After Amazon snaps up video site Twitch despite rumours of a Google purchase, we look at why the search engine giant didn’t buy them first.
Twitch is an undoubtedly dominant force in the world of gaming – with its livestreams (frequently watched and broadcasted by gaming fans, professionals gamers and game developers alike) being incredibly popular. Amazon, meanwhile, is an undisputed colossus in the world of online shopping with the retailer delivering groceries, TVs and just about everything else right to your door (sometimes by drone, too). So match the two together and what do you get? You get a massive deal that’s as much polarising as it is hopeful for those of us who’ve enjoyed the two – albeit individually – in the past. But what does Amazon’s purchase of Twitch mean now that almost $1 billion in cash money has been transferred? And what does it mean for Google who were also in the running as a potential buyer for Twitch’s offerings? In short: a lot, so read on to find out more.
Critically, Twitch and Amazon both agree that this won’t change anything about Twitch. I don’t need to tell you why this is good (for the most part everyone likes the way Twitch runs things) but I can tell you why that may not be a full truth. Emmett Shear, the CEO of Twitch explains that the buyout will “help Twitch do what we’re doing today, only faster. Twitch and Amazon have a very similar view of the world. From our point of view, very little changes” but he fails to realise that the biggest of changes has already been made.
Widely believed to be a defining factor in the buyout (and a necessary caveat if Twitch were going to be bought) is Twitch’s recent policy change. Twitch’s servers – while coping somewhat – were stretched, angel investors weren’t offering enough money and so Twitch really did need to be bought to continue to be sustainable, but that’s difficult when the axe of half a dozen lawsuits swings perilously over your neck. You see, Twitch users have a fondness for playing music in the background of their streams (if you’ve never watched – many of these things are like bonafide TV shows in their own right) and as a result, the record labels have been a bit huffy with unauthorised usage of their music, something they’ve only gotten angrier about given the amount of money that many Twitch streams make.
Already clamping down on YouTube videos with similar copyright violations, record labels could potentially sue Twitch for letting their users go about willy nilly using copyrighted music as they so wished. As a result, Twitch teamed up with a company called Audible Magic, using their detection software to check archived videos for music in their database (which is pretty extensive, from what I understand) and muting the offending footage for 30 minutes after the copyright offense was heard. Videos broadcast live won’t be affected but for those of us navigating timezones, jobs, lives, childcare and everything else that stops us from watching a Twitch show as it’s happening, mutes could spoil our fun when we’re watching archived footage. Even more so as part of Twitch’s other new, not-so-delightful policy is removing the ‘save forever’ archiving of videos and replacing it with ‘save for two weeks…after which point your video will be deleted’.
Shear explains that the audio recognition was something Amazon didn’t require and they were surprised by it (although as it will benefit them, it’s unlikely that they’ll complain too much) and that as a result of the deal they’ll be “improving quality of service,” but that likely won’t stop disgruntled gamers from causing up a stink.
It’s ire that Google won’t have to put up with, anyway, as although being the top running favourite (ok, the only favourite given that Amazon really did come out of nowhere) to buy Twitch for a similar price, they dropped out. But why did they pass on a lucrative deal that would have bolstered YouTube’s capabilities and been an incredibly valuable investment in the long run? As with many things it came down to one factor: the law.
While Google reps understandably declined to comment, the break-up of the deal between Google and Twitch is likely due to their existing ownership of YouTube. Both YouTube and Twitch are sites that allow video streaming and live broadcasts, gamers visit both sites, make both sites a lot of money and although they have slightly different niches YouTube and Twitch are arguably competitors within the same space. It’s for that reason that Google had concerns with the potential antitrust issues that could bubble up and bite them in the ass.
Even if they paid the money, dotted the is and crosses their ts, Google still could have landed in hot water from the Federal Trade Commission for trying to buyout a competitor (and thus become the biggest shark in the market). Hardly a savoury outcome for the search engine giant, Google looked to set up a “breakup fee in case the deal did not go through”. A breakup fee is by definition “a common fee used in takeover agreements if the seller backs out of a deal to sell to the purchaser” and a priority for anybody about to throw one billion big ones at a company only for the company to chicken out.
It is a shame that Twitch and Google couldn’t come to an agreement as the company would have been right at home under Google’s wing, right next to its YouTube brethren. Amazon, in comparison, have far less experience in streaming or gaming for that matter as their video streaming service (which lets you watch films and TV shows) is only just taking off. They’ve made small forays into gaming with the Amazon Fire TV box being an example, but again, nothing like the manner in which Google have.
That said though, a deal of this magnitude takes a while to officially finalise and will likely not be completed until the end of the year. So, if you’re worried about changes to Twitch, you’ve got several months to speak your voice and be heard. Just don’t play copyrighted music in the background as you do so.
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