Nerdy Google considered buying teen sensation Snapchat as it has failed at social time and time again. According to Business Insider’s Alex Heath, informal talks was held by the search giant with Snap where an offer of $30 billion was floated in 2016 before Snap’s last funding round, and just before its IPO this year. That offer was apparently an open secret inside Snap, and was on the table after the IPO too.
But, Evan Spiegel, Snap’s notoriously independent CEO, has shown no interest in selling out to Google or anyone else. This he did despite the startup’s market cap slipping to around $15 billion after soaring as high as $30 billion when it IPO’d in May.
The news of Google’s interest in Snap helped Snap’s share price climb around 2.3 percent today. The rise came after weeks of decline due to lockup expiration finally allowing insiders to sell stock, and strong growth for Facebook’s Instagram Stories and WhatsApp Status clones of Snapchat.
Snap told TechCrunch that these rumors and Google declined to comment to Business Insider. There's a possibility that Google’s interest was very preliminary and likely never rose to Snap’s higher ranks. It is also standard for startups to explore alternative paths before taking significant funding rounds or going public.
Google declined to comment to Business Insider and Snap told TechCrunch “these rumors are false.” It’s possible that Google’s interest was very preliminary, and likely never rose to Snap’s higher ranks. It’s standard for startups to explore alternative paths before taking significant funding rounds or going public.
Snap CEO Evan Spiegel (left) and his advisor and Google Executive Chairman Eric Schmidt (right)
After the 2016 talks went nowhere, Google’s growth-stage investment fund Capital ended up investing in Snap, and this contributed to the round valuing the “camera company” at $20 billion.There have been a long friendly disposition between the organizations. Eric Schmidt, Google chairman, was an adviser to Spiegel, Snap runs Google’s office software suite and Snapchat has committed to spending $2 billion on Google Cloud hosting over the next five years.
Snap looked unchallenged in the full-screen Stories social media game at the time of the May 2016 choice to go with raising money instead of being acquired. But in August, Instagram’s soon to be wildly successful Stories clone launched, has diverted growth, mind share and advertisers from Snap ever since.
It will be very beneficial if the both companies come together. According to TechCrunch, Google would get a top social property to make up for its Google+, Buzz and Wave flops. It could also reap data about people’s social graphs, where they spend time and what topics they care about, allowing it to improve its ad targeting and measurement.
Snap would gain a deep-pocketed parent that could provide extra capital to make acquisitions and build out its R&D-heavy augmented reality technology. Machine vision and image recognition algorithms from Google Search could unlock information about what’s in everyone’s Snaps. Snap’s ad revenue could be boosted by Google’s advertising expertise and connections.
Google Glass and Snap Spectacles hardware efforts can be aligned to build a powerful but appealing AR device, if they join forces. But Google’s open, engineering-driven culture could clash with Snap’s secretive, design-driven culture.
But the major problem is Spiegel. Snap’s voting rights have been configured by Spiegel and his co-founder, Bobby Murphy, in order to give them full control over the direction of the company, and denying public backers any say. Hence, investors could not be compeled to take the $30 billion offer which is even double Snap’s current market cap, even if they would have loved to. Spiegel, who is known for following his gut over outside advice, famously rebuked Mark Zuckerberg’s offers to buy Snapchat.
As reported by TechCrunch before the IPO, to bet on Snap is to bet on Spiegel — for better or worse. His sixth sense for product produced ephemeral messaging and Stories, while his eye for acquisitions gave Snap Bitmoji and AR face filters. But with Snap drowning under Facebook’s competition, Spiegel’s renegade style could see the company refuse life preservers even as it sinks.