Salesforce, the last known suitor for Twitter, last week officially bowed out of the running for an acquisition deal, a move that forces the embattled company either to look for a new savior or find some internal answers to its lingering inability to find a winning growth strategy.
Salesforce walked away from the deal because it wasn’t the right fit, CEO Marc Benioff told the Financial Times.
The FT report is accurate, Salesforce spokesperson Chi Hea Cho told the E-Commerce Times, but the company would not comment further.
Frenzy Flames Out
Salesforce was one of several technology and media firms reportedly vying to scoop up Twitter after it signaled interest in a sale to outside investors, having struggled in recent months to grow user engagement and develop a long-term profitability model.
Google, The Walt Disney Company, Microsoft, and others either hired investment banks or entered preliminary discussions on a possible deal, according to multiple reports published over the past month.
Disney may have been drawn toTwitter as a distribution outlet for streaming digital content. The company reportedly is concerned about losing viewers as millennials increasingly move away from cable television and traditional broadcast networks in favor of online streaming and other viral content.
Twitter recently made a strategic shift in its focus toward live video, taking advantage of its new capabilities in opening up bandwidth and responding to the increasingly important role that live video plays with its biggest rival, Facebook.
Twitter last month debuted a live stream of Thursday Night Football under a new agreement with the National Football League.
Salesforce had considered the addition of Twitter’s customers as a quick way to grow its enterprise software customer base. The strategy, in part, was designed to counter Microsoft’s US$26 billion acquisition of LinkedIn.
Microsoft, by some accounts, is using LinkedIn as a senior level recruiting platform to draw potential customers to its Office 365 suite and Dynamics platform.
The Shoe Doesn’t Fit
“I suspect that Salesforce finally recognized that the cost of acquiring Twitter, combined with the complexity of managing a global social network of this magnitude, outweighed the business benefits it would have produced for Salesforce and its customers and partners,” ThinkStrategies Managing Director Jeffrey Kaplan told the E-Commerce Times.
Salesforce has binged on acquisitions in recent months, picking up Demandware for $2.8 million, BeyondCore for $110 million, Krux for $700 million, to name a few.
Salesforce’s decision to drop consideration of a Twitter acquisition reflects “deep uncertainties around any potential synergies” between the companies, said Tim Mulligan, senior analyst at Midia Research.
“Twitter in many ways is an echo chamber rather than a customer acquisition tool,” he told the E-Commerce Times.
It is great for existing users, Mulligan said, “but increasingly irrelevant for nonusers who make up the overwhelming majority of the mainstream digital audience.”
Access to its highly influential user base will be of value to the right company, he added, but acquiring the firm doesn’t make sense from a standpoint of fueling a growth strategy.