Twitter Rejects Facebook Merger
Twitter Rejects Facebook MergerDec 01 2008 - Blogs, Social media - Farhad Divecha
After several weeks of negotiations, Twitter and Facebook have failed to come to an agreement about a possible acquisition of the micro-blogging service by the social network.
Mark Zuckerberg, CEO of Facebook, was quite impressed by Twitter’s speed of status updates and its growth rate since 2006, when it was launched. Thwitter currently has about 6 million registered users.
Had the deal actually taken off, it would have been a marriage between one of the most popular social networks and the fastest growing and most popular micro-blogging site.
Facebook had reportedly offered Twitter $500 million, mainly in stocks and a certain cash component. While this might seem like a very good offer for Twitter, which is currently valued at around $98 million, what the actual value of Facebook stocks would be in today’s market remains debatable.
The price offered is surprisingly one of the reasons for the failure of the deal.
Although Twitter has no source of revenue at present, its team of executives and investors felt that they must try to build up their own revenue sources, as they had done with the network of users. They also believe that in spite of the economic downturn, they stand a good chance of being able to generate revenue.
Twitter has placed a senior executive in charge of trying to find potential sources of revenue, such as introducing ads into the service and levying fees on business customers.
Another reason the deal may have failed to materialise, could be concerns regarding additional costs, which Facebook would have to incur, in order to pay for SMS messages sent through Twitter. It has been estimated that if all of Facebook’s 120 million users were given access to Twitter, the SMS costs would be in the range of $75 million annually.
While the deal has been called off, for now, Facebook might make another attempt to acquire Twitter, at some time in the future, and other websites or even major mobile networks may now show an interest in Twitter.