Twitter is quickly becoming tech’s billion-dollar hot potato with Salesforce being the last to decline buying the 140-character social media platform. This could open the door for a potential bid from Japan’s Softbank, which has previously stated interest, has money to spend and incentives to acquire it.
Here are some of the reasons why Twitter could be turning Japanese.
Twitter and the hot potato game
About a month ago, Twitter started approaching several big tech companies about a possible sale or merger. To quickly run through the ensuing will-they-won’t-they, companies like Disney, Google and Microsoft all took a good look at Twitter, then all came back with a ‘no thanks, not interested.’ Salesforce has now joined the list of naysayers. Since then, Twitter’s stock has been moving in a direction that mimics a brick’s relationship with gravity.
Japan loves Twitter
Part of the problem for Twitter is that its active user growth has stalled. At the same time, it is struggling to make money, not to mention compete with the social media that aren’t Facebook, who doesn’t/shouldn’t count. As seen in Vincenzo Consenza’s great maps of the world of social networks, Facebook pretty much rules any part of the world that isn’t Russia or China. Worryingly for Twitter, they also show how Instagram is steadily pushing Twitter out of the No. 2 spot in many countries.
However, the world maps also show something very peculiar about Japan. Here, Twitter is bigger than Facebook. 35 million Japaneseactively use Twitter at least once a month, compared to 25 million active users for Facebook. The fact that Twitter is so popular in Softbank’s home market is one reason why Softbank could buy it. The underlying reason is data.
140 digits of Kanji – and the U.S.
Twitter’s 140 character-limit has been both its strength and weakness in places like North America and Europe. In Japan, the picture is a bit different. Japan uses three alphabets. One of them is Kanji, where a single character can represent a whole word. That means that a single Japanese tweet can hold about as much data (or information, if you’re feeling generous) as the beginning of this article, until the ‘Japan loves Twitter’ sub-header. This information can be used to analyze user behavior, shopping preferences and other kinds of business intelligence. Twitter has already been eyeing Japan as a promising market for its business intelligence solutions, and Softbank would be able to use the data and analysis in relation to its other business areas.
While the home market remains massively important to Softbank, the company has also been making inroads—and acquisitions—in many other markets across the globe. Twitter’s mountains of data from people all around the world could provide valuable insights, and one area that would be of particular interest to Softbank is the U.S.
Money to burn
Then there is the fact that Softbank seems to have a mountain of cash to play with. The company recently announced that it was going to launch a $100 billion tech fund together with the Saudi Arabian government. Incidentally, Saudi Prince Al-Waleed bin Talal bin Abdulaziz is the second-largest single shareholder in Twitter. Softbank spent the summer buying UK chip manufacturer ARM for $31 billion and just last week led the U.S. biotech company Zymergen’s $130 million Series B round. Pretty good shopping for a couple of months.
The acquisitions show how Softbank is not afraid to use M&A to move into new business areas. One area that it hasn’t really invested in so far is social media, but Softbank CEO Masayoshi Son has previously stated that it would be getting into social media one way or the other. Now the former COO of Softbank, Nikesh Arora, said as recently as last year that the company would be interested in acquiring Twitter “at the right price.”
While these months saw Twitter’s stock rise on the back of the sale rumors, peaking around $24 giving Twitter a value of $25 billion, it has since fallen sharply. Today the stock price is about $16.90, making Twitter worth $12 billion. The question then remains if that is the right price for Softbank to get into social media – and if Twitter is the right way to do so.