Twitter is at a dead end. Can Google save it?

Something has gone wrong at Twitter, the world’s second largest social media company, even with a monthly active user base of 316 million people and more than 500 million tweets sent out per day .

| Updated on: Aug 13 2015, 09:46 IST
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Something has gone wrong at Twitter, the world's second largest social media company, even with a monthly active user base of 316 million people and more than 500 million tweets sent out per day .

Twitter has failed to break through the glass ceiling the same way Facebook -- with 1.49 billion monthly active users and counting -- did to transform itself into a global tech conglomerate.

Twitter had a game-changing impact when it arrived on the social media scene. Even today with active engagement from people like Donald Trump, Nitish Kumar, John Oliver and Barkha Dutt, its role as a platform for politics and journalism has never been greater.

But the San Francisco-based company's troubles leapt into the limelight four months ago on April 28th when its shares tanked 26%, wiping more than $6 billion of its market value, after the company's disappointing first quarter-results leaked out. This is what the leaked results revealed: that Twitter's revenues of $436 million in the first three months of the year were well below analyst estimates of $456.5 million. The number of users accessing Twitter on mobile devices every month also missed expectations, with a figure of 241.6 million falling short of the predicted 243 million.

Users are abandoning the service and growth has stagnated. Twitter might not be irrelevant but it might never truly be a mass platform -- something that might concern both investors and advertisers.

'Although the company is popular among power users, those who don't use Twitter don't see the point. As its stock price plunges, Twitter executives are working frantically to give the service more mass appeal,' journalist Julia Greenberg commented in an article on the Wired.

According to a January report by market research firm eMarketer, India ranks second in Asia in the number of Twitter users at 22.2 million (Japan, with 26 million users, is number one). That sounds great, but that's only 17% of India's social network users.

Internet giants have crashed in a spectacular fashion in the past. Exhibit A is MySpace. At its December 2008 peak, MySpace attracted 75.9 million monthly unique visitors in the US but by May 2014 it had fallen to a pathetic 5.4 million.

The big changes

Twitter has seen some major re-jigging in the last quarter. On the corporate side of things, Dick Costolo announced that he would be stepping down as CEO after a nearly five-year stint; in his place co-founder Jack Dorsey, who was still on the board, stepped in as interim CEO from July 1.

Bloomberg reported last week that the company's board was considering a bigger shakeup that may involve the exit of Dick Costolo as a board member.

There have been changes made to the core product as well. Two weeks ago the company removed wallpapers from users' home and notifications timelines on Users now see a stark all-white background in place of their usual customised backgrounds, when viewing their profile, notifications and main timeline.

The move could allow Twitter to design features and offer ads for the home and notifications page without worrying about colours clashing with unknown customisations, like it happened with MySpace.

One of the biggest reasons MySpace became so popular was because of the broad customisation it offered to its users, but that wildcard was a source of major frustration to both its own designers and advertisers.

Twitter also is exploring a new way to display its tweets. Tweets typically appear in reverse chronological order, but that might change as the company looks for ways to make its service more intuitive.

In a conference call with financial analysts last week, interim CEO Jack Dorsey and chief financial officer Anthony Noto talked about improving the service. "Our goal is to show more meaningful tweets and conversations faster, whether that's logged in or out of Twitter." said Dorsey.

CFO Anthony Noto said that stats indicate that "We've only reached early adopters and tech enthusiasts. And we've not yet reached the next cohort of users known as the mass market."

"Non users can continue to ask: 'Why should I use Twitter?'" Noto said, adding that for those who don't regularly use Twitter it remains "too difficult to use."

Prominent venture capitalist and Twitter investor Chris Sacca wrote a 8000-word blog post in June highlighting some of Twitter's product issues. He offered three suggestions he felt would help bring in more users to the platform, 'Make tweets effortless to enjoy, make it easier for all to participate and make each of us on Twitter feel heard and valuable.'

Dorsey has promised that changes are afoot. "You'll see us continue to question the chronological timeline and all the work it takes to build one and finding accounts," he said, right before Twitter released new features like "While You're Away," a summary of tweets you missed while doing others things. And later this year, Project Lightning, an upcoming Twitter tab that will include events-based curated feeds, will finally go live. .

But will this result in more advertising dollars? Noto called for patience. "We expect that [it] will take a considerable period of time" to reach the mass market, he said. But will advertisers and investors have that patience?

Google: The saviour?

To grow, Twitter needs to succeed in emerging markets like India. Success in India will require a strong presence on mobile, specifically Android. The Twitter experience on Android is acceptable but third-party apps like Falcon Pro and Talon offer superior experiences. Being tied to the company that makes Android may provide a solution.

And the timing itself makes it more plausible: two weeks ago, Google uncoupled its multitude of services from Google+ after trying to shoehorn the social platform into every Google product imaginable. Google+ is officially a failure and what better social network to fill its shoes than Twitter?

Google and Twitter present an interesting dichotomy in the world of social media, Google's biggest strength (if you disregard Google+) - an active user base that numbers in the billions - is something that appears permanently out of reach for Twitter. If Google+ isn't going to be the next social network with more than a billion users, maybe the company will set it finally sights on Twitter and try to do something bold.

The model for the this buyout could follow the YouTube acquisition, where Google put down a lot of money to get its hands on the service and has largely run it as an independent entity. The video site has thrived in that environment.

But will Google take the bait? Google ended its last quarter with $64.4 billion in cash, enough to match Twitter's current market cap ($18.5 billion) almost three-and-a-half times over. But this would make it Google's biggest acquisition ever, and that makes this deal seem like a bit of a stretch. But a lower price tag may take the plunge and solve its social media woes in one stroke.

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First Published Date: 12 Aug, 17:26 IST
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