Facebook fires up head-to-head battle with Twitter

What the Tweet? After failed buyout bid, Facebook moves to build own Twitter-like platform

Twitter Inc. is at a critical juncture now that the popular Facebook Inc. has redesigned its services to, well, be a lot more like Twitter, according to analysts.

Facebook announced late yesterday that its public profiles have been updated to allow users to share their information with an unlimited number of friends. The updates, according to Facebook, can "be brief messages" similar to Tweets or longer ones that include photos and videos. The new Facebook setup will also enable businesses, organizations or even celebrities to blast out information to customers, members or fans.

Many of the Facebook updates put the popular social network in direct competition with Twitter, the microblogging site whose user base includes companies such as Dell Inc. and celebrities like Lance Armstrong. News of the new competition between the firms comes the same week that executives from both acknowledged that Facebook last fall had made a failed bid to buy Twitter.

"Twitter is in a precarious position," said John Byrne, a senior analyst at Technology Business Research Inc. "It looks like their shelf life may be limited. They are one-dimensional, and people are getting the concept. Then a company like Facebook comes along with a considerable user base, and they can implement the same kind of mechanism. And with that, they may be able to out-Tweet Twitter, or that's what they're hoping for."

Facebook announced in January that it had just topped 150 million active users.

Caroline Dangson, an analyst at market research firm IDC, said it's clear that Facebook was trying to buy Twitter to get its hands on the microblogging platform. Since that didn't work out, the company is simply building its own and will now compete directly with Twitter.

"Are they direct competitors? Before these changes [at Facebook], I would have said no," said Dangson. "By adding this now, though, Facebook is taking Twitter on directly. They realize if they have these real-time streams, then people will spend more time on Facebook. If people can do it all on Facebook, they just might decide to do so. Suddenly, they don't have to go to Twitter."

She added that the companies that are already finding that Twitter benefits their businesses likely won't give up that formula. But companies that are just starting to jump onto the social networking bandwagon may opt to get multiple capabilities from the same source.

Byrne noted that it appears that many social networking users run both Facebook and Twitter. Now that may be unnecessary. Such situations, Byrne said, could prompt Twitter execs to rethink their hesitation to sell the business.

In an e-mail to Computerworld earlier this week, Stone said Facebook wants to remain independent. "We're big fans of [Facebook CEO] Mark [Zuckerberg] and his team, but we feel very strongly that Twitter is just getting started. We're planning on building a strong, independent Twitter Inc.," he said.

And while Byrne noted that Twitter is at the cutting edge with its microblogging idea, it's going to take a lot of work to stay there. Just ask Yahoo Inc., which was overshadowed by Google Inc. Or ask MySpace.com Inc., which has been eclipsed by Facebook.

"They need to come up with something else, or they need to evolve Tweeting and develop a model for revenue," he added. "I would say it's a critical time right now."

Copyright © 2009 IDG Communications, Inc.

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