In 2013, rumors spread that Google had offered to acquire the popular photo messaging app Snapchat for $3 billion. While both Google and Snapchat declined to confirm the deal at the time, details later emerged suggesting that the offer was legitimate. The alleged acquisition offer highlighted Snapchat’s rapid growth as a social media upstart, as well as Google’s desire to acquire rising mobile apps. While Snapchat ultimately rejected the deal to pursue an independent path, the events provide an intriguing glimpse into the high-stakes acquisitions battles of Silicon Valley’s tech giants.
The Rumors Spread
Speculation about Google’s interest in Snapchat began swirling in November 2013, when several tech blogs reported that Google had approached Snapchat about a potential acquisition valued at over $1 billion. According to anonymous sources, Google had offered $4 million in cash for the young startup that had rapidly gained popularity for its disappearing photo messaging app.
While intriguing, the rumors were unconfirmed by either party. Snapchat co-founder Evan Spiegel gave a coy non-denial, telling reporters he wasn’t willing to discuss rumors or valuation. Google also declined to comment on what it considered market speculation.
Without official confirmation, many initially doubted the validity of the reports and suspected they were planted leaks intended to drum up interest in Snapchat’s services. However, as more details emerged in subsequent weeks, it became clear the offer was likely legitimate.
Details Emerge on a $3 Billion Offer
In late November 2013, a report by blog TechCrunch provided evidence that Google had indeed made an acquisition offer of up to $3 billion. While neither Google nor Snapchat ever verified the reports, TechCrunch cited multiple sources who corroborated key details, lending credibility to the deal.
According to reports, Google had approached Snapchat weeks earlier with an offer to acquire the company for $4 billion in cash. Spiegel, wary of relinquishing control, apparently turned down the initial offer. However, Google was determined in its pursuit and raised the offer to $3 billion shortly thereafter.
The new proposal reportedly allowed Spiegel to keep creative control over Snapchat, aiming to make the deal more enticing. But after mulling the proposal, Snapchat ultimately rejected Google’s $3 billion offer near the end of November.
With both Google and Snapchat declining to confirm the reports, their accuracy can’t be conclusively verified. However, many industry insiders expressed their belief that the reports of an acquisition offer were largely truthful. The balance of evidence suggested Google had engaged in serious discussions to buy Snapchat for billions, but the deal had fallen through.
Snapchat’s Meteoric Growth
If Google was in fact pursuing Snapchat for $3 billion, it underscored the rapidly rising valuation of the young startup. Snapchat launched in 2011 as an app for sending disappearing photo messages. By late 2012, Snapchat users were sending 20 million photos a day. However, 2013 saw Snapchat’s growth explode.
By fall of 2013, Snapchat’s users were sharing 350 million photos daily, with billions of Snaps opened every month. The app’s popularity was growing faster than nearly any other social product in history. With youthful demographics and deep user engagement, Snapchat was validating itself as the hot new player in mobile social networking.
For Google, Snapchat’s growth likely made the company appear to be an appealing acquisition target. Some reports indicated Google was interested in acquiring Snapchat to remain competitive with Facebook in mobile photo-sharing. While Google’s social efforts had floundered, mobile was a key growth arena, and Snapchat had tapped into the zeitgeist. Acquiring Snapchat could provide Google a potential weapon against Facebook.
Google’s Aggressive Acquisitions Strategy
In fact, Google had demonstrated an aggressive appetite for major acquisitions during this period. Over the previous two years, Google had purchased Motorola for $12.5 billion and the navigation app Waze for $1 billion. An offer of $3 billion for Snapchat would be costly, but feasible.
Google also had a penchant for ambitious, forward-thinking deals, often aiming to acquire technologies before rivals could. For example, when Google acquired Android in 2005, it was a speculative bet on the future of mobile operating systems that paid off handsomely. A prescient Snapchat acquisition had the potential for similar long-term payoffs.
Thus, while costly, an offer of $3 billion for Snapchat aligned logically with Google’s strategy. Some analysts even expected an acquisition to occur. But ultimately, Snapchat spurned the cash and chose to remain independent.
Why Snapchat Rejected the Offer
Although turning down $3 billion may seem surprising, several factors provided motivation for Snapchat to reject Google’s advances.
Desire for Independence
For Evan Spiegel and fellow co-founder Bobby Murphy, independence was likely the primary reason for rejecting acquisition offers. Spiegel had already rebuffed a $1 billion offer from Facebook in 2012. At 23 years old in 2013, he was young enough to pursue his vision without selling.
Remaining independent meant Snapchat could control its own destiny rather than being subsumed into Google’s vast ecosystem. While joining Google likely promised generous resources, it also meant compromising creative freedom. Independence was clearly alluring to Snapchat’s founders.
Belief in Future Growth
Reports also indicated that confidence in Snapchat’s potential for continued growth impacted the founders’ thinking. Sources said Spiegel believed Snapchat could one day be larger than Facebook, making a $3 billion sale premature.
Snapchat was also reportedly doubling its user base every few months in late 2013. With that type of hypergrowth, selling so soon likely seemed unnecessary. Spiegel reportedly desired revenues of $500 million before considering acquisition bids.
Thus, Snapchat’s founders were presumably confident their startup’s best days lay ahead. Selling now would undervalue Snapchat’s long-term earning potential. Rejecting Google’s money was risky, but allowed pursuing the unfettered upside.
Differences in Vision
Finally, divergent visions between Snapchat and Google about the app’s future may have doomed acquisition talks. Spiegel reportedly felt Google aimed to incorporate Snapchat into Google+, which differed from his own goals.
Snapchat was also said to be worried that Facebook and Google might mimic Snapchat’s features in their own products if an acquisition occurred. The threat of appropriation gave Spiegel further pause.
With neither company seeing eye-to-eye on Snapchat’s strategic direction, Spiegel understandably opted against giving up control. As an independent entity, Snapchat could build the product he envisioned rather than fulfilling Google’s wishes.
Aftermath of Rejected Deal
While Google never attained Snapchat, its reported offer cemented Snapchat’s status as a red-hot emerging player in social media. News of the rebuffed deal generated greater interest in Snapchat’s platform and accelerated its user growth.
In subsequent years, Snapchat was able to raise additional venture funding, allowing the company to expand while preserving independence. By staying the course, Snapchat built itself into a social media powerhouse.
Google, meanwhile, did end up acquiring some smaller video messaging startups later in 2013. However, the company never again attained a social media hit on the scale of Snapchat. While a longshot, acquiring Snapchat may have altered Google’s trajectory in mobile photo sharing.
The reported $3 billion offer therefore represented a fork in the road moment for both Google and Snapchat. While declining the money was risky for Snapchat, the decision did allow the company to control its own destiny. Startups face many make-or-break moments, and this was one pivotal decision that allowed Snapchat to achieve massive success on its own terms.
Conclusion
While details remain ambiguous, circumstantial evidence suggests Google did in fact offer multi-billion dollar bids to acquire messaging phenom Snapchat. For a young startup still finding its footing, selling likely would have been the safe choice. However, rejecting Google gave Snapchat the freedom to become a social media leader under its own creative vision.
Major acquisitions often transform the tech landscape overnight. But on rare occasions, spurning a buyer can be game changing as well. By choosing independence over security, Snapchat took the road less traveled. That choice likely altered Snapchat’s future as much as any buyout. The saga shows how, sometimes, the deals that don’t happen can shape history just as much as those that do.