The web sprang into life last week with the news that Google tried to buy social firm Snap for a whopping $30 billion last night, ahead of Snap’s most recent funding round. Whether Evan Spiegel should have sold is a matter for intense debate: Snap has since lost around half of its market capitalization, and has slipped to around $15bn.
Independent Spiegel may be lauded for resisting such a lucrative offer. And perhaps the tech industry is richer for having CEOs who can stand up against galactically-endowed corporate behemoths. Snap’s value even hopped up by around 2.3% on news of the attempted deal.
But Snap’s stand could have serious consequences. Google chairman Eric Schmidt may be an adviser to Spiegel. And the latter’s company has committed to spend $2bn on Google Cloud hosting across the next five years.
Google’s dominance has not arrived through much palliness, however. And last week it was reported the firm is developing a news product called Stamp–which would deliver mobile magazine-like design similar to that of Snap’s own Discover.
That news comes as Facebook continues to clone several of Snap’s key products, throwing Snap’s value and uniqueness into doubt. Spiegel’s firm is allegedly working to deliver more video content. It has built success from innovation and quirkiness, so few would doubt that its video foray will not be some sort of success.
But competing in Google and Facebook’s market at the same time is a tall order for Snap. And without the fortune of Google to help it swallow and co-opt more and more technology brands, it could soon find itself faltering.
Spiegel and co-founder Bobby Murphy have engineered almost entire control over Snap’s company direction, and can veto any public calls for an acquisition to go ahead. Having refused to sell at twice market cap, it looks unlikely the duo will green-light any future offers. The firm’s stock price has increased the past couple of days, and earnings due this week will provide a crucial look at Snap’s performance.
Spiegel and Murphy’s refusal to sell could be a boost for one of Silicon Valley. It could also spell the company’s doom.