We keep hearing that Google floated an offer of at least $30 billion to buy Snap in early 2016.
Three people, including people inside and close to the company, separately confirmed they had heard the chatter and price tag, with one calling it an “open secret” among Snap’s upper ranks and certain tech industry circles.
Business Insider first heard the rumor of Google’s $30 billion-plus interest in Snap last year and heard further tales of the discussions from more insiders over the past several days.
It’s unclear how formal the discussions these insiders say happened may have been, but Snap and Google have long been close. Informal discussions between companies are frequent in the tech world, especially surrounding major events, like an initial public offering or a large round of fundraising.
Google’s initial offer would have been discussed just before Snap raised its Series F round of private funding in May 2016, valuing the company at $20 billion. CapitalG, the growth equity fund managed by Google’s parent company, Alphabet, ended up quietly participating in the round.
One person said Google and Snap also had discussions about a potential buyout just ahead of Snap’s IPO in March, and that an offer in the ballpark of $30 billion had been on the table since the IPO.
Chatter that Snap passed up a chance to sell to Google for at least twice its current value could be especially painful for investors and employees grappling with the company’s sinking stock. Snap’s shares are trading at around $12.50, and it has a market cap of roughly $14 billion, well below the $24 billion valuation at which it priced its IPO.
When asked for comment, a Snap representative told Business Insider that as far as formal discussions go, “these rumors are false.” Google declined to comment.
One possible motivation behind the rumors is that people are hoping Snap will get acquired. But the rumors have persisted for months, and they’re being talked about as fact both inside and outside the company by lots of people in a position to know.
Why a deal between Snap and Google would make sense
The two companies are already close. Sources say there is mutual respect between each side’s leadership, and Alphabet’s executive chairman, Eric Schmidt, is an early adviser to Snap CEO Evan Spiegel. Snap is one of the largest customers of Google Cloud and uses Google’s suite of apps internally.
Google has always wanted to own a hot social network and has tried several times with products like Google Plus and Google Buzz. In 2013, it was rumored that Google had tried to grab Snapchat for $4 billion as Spiegel turned down an offer from Facebook CEO Mark Zuckerberg.
Joining forces with Google could also help Snap better monetize its platform – Google is raking in the vast majority of all digital ad money – and it could be a good way for Spiegel to stick it to Zuckerberg, with whom he has had a rocky relationship.
And here’s why a deal may not work
27-year-old Spiegel would ultimately decide whether to sell Snap, and people close to the company say he’s fiercely independent and has shown no serious interest in selling. He is widely considered to be a visionary, contrarian CEO who values running his company in Southern California, outside of the Silicon Valley bubble where Alphabet is headquartered.
It’s also unclear how Spiegel and his roughly 2,500 employees would integrate into Google or Alphabet. Spiegel doesn’t strike us as the kind of executive who would like reporting to a boss.
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