Apple and Twitter Alliance – Could Facebook Survive?

Apple and Twitter Alliance – Could Facebook Survive?
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Apple and Twitter Alliance - Could Facebook Survive?

Apple Inc. (NASDAQ:AAPL) and Twitter merger rumors have been buzzing on the internet for the past few days. Yesterday, we mentioned that a buyout could pose a threat to both Google and Facebook. Facebook has also been under pressure from a 50% decline in price since its IPO, just several months ago.

While different parties express contrasting views on the matter, two big questions underlie all outlooks; does Facebook Inc (NASDAQ:FB) have a moat, and will Apple eventually break Facebook?

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While conclusive answers cannot be raised at the moment, the prevailing market conditions can provide guided speculations.

Before delving into the possibilities, it would be helpful to look at the highlights of the Apple, Twitter deal reported yesterday.

Apparently, the New York Times reports that Apple Inc. (NASDAQ:AAPL) had held negotiations with Twitter, over investing a large sum into the rapidly growing social network. While the report was met with disapproval from media houses like NDTV, it did manage to arouse much excitement.

It’s a revolution!

What do you understand about a revolution? Enemies will be shot, survivors will be shot again! That’s my personal understanding. Interestingly, Apple happens to fit the description of a revolutionary. Just look at the ‘destruction’ it has left in its wake. Former mobile big wigs like Nokia Corporation (NYSE:NOK) are still receiving a beating as the stock is now close to a 20 year low.

What am I trying to say?

Apple always strives to dominate, whichever market it is in. In addition to that, the electronic maker bears no reservation for competition. Just look at the lengths through which it has gone to bury Samsung Electronics Co., Ltd. (ADR) (LON:BC94)  and Google Inc (NASDAQ:GOOG), through endless litigation. What’s to say that it won’t do the same to Facebook? Funnily enough, it need not do the same. Facebook’s financial muscle cannot withstand.

Even if Facebook Inc (NASDAQ:FB) has a moat, I don’t think it would be deep enough to limit Apple from working its magic. The odds are more than lopsided, especially with the huge cash hoard which Apple can deploy.

Another MySpace scenario

MySpace used to be of the thing. I presume it was even bigger than Facebook (on a relative basis), especially after considering the fact that it had no formidable competitors. However, it slowly faded into oblivion. Facebook may follow suit if Apple and Twitter hold hands.

For starters, Twitter is expanding every day. It is increasingly becoming popular among young people, who account for the rapid the growth of today’s social sites. Many business are also using Twitter for customer complaints, to reach out to consumers, and more. Like Facebook, Twitter has the challenge of converting traffic into money. Twitter has begun starting monetization. Apple’s entrance may change things completely and allow it to focus more strength on say, growth or additional products. Facebook has received far more criticism over privacy polices than has Twitter.

Facebook will therefore have to deal with financial woes, competition from Twitter and Apple and the fight to remain relevant. I really don’t think it has the capacity to stage and win all these battles.

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