Did Twitter Inc. Really Just Blame Apple Inc. For Its Loss of 4 Million Users?

By Markets Fool.com

During Twitter 's fourth quarter earnings call, CEO Dick Costolo claimed that an "unforeseen bug in the release of iOS 8" dented the site's monthly active user (MAU) growth. CFO Anthony Noto claimed that the bug caused Twitter to shed 4 million active users, causing its 288 million MAUs to miss Wall Street's forecast of 295 million MAUs.

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Source: Pixabay.

Costolo then told Business Insider that Twitter lost 3 million users after Apple stopped auto-polling its feeds for Safari's "Shared Links" feature, and lost another million due to encryption changes in iOS 8 which prevented users from logging on. But Twitter IR then partially backtracked via a Tweet, stating that there "was no bug or issue with iOS 8," and that it was "an issue on Twitter's side as users upgraded."

Let's take a look at Twitter's convoluted claim that iOS 8 caused it to "lose" MAUs, and why it's probably just an excuse to mask the site's sluggish user growth.

Why blaming Apple doesn't make any sense
Apple's Shared Links features on Safari aggregates links from Twitter accounts which a user follows onto a bookmark-like page. Before iOS 8, Shared Links would automatically update with the latest links. But starting with iOS 8, the feature was only updated when opened.

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That change shouldn't make a difference to a regular Twitter user, since the only noticeable difference is a minor delay when Shared Links are opened. But that change makes a difference when Shared Links of non-active users automatically access Twitter. For example, if you signed up for Twitter but stopped using the service a year ago, the Shared Links feature still automatically updated on iOS 7, making you a "monthly active user" to Twitter even if you weren't viewing any tweets.

Safari's "Shared Links" on the left side. Source: Apple.

Meet Twitter's zombie users
Therefore, stopping automatic Shared Links updates merely flushed out the fake MAUs who weren't actually using Twitter on a regular basis. However, Twitter still counts all these questionable MAUs, which could simply be third party apps automatically updating their feeds, as active users.

Twitter actually admitted during its latest earnings report that 8.5% of its users, or 24.5 million users, "used third party applications that may have automatically contacted our servers for regular updates without any discernible additional user-initiated action." This means that all those MAUs could be third party apps, bots, or fake users, which shouldn't be counted as "active" at all.

Costolo's other claim, that Twitter lost 1 million more MAUs because encryption changes in iOS 8 prevented users from logging on is based on similarly flawed logic. Temporary log on problems might irritate human users, but probably won't convince real active users to quit Twitter. However, login issues can flush out fake users and bots, which Twitter has plenty of.

Twitter shouldn't make excuses for losing these users, since they don't have any value to marketers. If Twitter purged these fake users and bots, MAUs will drop but its average revenue per user (ARPU) would rise. Yet Twitter is so concerned about the market's perceptions of MAU growth that it is now blaming Apple for possibly flushing out some zombie accounts.

Blame yourself, not Apple
Twitter's slowdown in MAU growth has been dramatic. In the fourth quarter of 2013, Twitter's MAUs rose 30% year-over-year to 241 million, missing Costolo's target of 400 million. Last quarter, MAUs only rose 20%.

The problem with Twitter is that it's a digital soapbox where users with the most followers and retweets "win." That's why average Twitter users often use the service to follow famous people and brands rather than tweeting anything themselves, making it an attractive platform for self-promoters and advertisers, but a terrible platform for social engagement.

To increase user engagement, Twitter is launching new video ads, video editing tools, mobile payments, e-commerce integration, and group chat features. But those features also clutter the site, turning it into a messier version of Facebook . Meanwhile, a new deal with Google , which lets users bypass its News Feed, might spur user growth but reduce ARPU.

Unless Twitter streamlines its plans for the future and stops counting fake users as active ones, I suspect that its user growth woes will continue.

The article Did Twitter Inc. Really Just Blame Apple Inc. For Its Loss of 4 Million Users? originally appeared on Fool.com.

Leo Sun owns shares of Apple and Facebook. The Motley Fool recommends Apple, Facebook, Google (A shares), Google (C shares), and Twitter. The Motley Fool owns shares of Apple, Facebook, Google (A shares), Google (C shares), 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.