Meta Threads rivalry with Twitter intensifies as lawsuit looms
Meta and Twitter’s rivalry has escalated with the successful launch of Threads and the threat of a lawsuit, but analysts suggest that Twitter still has fight left.
Threads, Meta’s highly anticipated app, amassed over 70m subscribers within days of its recent launch. The app’s availability caused a staggering 455 per cent surge in Meta’s stock, leading analysts to speculate a potential $1trn (£779m) market valuation.
“Twitter isn’t dead yet”, said CMC Markets analyst Danni Hewson, suggesting that users who have spent years building up a following will want to retain that, while followers may wish to remain loyal.
It does have the “potential to be a major disrupter” though, said Hewson, as millions of Instagram and Facebook users who can easily carry accounts over to Threads, are “one easy click from adding an extra check in point to their daily habits.”
In the competitive landscape of advertising revenue, Threads presents Meta with a powerful advantage.
“It’s all about eyeballs and how long you can keep them focused on your platform,” Hewson added. “With so much competition for advertising revenue, companies are looking for an edge and Threads gives Meta a pretty powerful one.”
It comes as Elon Musk announced on Friday that Twitter is set to take legal action against Meta, alleging the misappropriation of intellectual property by hiring ex-Twitter employees to create Threads, which bears striking similarities to Twitter.
“Competition is fine, cheating is not,” said the billionaire owner of Twitter.
Meta has denied the claims stated in Twitter’s legal letter. City A.M. approached both parties for further comment on the legal action.
City media analyst Ian Whittaker said Threads is unlikely to represent an “existential threat” to Twitter.
“One issue Meta is likely to face is trust,” he said, highlighting that Meta has faced its fair share of scrutiny, particularly surrounding the rigging of elections and politics.
With UK and US elections are coming up next year, this could play a key role in the take-up of Threads.
“Having a tool which is likely to be heavily politically weighted may reignite such fears (and also put off advertisers),” Whittaker explained.
Meta shares are up two per cent over the last five days, which “doesn’t indicate great fear or excitement around this new venture,” according to Hargreaves Lansdown equity analyst, Sophie-Lund Yates.
She explained it could be “down to the fact investors need proof of better differentiation from Musk’s Twitter.”
Described by Meta as its response to Twitter, Threads launched last Thursday in over 100 countries, providing a platform for text-based conversations. With a familiar appearance resembling Twitter, the app maintains a 500 character limit for posts, harkening back to Twitter’s original concise messaging ethos.
Meta has said it is “taking safety seriously” and complying with Instagram’s Community Guidelines but this has not quelled regulatory concerns within the European Union.
Meta must reach an agreement with the European Commission regarding data sharing between Instagram and Threads before the app becomes available in the bloc.
The timing of Threads is unfavourable for Twitter, which has recently faced widespread backlash over increased restrictions on TweetDeck and viewing limits.