Competition or Imitation

Twitter vs. Threads – Is it fair competition to capture an unmet user need, or a last-gasp, late-stage imitation in a dying market? Here's a snapshot of a framework we use in our strategic consulting work to answer this question.

Market Overlap

These two offerings are competitors because they fill the same user-centered need, the exchange of information, through a similar technology, online media. The challenge lies a layer below the surface–what is the growth rate of social media users?

According to Statista, the growth rate of online users from 2017-2022 was 68%; however, projections show the growth rate slowing to 27% from 2022-2027. Clearly, the once blue ocean is turning red with competition.

Product or Service Similarity

On the surface, a declining growth rate should not deter entering a market. What if the incumbent is not meeting the users’ needs, and a small iteration could unlock new opportunities?

In its much-celebrated launch of Threads, Meta highlights that Threads is an extension of Instagram for sharing text updates – yawn, with 500-character long posts (versus 280 characters on Twitter), and 5-minute videos (versus 2 minutes, 20 seconds on Twitter).

Given the high level of similarity between the two services, I would label Threads as an imitator, not a competitor. This helps answer our first question, as Threads is not unlocking widespread, unmet user needs.

Business Model Similarity

Twitter’s revenue gain from paid verification pales compared to the revenue lost as advertisers fled the platform. Similarly, Meta and Instagram face backlash as journalists call out its skewing of civil discourse, and scientists highlight its negative impact on children.

Yet, in the battle for revenue in a declining market, both companies are doubling down on their core business model – selling ads. In our view, this is neither a profitable nor sustainable long-term strategy and is further evidence that Threads is an imitator, not a competitor.

Our takeaway is that executives must differentiate between true competitors and mere imitators to carve out a strategic advantage. As demonstrated in our brief comparison of Twitter and Threads, recognizing the subtle differences in market, product, and business model can equip you with valuable insights for allocating your firm’s scarce resources. 

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