The Coming Facebook-Twitter Collision

Forget about rivalries with MySpace and LinkedIn. Facebook's real competition is coming from upstart microblogging site Twitter

By Sarah Lacy

Every time monthly Web traffic numbers are released, you can expect at least a half-dozen blogs to run a graph showing Facebook gaining on MySpace in some made-up social media war. And as more "adults" join Facebook, the more likely you are to hear about Facebook threatening LinkedIn.

I have long argued that such comparisons are invalid since these are three very different sites. They all aim to connect people, but they go about it in sharply contrasting ways. There is one company that's on a collision course with Facebook, however. It's called Twitter. Heard of it?

Signals of the potential rivalry abound, most recently in Facebook's redesign, details of which were unveiled on Mar. 4. One change will let public figures communicate with fans and followers on Facebook in much the same way they do on Twitter. Another lets individual users get more regular updates of what their friends are doing and thinking—similar to the way it's done on, you guessed it, Twitter. Some industry watchers called the moves a desperate attempt to mimic Twitter.

I call it preemptive. I had a recent exchange in San Francisco with a group of Boston College undergrads that illustrates why. No question these kids like technology; they gave up their spring break to hang out with Silicon Valley tech types. And yet, a good number of them just didn't get Twitter. It was one of the only times I recall where the old person in the room—me—was explaining the relevance of a new Web technology to younger people. It's not that they didn't get the point of staying connected (cue Old Man Stewart shaking his fist). They get it just fine. That's what they use Facebook for. Facebook's redesign gives them fewer reasons to try Twitter.

An Eventual Threat?

Sure, Facebook investor and board member Peter Thiel can try to damp enthusiasm for Twitter by saying Facebook is eyeing lots of acquisitions. But there's a reason Facebook was hungry enough for Twitter that it offered $500 million in stock and cash to a company with a small staff and no revenue—in the middle of a recession.

And there's a reason Twitter didn't take it. Twitter knows it's just getting started, and it is the closest thing to an eventual threat. It would have been like Facebook taking Viacom (VIA) up on its $750 million offer or accepting $1 billion from Yahoo! (YHOO) back in 2006.

When I last spoke to Twitter founder and CEO Evan Williams, he coyly told me he was nowhere near done building out Twitter as a service or a business and that he has a clear vision for both. He's not going into a lot of detail, but I can tell you it has a lot to do with the real-time news feed that Twitter has become; there's also a lot of potential in the way Twitter lets you search for information on the Web in real time—not at some fixed point in the Web's recent past. With a fresh round of capital in the bank, and all the hype in the world at his back, why would he sell now? Remember, Williams already went down that road with Blogger, and quickly left the acquirer Google (GOOG) as soon as his lockup expired. He's not someone who likes working for other people, and he made enough from pre-initial public offering options in Google that he doesn't have to.

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