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Amazon should buy Twitter.
One year ago, when Twitter was out looking for a new home, Amazon wasn’t really mentioned as a possible suitor. But many people — myself included — think Twitter will eventually have to sell. After years of little user growth and no profits, it’s clear that the company needs a larger, more stable parent to protect it from the pressures of public-company life.
Amazon could be that larger, more stable benefactor.
The current state of play: Twitter may be the most relevant it’s ever been, thanks in part to President Donald Trump, who uses the service daily to make pronouncements that end up destabilizing financial markets as well as world affairs. He has stoked political tensions, bickered with other politicians and created drama with other nations. (Hi, North Korea!)
Trump aside, there are other reasons, though unproven, for why Twitter might look appealing to Amazon. It’s still the best platform for real-time search (which is why a lot of Google searches now show tweets), and while Twitter hasn’t perfected its search product, there is a lot of potential. Twitter hasn’t figured out social commerce yet, either, but perhaps Amazon could make it work.
There are a lot of other reasons, which we get to below, but before that, let’s talk money. Amazon could easily make it work. Even at a very high 30 percent premium, Twitter’s takeout price would be around $16 billion. And while Amazon had $15.4 billion in cash at the end of June, it could offer stock plus cash. Or it could just borrow the funds outright, as it did when it bought Whole Foods for just under $14 billion in June.
Why should Amazon buy Twitter? Here are five reasons:
Advertising
Amazon has a growing advertising business, and Twitter is an advertising company. Twitter hasn’t figured out direct-response advertising the way Google and Facebook have, but matching Amazon’s purchase and search data with Twitter’s data around people’s interests is a fun idea. It could provide an immediate (though relatively small) boost if Amazon decided it wants to actually compete with Facebook and Google for marketing dollars, and Twitter’s real-time search data could prove valuable. Amazon is competing just fine on its own: eMarketer projects that Amazon’s U.S. digital ad revenue will surpass Twitter’s this year, but adding Twitter would give Amazon much more data on mobile users.
Live video
Twitter wants to be the best online destination for live video, a part of its push to distribute real-time news and information. The problem is that Twitter doesn’t have very good live video content. Many of its deals are for video that probably wouldn’t find a home anywhere else. Amazon, on the other hand, has some amazing content, including original TV shows and NFL football, but a smaller overall reach, given that it has about 85 million Prime members. Twitter, which had 328 million monthly active users as of June, could offer Amazon additional reach for its content, especially for mobile viewers, and offer a built-in social experience for some of Amazon’s best shows. Plus, putting some Amazon videos on Twitter might help draw people in who aren’t yet Amazon Prime subscribers.
Customer service
Amazon is online shopping, but it doesn’t provide much in the way of connecting people to businesses the way that, say, Facebook is trying to do with Messenger and WhatsApp. Buying Twitter would immediately give Amazon another messaging option — and one that many people already use to try and get attention from brands and businesses. Imagine if Amazon could sell you a new television, then automatically connect you with the seller via Twitter DM for any troubleshooting, receipts or exchanges. Twitter already offers some business features for customer-service purposes, but it has really underachieved there. Teaming with Amazon could help.
Media impact
If anyone is willing to pay for a media company with social impact, it may be Amazon CEO Jeff Bezos. He already owns the The Washington Post, which he bought for $250 million back in 2013. (That was a personal purchase, not an Amazon purchase.) He may believe Twitter’s social and cultural value is worth preserving — plus, Bezos actually tweets. Potential bonus: The Post was not profitable when Bezos bought it, but it turned a profit in 2016. Without the pressure that comes from a publicly traded stock, perhaps Bezos could do the same for Twitter.
Amazon can be patient
Some believe that, more than anything, Twitter would benefit from some air cover while it gets things figured out. Imagine if Twitter didn’t need to report earnings every three months, and if the service was instead measured by its ability to influence the real world and disseminate information. Putting the company under Amazon’s umbrella would give Bezos time to figure out the best way to value Twitter without watching its business get ripped by the media and Wall Street every three months.
This article originally appeared on Recode.net.
