Last fall, Facebook tried and failed to acquire Twitter for $500 million in Facebook stock.
The deal blew up when Twitter learned Facebook valued itself somewhere around $8 billion while its stock was going for closer to $4 billion on the market.
So what has Facebook CEO Mark Zuckerberg done since?
He has followed the model set by his tech business hero, fellow Harvard dropout and Microsoft cofounder Bill Gates.
Throughout his career at Microsoft, when Bill Gates came up against a rival with an impressive product, his standard move was to dedicate Microsoft’s resources toward coming out with a Microsoft version of the product. Microsoft would then refine that version–and, ultimately, in many cases, build a better one–while slowly but surely driving the innovator’s product into irrelevance.
The quickest examples that come to mind are Windows from Apple, Wordperfect, XBox from Playstation, Explorer from Netscape, and Office from Lotus Notes.
It was a method that drove Gates’s rivals mad. Larry Ellison once blew up at a reporter who asked about Microsoft innovations, telling the reporter:
“What’s new is nothing new. Microsoft continues to do what they always do which is to keep the price of Windows high and copy other people’s software and just add it to Windows. That is the absolute opposite of innovation.”
But Gates wasn’t in business for his rivals benefit and neither is Mark Zuckerberg. And so, since the Twitter deal died, Facebook has bit by bit taken on Twitter-like features as its own.
On Facebook, it used to be only a user's 'friends' could see a user's updates.
Now Facebook is asking users if they want to broadcast their status messages to everyone. The 'everyone' option is the the standard choice for most Twitter users.
For its first five years, Facebook emphasised symmetrical relationships.
For users to connect and share information, they both had to accept a friendship. Soon, users will be able to become another user's 'fan' without asking that user for permission -- just the way Twitter users can follow other users without being followed-back.
Twitter profiles were always located at Twitter.com/username.
Facebook profiles were located at Facebook.com/a bunch of random numbers and stuff. Now Facebook profiles follow the Twitter model.
Facebook used to have an algorithm that decided what updates users wanted to see from their friends.
Now, like Twitter, it shows users every new update from their friends, sorted by chronology. Fortunately, there are ways to filter out the noise.
Twitter's roots are in SMS messaging. That's why messages can only have 140 characters.
Facebook has also had some SMS functionality since almost the beginning, but lately it has promoted it much more. For example, now you can become another user's fan and subscribe to their updates via SMS.
Facebook search used to turn up only user profiles and the content on them.
Now, like Twitter, it will turn up shared items and the content of messages from users. Good move for Facebook. The doomed MySpace-Google deal proved there's little money to be made in searches for people's names. Searches for what people are saying about the latest movie release would be a great place for ads, though.
From Oprah to Shaq to Ashton Kutcher, Twitter's popularity is due in large part to its celebrity users.
One reason this happened is that when a new user signs up, Twitter suggests the celebrities as good people to follow. Facebook now does the same thing.
During the 2008 Presidential election, Twitter set up a mini-site called elections.twitter.com for people to watch during the debates.
Web TV network Current TV also ran Twitter comments like a stock ticker along the bottom of its broadcast during the debates. During the inauguration, Facebook got into the act, meshing live video from the event with status updates from users. Now Facebook is getting into the business full-bore, partnering with Ustream to offer the service to anyone.
On Twitter, there's never been any technical difference between following a personal friend and following a company that owned a single account. Facebook used to draw a distiction between the two.
Ever since Mark Zuckerberg took in interest in Twitter, Facebook began to distinguish between the two less. For example, when creating a group of friends, it's easy to include a company's official Facebook page.
Facebook used to limit the amount of friends a user could have to 5,000.
Then it saw celebrities join Twitter and gain several hundred thousand followers. Facebook's friend limit is gone now. Ironically, Mark Zuckerberg announced he would make this move on Twitter after he got thousands of new followers when a story about his use of the site hit Digg's front page.