24 November 2008

Facebook to no longer pursue Twitter acquisition

There have been rumours circulating that social networking giants Facebook might acquire the popular micro-blogging site Twitter for quite a while now. However, it now appears that a potential deal has broken down between the two companies.

Facebook - the popular social networking website that allows people from around the world to connect and collect online friends - has publically expressed its interest and respect for Twitter and its progress. Not all that surprising, as Twitter's popularity has been growing steadily, particularly amongst businesses, in recent times. Twitter operates by allowing users to post short blog posts of up to 140 characters in length, in response to the question: What are you doing? In addition, once you are signed up to Twitter, you are then able to follow the posts and updates from other members..

There have been several reasons reported for the acquisition falling through such as cost and integration; however, one of the more important reasons seems to be that Twitter's investors and executives stated that they would like to build up more revenue on their own.

But, at present Twitter feel's it can overcome the economic downturn on its own, despite the company receiving no revenue; the idea behind the operation of the website is one that it hopes will continue to grow in popularity. In fact, it has been reported that Twitter is exploring other possibilities for revenue making, including charging a fee to business users and possibly adding advertising into the consumer service.

Another important factor in the break-down is the fact that Facebook was offering $500 million of its stock at the $15 billion valuation. As it goes, concerns were raised as to whether the amount offered in stock was actually worth $500 million; what's more, Twitter was not interested in receiving the funds in stock.

The failure of the deal doesn't seem to have damaged the mutual respect of the companies though, so maybe it's a case of never say never. Facebook has a following of 120 million active users, whilst relative newcomer Twitter has a reported 6 million registrations already. This is quite an impressive growth, considering the strong competition involved amongst social networking sites. So whether they go it together or alone we'll surely be hearing plenty about the two of them in the future.

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