• D: All Things Digital , Monday, November 24, 2008 11:46 AM

Kara Swisher reports that Facebook a few weeks ago nearly bought Twitter for $500 million in stock. The question of a Facebook-Twitter union came up at the Web 2.0 Summit a few weeks ago, and apparently, this was right when the companies were at the tail end of discussions. The talks have now ended, Swisher says, citing unnamed sources from both companies.

Apparently, the deal broke down over price as well as integration and cost concerns, but Twitter investors and execs also felt that the startup should now narrow its focus to generating revenues, of which there are currently none. "It's more about timing," said the Twitter source. "There is a strong feeling that there is still an opportunity -- even with the economic downturn -- to blow this thing out."

Too bad, says Swisher, as combining the world's fastest growing social network with the world's best known microblogging service "is actually a natural fit," especially now that Twitter has surpassed Facebook in innovating the "status update." According to Facebook sources, CEO Mark Zuckerberg was getting frustrated by all the press Twitter was getting for cornering a market that should have belonged to Facebook.

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