Well, Facebook owns most of the popular social media platforms on the Internet, it owns Instagram, Messenger, WhatsApp, and other tech companies. People are confused if Twitter is among all the companies owned by Facebook or not. And if not then, what are the reasons behind the same.
It is not like Facebook didn’t try to occupy Twitter rather it failed to do so twice. The company offered to buy Twitter a long time back for $500 million at a time when it wasn’t a successful platform and required increasing capital to run.
However, Twitter turned Facebook away with their proposal and since then, people are not aware of the reasons why Twitter didn’t sell to Facebook. In this article, I am going to tell you the answer to why Facebook’s attempt to buy twitter failed.
- Reasons Facebook’s Attempt To Buy Twitter Failed
- The Three Reasons Twitter Didn’t Sell To Facebook
Reasons Facebook’s Attempt To Buy Twitter Failed
Now let us discuss the reasons why Facebook does not own Twitter.
1. Twitter board’s eagerness to unravel its revenue potential
Well, the initial and the most appropriate reason why Twitter turned down Facebook’s proposal, was that the company’s board members wanted to see the revenue potential of Twitter.
They believed that Twitter will be able to earn way more in the future and had the potential to more than just survive.
Also, when CEO Mark Zuckerberg proposed to buy Twitter, it made the investors curious about Twitter’s future because if it wasn’t for the platform’s bright potential, Facebook wouldn’t have offered to purchase it.
However, everybody including Twitter’s new CEO Evans Williams and investors knew that it was a great risk for at that time Twitter was not earning anything. A deal of $500 million was luring enough.
They could have just accepted the amount and walked away with an abundance of profit but they chose to stick by the platform and now, it is one of the most popular social media sites on the Internet.
2. Facebook had concern over Twitter’s revenue-generating potential
People assume that if Facebook was willing to offer a sum of $500 million which is a great amount, then, the company must have a high revenue-generating potential.
But that wasn’t true in this case, as Twitter had quite a low and unattractive revenue-generating potential but a great future potential and innovations.
This made the company worth more as it was unique as compared to other platforms back then. This is also the reason why Facebook was unable to buy Twitter.
Also Read: How Much Is Twitter Worth in 2022
3. Facebook’s concern over charges accrued from running Twitter
Well, if you know bits about running a business you must be aware of the fact that if a company’s expenses are exceeding the revenue, then, the company will not be able to operate in the longer run.
As there will be no profits. This indicates that Twitter had a very low revenue-generating potential at the time which was Facebook’s one concern.
However, it wasn’t the only one, Twitter was bearing other external charges that made Facebook doubt its decision. Twitter was paying an annual fee of around $75 million for delivering messages on mobile phones, it was a huge amount for Facebook to bear.
4. Twitter’s Change of CEO
The change of CEO of Twitter from co-founder Jack Dorsey to Evans Williams was another reason why they were able to stand by their decision of not selling.
Board members realized in time that Jack was a weaker link through whom Mark Zuckerberg could have stood a chance to buy the platform.
But with Evans being the company’s new CEO changed a lot of things as he was a tough one to crack. Thus, this decision by the board members worked miraculously and Facebook failed to buy the platform.
5. Twitter Wasn’t Facing Any Real Threat
Back then, Evans Williams stated that there was no need to sell Twitter as they were not facing any real threat from Facebook. Both of the platforms were unique, their features and functions differ from each other.
Evan Williams stated that no platform will be able to pose “a credible threat of taking Twitter to zero”.
And thus, Facebook was no threat to Twitter and, there remains no reason to sell.
The Three Reasons Twitter Didn’t Sell To Facebook
The three main reasons are derived from the exact email that Evan Williams sent to the board stating why one sells a company.
He mentioned all the reasons that an investor would consider selling a company and why he doesn’t think that it would be profitable to sell Twitter to Facebook.
Evans mentioned as he used to keep saying that Twitter was a billion-dollar company and to him, it was worth way more than that. His and the board members’ faith in Twitter’s potential was good enough reason to reject Mark Zuckerberg’s proposal.
In 2008, when Facebook made its offer, Twitter roughly had 1+ million users; however, they wanted to see its growth in early 2009. The company wasn’t earning enough to make revenue but they had faith that one day it would.
Evan Williams stated that one of the reasons why they would consider selling Twitter is if Facebook was posing a threat to the platform. But in this case, it was not as Twitter and Facebook were two very unique platforms and thus, there remained no threat of cloning features.
Williams stated that Facebook was ill-equipped to have cloned Twitter. Thus, Facebook was not Twitter’s competitor and never could be in the future for the platforms and their functions were very different.
This was another main reason why Twitter didn’t sell its app to Mark Zuckerberg. A platform with unique features and functionality has a great future and revenue potential, and Williams was wise enough to understand that.
Williams was concerned about the different working environments and culture mismatch between Facebook and Twitter. He stated in his email that another reason why we should consider selling was if we were getting a chance to work for someone great.
And to that fact, Williams didn’t use Facebook and was concerned about how they did business. He thought that Twitter will be highly impacted by this collaboration in a bad way.
He was sure that Twitter would be far better alone and will have great earning potential in the future.
He was aware that his decision could cost the company a fortune if it went the opposite way for $500 million was a great deal to walk away from. But his bet paid off and now, Twitter is one of the most renowned companies.
The board members had faith in Twitter and its new CEO Evan Williams upon the arguments that he drew. And they decided to decline Facebook’s offer to acquire Twitter. We are indeed sure that they might now be proud of the decision they took at the time.
Williams even blogged about this offer without mentioning Facebook’s name stating that he believed in his company’s potential.
And that he knew that the company that offered to buy Twitter wasn’t the right fit for him and his team. He knew that Twitter was better off alone and was a billion-dollar company.
We see now that Twitter made the right choice by not selling the company and that Facebook might still regret failing to acquire it.
I hope we have mentioned all the reasons in brief why Facebook wasn’t able to acquire Twitter.