Facebook Moves onto Twitter's Turf

Click here to see a video interview with Facebook's Dave Morin.

Peek over the shoulder of many of the technophiles traipsing the convention center halls, coffee shops, and hotel lobbies at this year's South by Southwest Interactive (SXSWi) festival in Austin, and you're likely to see a dizzying stream of tweets. They're using TweetDeck, a free software tool that pulls messages from microblogging site Twitter and sorts them into different categories in real time.

Now they'll also be able to see Facebook alerts in the mix.

On Mar. 16, Facebook unveiled a partnership that lets TweetDeck users view status updates from Facebook friends alongside Twitter contacts. Currently, TweetDeck allows people to set up different columns to filter real-time messages on Twitter—say, a column for work friends and another for all tweets about a certain topic. Under the new arrangement, a single new column will contain Facebook "status updates." In this column, social networkers will see short messages from Facebook friends only and will be able to chat with those who are online. In the future, Facebook says the application will include support for posting images, links, and other types of content.

Teaming with TweetDeck is Facebook's latest attempt to capitalize on burgeoning interest in short, real-time messaging that has gained Twitter a rabid following in the past two years. Facebook attempted to acquire Twitter for $500 million last year, and many analysts see the potential for greater rivalry between the two companies as Twitter gains in popularity. "This kicks off a more competitive element between Twitter and Facebook," says TweetDeck founder Iain Dodsworth. "Applications like TweetDeck are placed perfectly in the middle. The services are used in different ways; this is why you need an application that does both."

Earlier this month, Facebook made home page changes that let users more easily see a stream of friends' updates as they're posted to the site. "Streams are the future of the Internet," says Dave Morin, Facebook senior platform manager. Also at SXSWi, Facebook introduced applications from several application developers that had previously worked only with Twitter messages.

Application Abound

TweetDeck is among the most popular of the dozens of applications from outside developers used for browsing and posting updates to Twitter, accounting for more than 10% of interactions with the site, according to Twitstat, which researches Twitter-related tools. TweetDeck's Dodsworth is a 34-year-old British programmer who picked up a $500,000 angel round of funding from Betaworks in January. "Two-thirds of the updates on Twitter are coming not from Twitter but from applications around Twitter," says Loic Le Meur, who founded Twhirl and Seesmic, two applications that also help Twitter users sort their tweets. Recently, Le Meur announced a new version of Seesmic that will combine Twitter and Facebook updates and allow for video updates.

Another announcement from Facebook centers on Apple's iPhone. The feature lets users bring their Facebook friends and other content into any iPhone application. For Facebook, the new tool means greater integration of iPhone applications with the Facebook experience. For Apple (AAPL), it may mean easier, wider distribution of iPhone apps. Users of iPhone applications with Facebook Connect can start playing games with their Facebook friends, or share or recommend applications to friends more easily.

Facebook is embracing the software development community anew after steps last year that de-emphasized third-party applications, alienating some programmers. A redesign of its home page last July meant that certain applications, including games and photo tools that users can download to their profile pages, were shoved unceremoniously to a separate tab on the site called "Boxes," which statistics showed hurt their traffic. One developer, Scott Rafer, declared the "Facebook platform is dead" to the outside developer community.

In addition to opening up parts of its traditionally closed developing environment—bringing status messages to outside sites and desktop clients, for example—Facebook is using a wad of cash to make amends with developers. A new Facebook Fund competition will award the creators of 100 top new applications with $100,000 each in early May.

Through applications such as TweetDeck and Seesmic, these developers could help Facebook harness some of the excitement around ideas like Twitter. "We can't build on all the ideas we have, and quite frankly, we don't have all the ideas," says Facebook's Morin. He says the site will continue to look for ways to help third-party developers make money, such as allowing them to accept micropayments, subscriptions, and sell virtual goods.

Will Facebook's latest design changes crush Twitter? Le Meur doesn't think so. "It's not such a competition," he says. "You don't use Facebook the same way you use Twitter. Our friends on Facebook generally are not the same friends [we have] on Twitter."

Before it's here, it's on the Bloomberg Terminal.