Facebook Vs Twitter

Source: Author's graphic

63% of Facebook (NASDAQ:FB) users get their news from the social network. Likewise, Twitter (NYSE:TWTR) sees the same percentage of its users scouring their timelines for news. Considering that Twitter prides itself on being the "real-time information" (i.e., news) network, it's interesting that more users don't use it to read the news.

Twitter still holds one advantage over Facebook, and that's where its "real-time" network plays a big role. 59% of Twitter users that get news from the social network follow breaking news on the platform. That number is just 31% on Facebook.

But Facebook may be planning an attack to overcome Twitter's advantage. Business Insider reports that Facebook is working on an app that sends breaking news alerts to users, offering an alternative to Twitter.

Partnering with publishers
Facebook is expanding on its relationship with publishers, which it's been fostering for several years. The new app will allow users to select publications and topics they're interested in receiving alerts about, and then they'll just sit around and wait for an alert. On the back end, publishers are provided with a tool to send out a 100-character notification with a link to the article on their website.

Facebook's core experience -- the News Feed, sharing articles with friends, etc. -- isn't even a part of the app (as described by Business Insider). Users go straight to the publication's website. And some may even follow up by checking out Twitter to follow the story.

But Facebook appears to be betting that it can use the data it receives from users of this breaking news app to deliver a better news reading experience on its own platform. If a user clicks on a link to an article, for example, he might see more information on that news story the next time he logs into Facebook.

Facebook's News Feed algorithm allows it to put pretty much whatever it thinks is relevant to its users front and center. Comparatively, Twitter is bound by the reverse-chronological timeline of tweets from accounts a user follows. (Co-founder and interim CEO Jack Dorsey has emphasized his desire to move away from that strict timeline, though.) As a result, Facebook may be a better destination for users that want to follow breaking news if they use this new app.

But Facebook gets so much more
Not only does Facebook get explicit news stories that its users are interested in, it will also learn about publications and topics that its users like. Facebook's Paper app asks for similar data from its users. Paper also sets a nice backbone for categorizing news stories by topic. Facebook can feed that data back into its flagship app to present stories to users they know are interested in a specific topic.

Paper and this breaking news app that Facebook is testing will make Facebook a better place to read the news. Perhaps that's why we've seen an increase in the percentage of Facebook users that get their news from the social network since 2013. It's up from 47% to 63% in that time.

So, the breaking news app doesn't just threaten Twitter's strength in breaking news, it threatens its strength as a general news reader as well.

Twitter is under attack
This is just Facebook's latest experiment to take on Twitter's strengths. The company launched a live streaming service for verified accounts earlier this month that will compete directly with Twitter's Periscope. Additionally, Facebook offered users a curated feed of content around the Lollapalooza music festival similar to Twitter's upcoming Project Lightning.

Facebook's huge R&D budget along with its near ubiquity allow it to compete with Twitter on just about every front. Twitter, meanwhile, has yet to establish the loyal user base necessary to fight back and produce meaningful earnings results. It's spending heavily on its own R&D -- about 40% of revenue last quarter -- but it's limited by its size. Facebook's R&D spending last quarter was more than double Twitter's total revenue.

Mr. Dorsey has indicated that Project Lightning will draw a significant audience to Twitter for event coverage, and the reverse-chronological timeline isn't necessarily the best way to present its content. Moving away from that may be Twitter's best hope of maintaining its position as the best source to follow breaking news.

Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Facebook and Twitter. The Motley Fool owns shares of Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.