Turkey Lifts Twitter Ban - Analyst Blog

Reportedly, Turkey has lifted the ban imposed on accessing Twitter Inc. TWTR. Tukey's Telecommunications Board (TIB) imposed the ban on accessing Twitter just prior to the municipal elections held on Mar 30, 2014. According to The Wall Street Journal, the move came after the country's top court ruled the ban as unconstitutional.

The ban came after Twitter refused to block a tweet that contained recordings and documents suggesting the involvement of Turkey's Prime Minister Recep Tayyip Erdogan in corruption. However, Erdogan denied any wrongdoing and claimed that the recordings and documents were fabricated to discredit him before the elections.

The Turkish government's move was widely criticized by international authorities including the U.S. and Swedish governments. However, this did not succeed in moving Erdogan from his stance, as he blocked Google's GOOG YouTube a week later.

The ban on accessing Twitter and YouTube in Turkey reflects the growing importance of social media as a medium of protest. Political leaders around the world are finally recognizing the potency of social media in changing regimes. Although the ban on Twitter was lifted, YouTube still remains inaccessible.

Nevertheless, the lifting of ban is a positive for Twitter, as Turkey happens to be one of its top 10 markets boasting 12 million users. Twitter is facing a number of issues that are troubling investors. The growing popularity of Facebook FB's Instagram among U.S. smartphone users is a major concern in this regard.

Recently, Instagram surpassed Twitter in popularity as a mobile app among U.S. smartphone users. Per eMarketer, approximately 35 million Americans used Instagram at least once a month in 2013 versus Twitter's 30.8 million. Per Facebook, Instagram's daily active user base recently touched 200 million.

In order to effectively compete with Facebook, Twitter recently allowed its Vine application users to send private text messages along with videos to their network contacts as well as outsiders. Per Bloomberg, Facebook's Instagram recently added a similar service.

Both Twitter and Instagram are expected to benefit from the growing usage of smartphone messaging apps. However, Twitter's recent experiments that include the addition of the “share with followers” instead of retweets, much like a Facebook “share” and a Facebook-type new profile page, have failed to impress users.

In such a scenario, we believe the new feature addition will not provide significant competitive advantage to Twitter. We consider the introduction of photo tagging feature for Apple's AAPL iOS and Google's Android and the expected music service are the key near-term growth drivers.

Currently, Twitter has a Zacks Rank #3 (Hold).