Another Reason to Ditch Twitter?

Well, that didn't take long. Just a couple of days after Twitter users forced the social-media darling to backtrack on the decision to change its privacy policy, a potentially larger privacy issue has reared its ugly head. At a time when U.S. citizens are already hypersensitive when it comes to our privacy -- Edward Snowden and the NSA have seen to that -- Twitter's timing couldn't be worse.

My recent article detailing the outrage following Twitter's decision to alter its policy included a warning for users concerned with privacy, but that was just the tip of the iceberg.

A brief recap
Friday's furor arose from Twitter's decision to change its policy involving blocked tweeters. For the day that it was in force, the new policy said that if you were blocked, you couldn't "follow" tweets of the blocker, see their tweets, or view their profile picture. Makes sense; that's what you get for being blocked.

But Twitter neglected to mention its new policy didn't include cutting the blocked person off from the tweets of the person who did the blocking. What? The inane policy change was the impetus for nearly 2,000 tweeters to sign an online petition within hours to revert to the old policy. Twitter reluctantly backtracked the following day.

Twitter's policy change is similar to an issue Facebook was forced to address shortly after acquiring Instagram. You may recall users threatened mass defection after learning their names and likenesses could be used for advertising purposes, whether they agreed to it or not. Facebook is also facing more recent concerns surrounding proposed privacy-related changes to -- what else -- gain user data to boost advertising revenues.

Welcome to the real world
Investors in Twitter, just as with Facebook following its IPO, are hedging their bets it will find multiple ways to monetize its 232 million monthly average users, or MAUs. And at $56 a share with a $31 billion market cap, apparently there are a lot of folks willing to gamble on Twitter.

But unlike Facebook, which was already nearing a billion MAUs when it went public, Twitter has the added challenge of having to increase its user base. For it to generate anything close to Facebook's advertising revenues, Twitter needs to show potential advertisers some value, and that means more users. Growing Twitter's user base is going to be even more difficult as features like the rumored "Nearby" come to light.

Nearby is too near
How long the Nearby feature has been around no one outside of Twitter knows for certain, but it came to light recently that some tweeters found they have the ability to see who around them are tweeting. But Nearby doesn't stop there. The little icons that pop up in a map-like graphic can be clicked on and the tweets themselves will appear, whether or not the user follows them, or even knows who they are.

It's easy to see the benefits to prospective advertisers of a feature like Nearby -- especially locally. Knowing in real time that someone just tweeted, "Where can I find a burger place around here?" and being able to target ads of local restaurants could be a winner. But why would Twitter make it so easy for complete strangers, who just happen to be in the same area, see a person's messages? No doubt Twitter will toe the usual party line and explain Nearby is a way to "make Twitter more engaging."

Final Foolish thoughts
Twitter has to better monetize its user base, and increasing its active user base is every bit as critical. Its need for MAU growth comes at a time the number of unhappy Twitter users seems to be picking up steam.

Twitter's response? Change its privacy policy, upsetting its users, then not only allow but also make ridiculously simple the ability to peek over the shoulders of complete strangers as they tweet their own followers. The need for advertising revenue is obvious, but so too is Twitter's need to placate privacy-sensitive users. Nearby is strike two for Twitter's privacy policy.

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The article Another Reason to Ditch Twitter? originally appeared on Fool.com.

Fool contributor Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook. 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.

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