Twitter warns EU data rules could stall growth

The company is struggling to match the money-making prowess of rivals such as Facebook

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The Independent Online

Twitter’s UK revenues more than doubled last year, but the microblogging site warned that new data protection rules being considered by the EU could curtail its growth in Europe.

UK revenues jumped from $66.5m (£43.3m) in 2013 to $140.3m last year, according to Twitter’s annual report filed in the US. Britain remained Twitter’s biggest overseas market, accounting for 10 per cent of total revenue.

But Twitter warned that the rapid growth could be threatened by new regulations being considered by the European Union, which would make it more difficult for data on EU citizens to be taken outside of Europe.

Twitter said if the rules were passed it would have to “create duplicative and potentially expensive” infrastructure and operations in Europe, or cut back on its advertising and analytics businesses here. Apple recently announced plans to spend €1.7bn building two data centres in Ireland and Denmark, which some commentators have interpreted as a pre-emptive move to deal with the proposed EU laws.

The reforms carry hefty penalties for breaches, with tech companies fined up to 5 per cent of annual revenues. For Twitter this could mean a levy of up to $70m based on last year’s revenues.

The jump in Twitter’s UK revenues follows a push from the company to make money out of its platform. Twitter has struggled to convince investors that it can be as profitable as rivals such as Facebook, Google and Yahoo. Overall revenue jumped from $664m to $1.4bn last year, but the business remained in the red, making a loss of $577m, compared with $645m in 2013.

Twitter launched advertising products last year such as Cards and the TV tie-in Amplify overseas, but its annual report reveals that international advertising is not as profitable for Twitter as US ad sales, with just $1.16 made per timeline view in the last quarter of 2014, compared with $5.65 in the US. In response, Twitter said it planned to hire more sales and advertising staff in Ireland, Brazil, Canada and Singapore.

Twitter spent $188m in cash and shares last year acquiring businesses to boost its commercial operations. The biggest deal was the $107m purchase of data analytics business Gnip last April.

Twitter’s shares have struggled to make much headway since it listed on the New York Stock Exchange 18 months ago. The company closed at $45.10 on the first day of trading and enjoyed a strong initial run, but last night its shares were only marginally higher than their first close at $48.29. Twitter declined to comment.