Apple Inc. held discussions with Twitter Inc. more than a year ago about taking a strategic investment in the short-messaging service, according to a person familiar with the talks.
People familiar with the matter said there are no current formal investment or acquisition discussions between the companies.
News of the investment talks was first reported by the New York Times.
Since the discussions between Twitter and Apple ended, the landscape has shifted for many fast-growing Web start-ups, both public and private. Facebook Inc. had a rocky initial public offering in May, and its shares are now down more than a third below their IPO price. Valuations of other high-profile tech companies, including Groupon Inc. and Zynga Inc. also continue to fall to earth — developments that have made investors question rich valuations placed on consumer-Internet start-ups such as Twitter.
While Apple has been hugely successful in selling phones and tablets, it has little traction in social networking, which has become a major engine of activity on the Web and on mobile devices. Social media are increasingly influencing how people spend their time and money an important consideration for Apple, which also sells applications, games, music and movies.
Apple has not made many friends in social media. Its relationship with Facebook, for example, has been strained since a deal to build Facebook features into Ping, Apple’s music-centric social network, fell apart. Facebook is also aligned with Microsoft, which owns a small stake in it. And Google, an Apple rival in the phone market, has been pushing its own social network, Google Plus.
[quote]“Apple doesn’t have to own a social network,’’ Timothy D. Cook, Apple’s Chief Executive, said at a recent technology conference. “But does Apple need to be social? Yes.’’[/quote]
Twitter and Apple have already been working together. Recently, Apple has tightly sewn Twitter features into its software for phones, tablets and computers, while, behind the scenes, Twitter has put more resources into managing its relationship with Apple.
Though an investment in Twitter would not be a big financial move for Apple by any stretch — it has $117 billion in liquid investments, and it quietly agreed to buy a mobile security company for $356 million on Friday — it would be one of Mr. Cook’s most important strategic decisions as Chief Executive.
And it would be an uncommon arrangement for Apple, which tends to buy small startups that are then absorbed into the company.
But such a deal would give Apple more access to Twitter’s deep understanding of the social Web, and pave the way for closer Twitter integration into Apple’s products.
