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Facebook Begins Testing Clubhouse Competitor Hotline

Facebook is testing a Clubhouse competitor called Hotline that could give the audio-based social app a run for its money.

Twitter  (TWTR) - Get Twitter Inc. Report may not want in on Clubhouse, but Facebook  (FB) - Get Meta Platforms Inc. Report certainly wants to set up a similar app all its own.

Facebook reportedly has begun testing Hotline, a combination of Clubhouse and Instagram live, in a bid to capitalize on the growing popularity of audio-driven real-time instant chatting and content. 

The social media giant rolled out a beta version of the experimental app, which is a combination of Clubhouse, Q&A and Instagram live. The app allows participants to ask questions to a host via audio and text. However, unlike Clubhouse, users can also turn on their cameras.

The rollout follows Twitter’s decision not to move forward with a bid for Clubhouse, an invitation-only audio-chat iPhone app launched in April 2020 that operates similar to a real-time conference, party or social gathering, but virtually, and in voice only.

Clubhouse topped 8 million downloads in the iOS app store last month, helped in large part by Tesla (TSLA) - Get Report CEO and founder Elon Musk, who raised the app’s profile after inviting Russia President Vladimir Putin to chat.

The success of Clubhouse, which has reported 10 million weekly active users, has demonstrated the potential of audio chat services, particularly during the COVID-19 pandemic when people can not physically be together.

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Hotline comes from a small group within Facebook called the New Product Experimentation (NPE) Team, which is tasked with building small social media apps from scratch. 

Unlike Clubhouse, however, which limits group conversations and presentations to 5,000 people, Facebook’s Hotline doesn't currently have any audience size limits. Facebook is also dabbling with a live audio room offering within its Messenger Rooms.

Meantime, Twitter is still looking at its own audio-focused chat efforts. The company reportedly has been testing its own audio feature called Spaces - live audio chatrooms in which Twitter users host a variety of conversation topics. The company said last month that it would make Spaces available to all users in April.

There's possible competition from Microsoft  (MSFT) - Get Microsoft Corporation Report too. Microsoft reportedly is in discussions to acquire video-game chat app Discord, another audio-focused app used by millions of gamers to chat in real time, for more than $10 billion.

As for Clubhouse, Bloomberg reported this week that it is in talks to raise funding from investors in a round valuing the business at about $4 billion following the failed Twitter talks. 

At last check, Facebook shares were down 0.03% at $313.01, while shares of Twitter were up 2.1% at $70.44.

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