On first inspection of the FriendFace deal, with Facebook paying $150Million (In stock/cash) for Friendfeed it looks like Twitter just lost a potential buyer in Facebook and might be limited to brokering a deal with Google or Microsoft, or actually having to find a way to monetise Twitter on their own.
All is not lost though, Twitter was never a good deal for Facebook, the price was too high and the benefits were limited for Facebook (who was looking for someone they could integrate into Facebook, not an external site separate to the Facebook ecosystem). For Twitter, giving up sovereignty to Facebook was never an option, and there was never a strategic fit between the two companies.
So for Facebook, Friendfeed was by far the better buy. Not only does Friendfeed integrate better into the Facebook environment (Facebook has been copying Friendfeed UI elements for a while now) but because of it’s stagnant growth despite continued innovation (Growing 0.26% in July Vs Twitter’s 16%) Friendfeed was brought to the auction table at a bargain basement price.
What is important to keep in mind here was Facebook bought Friendfeed not because of its user base, but because of it’s technology. Which is where twitter wins out of this deal.
After being bought out by Facebook, Friendfeed has no future as a stand alone product anymore. Sure there are ruminations about the site continuing, but the exodus has begun and Friendfeed users, unsure about the future of the site, no longer trust Friendfeed to exist in a years time. With this cloud over the future of the site, investing their time through continuing to use Friendfeed has a limited payoff and they are looking for alternatives.
Facebook has made a land grab for disenfranchised Friendfeed users with ‘Facebook Lite’ but given that these users just lost their ‘home’ because of Facebook, this is a psychological impediment to moving to a Facebook property.
Where will they go?