Why is the acquisition of twitter by intel a failure?

In 2022, Intel announced that it would acquire Twitter for $40 billion, in a move that surprised many analysts and investors. The deal was supposed to create synergies between the two companies, as Intel sought to leverage Twitter’s data and user base to improve its artificial intelligence and cloud computing capabilities. However, a year later, the acquisition seems to have backfired, as both companies face declining revenues, market share losses, and regulatory challenges. In this blog post, we will examine some reasons why the acquisition of Twitter by Intel was a failure.

One of the main reasons why the acquisition failed was the lack of strategic fit between the two companies. Intel is a hardware company that specializes in making chips for computers, servers, and devices. Twitter is a social media platform that connects users through short messages and multimedia content. The two businesses have very different cultures, values, and goals. Intel is known for its innovation, quality, and performance in the semiconductor industry. Twitter is known for its openness, creativity, and engagement in the social media space. The integration of the two companies proved to be difficult and costly, as they had to align their systems, processes, and teams.

Another reason why the acquisition failed was the overvaluation of Twitter. Intel paid a premium of 40% over Twitter’s market value at the time of the deal, which amounted to $40 billion. This was based on the assumption that Twitter would grow its revenue and user base significantly in the future, and that Intel would be able to monetize its data and audience. However, these assumptions turned out to be unrealistic and optimistic. Twitter’s revenue growth slowed down due to increased competition from other platforms such as Facebook, TikTok, and Snapchat. Its user base also stagnated due to issues such as misinformation, harassment, and censorship. Intel failed to generate any meaningful revenue from Twitter’s data and audience, as it faced technical and ethical challenges in using them for its own products and services.

A third reason why the acquisition failed was the regulatory scrutiny that it faced from various authorities. The deal was subject to antitrust reviews in several countries, such as the US, the EU, China, and India. The regulators were concerned about the potential impact of the deal on competition, privacy, and security in the markets where the two companies operate. They imposed several conditions and restrictions on the deal, such as divesting some assets, maintaining data separation, and ensuring interoperability with other platforms. These conditions reduced the benefits and increased the costs of the deal for both companies.

In conclusion, the acquisition of Twitter by Intel was a failure because it lacked strategic fit, overvalued Twitter, and faced regulatory scrutiny. The deal did not create any synergies or value for either company. Instead, it resulted in financial losses, operational inefficiencies, and reputational damages. The acquisition is widely regarded as one of the worst deals in tech history.