Facebook takes on Twitter in battle of the social giants

Stephen Withers
Thursday, 05 March 2009 04:32

Business IT - Networking

2009 was fast becoming the year of Twitter, but the Zuckerberg gang is fighting back with changes intended to keep Facebook on top.

Twitter - the service that lets you broadcast short messages about your activities, state of mind or anything else you can fit into 140 characters - has picked up a hefty chunk of mindshare over the last several months. This has made social networking heavyweight Facebook nervous.

The popularity of Twitter has been due in large part to the immediacy it provides.

So Facebook has announced changes that include real-time updates in place of the previous system of refreshing every 10 to 15 minutes.

In addition, Facebook aims to increase its attractiveness to those who want to communicate with large numbers of Facebook users by removing the 5000 friend limit.

Add the new ability to follow other Facebook members without the two-way friend relationship, and you've got something very close to Twitter's functionality merged with the traditional Facebook features.

The launch partners for the new-look Facebook are a diverse bunch, including politicians (presidents Obama and Sarkozy), celebrities (Ashton Kutcher and Demi Moore), media outlets (The New York Times, CNN and The Oprah Winfrey Show) and sports leagues (the NBA and WNBA).

Facebook attempted to acquire Twitter last year for a reported $US500 million, but the deal foundered on a disagreement over the value of the Facebook shares that would make up the bulk of the transaction.

Facebook is privately held, so there is no clear way of valuing its shares.

When Microsoft paid $US240 million for a 1.6 percent stake in Facebook in 2007, this was taken as implying a value of $US15 billion for the whole company. However, Microsoft purchased a special class of shares that would give it priority over other shareholders in the event of a liquidation.

A year later, private sales of Facebook shares or options implied a value of around $US4 billion. Since then, the NASDAQ Composite index has approximately halved and tech stocks have been badly hit, suggesting that Facebook's value - whatever it was - has also fallen.

The new-look Facebook will roll out next Wednesday, March 11.