Last week, we in India were so busy watching the Telecom Regulatory Authority of India (Trai) give a resounding slap to Facebook’s Free Basics scheme by outlawing differential pricing, that we nearly forgot to hear a sucker punch delivered by Wall Street to shares of Twitter, possibly its only real rival today. We need to contrast the two to get an idea of why Twitter needs to change as it is trying to do, amid a welter of troubles.
Twitter shares tanked after it said user growth stalled for the first time since it had its initial public offer (IPO) in 2013 and fell further over the week, and its shares have fallen from $48 a year ago to around $16 now. Shares have fallen by well over 50% since its co-founder, first CEO Jack Dorsey returned as CEO last July. Its market value is now at only $10.3 billion. Compare that with $293 billion that Facebook commands.
The 39-year-old Dorsey is not sitting easy and is out to do something to turn around Twitter, but its old loyal users have been bitching about the changes, with the #RIPTwitter hashtag insulting the initiatives. But my sympathies are with Dorsey, despite some mistakes he may be making.
The opportunity is too big for Twitter to miss because Facebook has no real competitor other than the microblogging service. Google’s initiatives like Google Plus have limited following. Facebook, with 1.6 billion average monthly users worldwide, and 1 billion average daily active users, is an awesome monopoly of sorts. Twitter has a fraction of it at 300 or so million average monthly active users. The basic rule of capitalism is that there is always room for two major brands in a similar marketplace.
So why not Twitter rise to the challenge and be more like Facebook -- even if some people mock it? The problem is that Twitter has a cult following among the more political, somewhat serious people who first made it what it is.
Twitter now has an attractive log-in page that lures you to some tweets. It is giving users the option to organise some messages by relevancy rather than a simple chronological approach. This is a bit like re-arranging the furniture of a room or the timing of a meal, and not everybody is happy.
Facebook now has the might of photo/video sharing site Instagram as well as messaging service WhatsApp. Twitter owns video-sharing app Vine as well as live streaming facility Periscope, but needs more power than that to take on Facebook. On current indications from Dorsey, Twitter plans to refine its service, invest more in video and tap influencers, creative people and journalists to expand their reach.
Guess what, Facebook is also helping influencers and news oganisations do better on the site, as I learnt last week during a meeting with Andy Mitchell, Facebook’s director of global media partnerships. So Facebook is going the Twitter way as well.
The competition is uneven but the opportunity is for Twitter to lose. What it needs is a white knight to save it and tap the potential. In a world where fluffy startups command multi-billion valuations, a decade-old tested service like Twitter is sitting on a bigger opportunity than people seem to acknowledge.
Can David Twitter take on Goliath Facebook? Somewhere, somehow, I expect Twitter to strike some strategic alliance. The stakes are too high for just controversial tinkering to show dramatic improvements. And there is no doubt Twitter has respect, news leadership, brand and technology to make it worth more than it is now.
(The views expressed by the author are personal.)