Twitter’s stock is being driven by rumors relating to the possibility of it being acquired and probably will continue to be at least until the company releases its third quarter earnings report. We heard that Walt Disney was in, and then Walt Disney was out. We heard that Google parent Alphabet was in and then out. We heard that Salesforce was in and then out and then back in.
A difference of social networks
One name that hasn’t gotten a lot of attention as a possible acquirer for Twitter Inc (NYSE:TWTR) is Facebook Inc (NASDAQ:FB) despite the numerous synergies that would exist between the two. But would Facebook, a Wall Street darling, really deign to make an offer for its red-headed step-sibling Twitter?
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In a post on VentureBeat, Francis Burns argues in favor of Facebook gobbling up Twitter, boiling it down to how different the two platforms are. After all, perhaps Facebook has what it takes to make Twitter’s model actually work.
Twitter might offer Facebook something different
He notes that while Facebook does do quite a lot for users and advertisers alike. Users can catch up with old friends (or frenemies), while advertisers can reach out and touch the people who do or might use their products or services. He agrees with most analysts that the social network is far ahead of Twitter in terms of ad targeting, products, support, sales, account management and data.
Twitter, on the other hand, doesn’t do well in the ad space. It does have some small niches, and it does well in the area of connecting users with brands, offering what Burns calls “a direct, unfiltered conversation with the people who are most important: customers.” However, it lacks the large numbers needed to scale its business up.
He also notes that Twitter does very well as a news source, and I would add that Facebook is very much in need of help with this. The social network has been battling allegations of bias, so it dumped all the human editors in an attempt to avoid bias, handing over the responsibilities to computer algorithms. Unfortunately, this resulted in a fake “news” story being circulated, so clearly the company doesn’t have all the answers here.
Twitter knows what Facebook doesn’t
What Burns sees TWTR as really offering FB is data that it lacks. He argues that Twitter knows things about its users that Facebook doesn’t, so buying the micro-blogging platform would enable it to sell more things to its users.
After all, the social network has been trying to copy TV targeting and real-time news by copying TWTR’s hashtags and trending news items, but Burns doesn’t believe Facebook’s network is compatible with these practices. He describes a “Twitter user paired with the Facebook network” as an “interesting allure.” He also explains how Instagram and WhatsApp ended up being great acquisitions for Facebook because each has its place in the area of social networking. Each has its own purpose, and he feels Twitter has a purpose too.
Too many challenges
While it’s true that now the micro-blogging platform is effectively at bargain basement prices, there may just be too many challenges to make it a worthwhile pickup for FB. The very nature of its business model, while good for news and brand interactions with customers, lends itself to an environment of harassment. If Facebook has some good ideas to solve those problems, then by all means, TWTR would be a good get. If not, then Salesforce might be the better option because its data, combined with the brand interaction that’s possible on Twitter might be a wise match.
TWTR shares edged upward by as much as 0.03% to $18 on Wednesday, while Facebook shares edged up 0.08% to $128.98.