Rumors Resurface about Google, Facebook Buying Twitter

Google and Facebook allegedly discussed acquiring Twitter for $8 billion to $10 billion, a deal that would give either company a powerful social communications tool with 200 million users.

Google, Facebook and others continue to be interested in buying Twitter, a microblog service whose value increased with the introduction of ads linked to short messages in 2010.

Google and Facebook, whose rivalry has grown more intense as the social network has lured eyeballs from the search giant, have reportedly broached the notion of acquiring Twitter for $8 billion to $10 billion, according to The Wall Street Journal.

Twitter declined to comment on what it called "rumors." Still, those are lofty valuations for a company that earned $45 million in 2010, mostly from its fledgling ad business.

It's also more than double the company's estimated worth as of December, when it banked $200 million in venture capital funding, valuing the company at $3.7 billion. Andreessen Horowitz also reportedly just pumped $80 million into the company.

The pricey offers are predicated on potential upside, not unlike that of local deals Website Groupon, which spurned a $6 billion buy-out offer from Google to take $950 million in funding to grow.

Twitter has 200 million users and, according to eMarketer, is on pace to make $150 million in advertising, or triple its 2010 earnings, in 2011.

The ad revenue could be greater if Twitter continues to successfully drive its Promoted products suite and launches its self-serve platform en masse this year.

Launched last April under the aegis of Twitter CEO Dick Costolo, Promoted Tweets allows companies to pay for tweets hawking their products on a CPM (cost per mille) basis, or per thousand people who see their tweets.

Promoted Trends features a company or product name in the trending topics on Twitter. The newest ad offering is Promoted Accounts, which are suggested based on a user's public list of whom they follow. All these products have proven their worth.

One would be tempted to take the acquisition talks lightly, given Twitter's management-including co-founders Evan Williams and Biz Stone, as well as Costolo-has pledged to build an independent business, perhaps becoming a $100 billion public company, according to the Journal.

As for the suitors, one could easily argue Google is in much greater need of a social-communications tool than Facebook. Google's + 1 social-layer service is allegedly months away from emerging, and Facebook continues to build user engagement, beating out Google, Yahoo and Microsoft in time spent online in 2010.

Facebook isn't in dire need of generating traffic or a social-communications tool, so the smart guess is Facebook is talking just to up any prospective bid from Google or anyone else.