, in which Spiegel and co-founder Bobby Murphy could sell some of their own shares and cash out. That means the two could still continue to go for broke and build out their own company rather than sell to the highest bidder, while having the insurance of already having taken some money off the table. And according to multiple people close to Snapchat, Spiegel and Murphy very much want to build out the startup into a full-fledged company.
Bottom line: If Snapchat keeps growing — and sources said that is indeed the case — Spiegel isn’t under the gun to make a decision today. If all goes well, his acquisition offers — and the high prices they command — likely won’t disappear.