Daily Debrief: Twitter this--why do a Facebook deal? Video

Daily Debrief: Twitter this--why do a Facebook deal? Video Transcript

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>> The economy may be sucking a raw egg, but that does not mean that deal making is moribund, especially not in the tech constellation. Welcome to the CNET News Daily Debrief. I'm Charlie Cooper here with CNET News' editor-in-chief, Dan Farber. And we've got a lollapalooza of a story to talk about today, Dan. Apparently Facebook has been talking deal with Twitter. Kara Swisher, of "All Things D," say we're talking 500 million dollars, but the deal, for whatever reasons, didn't go through. Look at it from the other side. Why would a Facebook-Twitter deal make sense?

>> Well, currently, it doesn't really make sense because I don't think they can come up with the proper valuation. I think as we read in Kara's story, the deal was 500 million dollars in stock at the 15 billion dollar valuation, which is a little bit excessive for Facebook. So it probably ended up being maybe 150 million dollars in real money. But that's still stock, and I don't think that the Twitter people thought it was enough and want to go their own way. Much in the same way, culturally, that Facebook has wanted to go its own way and forego all the talk about any soon [inaudible] And of course, in this economy, that's not gonna happen.

>> Good point. But when you talk about these two companies -- it's interesting. I mean there somewhat iconic as far as the Web 2-oh constellation goes.

>> Well, there iconic in the sense that they're two companies that have tremendous amount of buzz, and not much revenue to show for it. And I think that's part of the problem, which is, in the case of Facebook, to take on a Twitter, which to me makes a lot of sense because it's a notification system and one of the technologies that Facebook actually pioneered. And it's gathered a lot of momentum. So you put those two things together, 120 million Facebook users and about 6 million Twitter users -- and both growing faster than anything else on the Internet -- and, you know, that's a combination for owning a lot of really important territory with technologies that are very similar and complimentary.

>> And this is not a technology that Facebook by it's own could come up with?

>> Months and months ago I talked to Facebook CEO Mark Zuckerberg about Twitter, and saying, you know, "Isn't that something you guys should be doing?" It's really a notification system. The difference is that it's a broadcast notification system. Has this idea of followers and following, which is very similar to what Facebook does. And, you know, he really wasn't too forthcoming. He thought -- and he said subsequently -- thought he thinks that Twitter's doing a good job. I think it just turns out that it's hard to pull off financially.

>> It's going to be hard to pull off financially, and for Twitter going forward, obviously it's management and investors felt they should go it alone for the time being. But as a solo act -- again, the old question about Twitter -- how do they monatize what is a very popular service?

>> Well, one of the founders, who is the current CEO, Evan Williams, who sold a company previously to Google, has stated that he thinks that there's an enterprise business, which is to use Twitter for private enterprises and intranets. And there are already a few companies in that market such as Yammer and Presently. That seems a bit far off, and I think that over time, both Facebook and Twitter need to come up with a way in which advertising or marketing can be a part of what's embedded in their systems. And I think that Facebook had a false start with its Beacon system, in which a user would recommend something. And that recommendation would get pushed to their friends. And it was a form of marketing, and the marketers could get in on that. I still think that's going to come back.

>> Ah, you're a betting man, same time next year, what are the odds that Twitter remains solo?

>> I think Twitter has the money to remain solo. I think it's more a question of whether Facebook is willing to pony up with enough money.

>> Okay. We'll hold you to that one. On behalf of CNET News, I'm Charlie Cooper. ^E00:04:00