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I suppose that is believable. When you have the money and the traffic, there probably isn't much motivation to examine your smaller competitor. Perhaps they were always looking up towards larger services. Obviously, that was a mistake. Digg served a purpose, the closest service that served a similar purpose would have been Reddit. Not Facebook or Twitter.
Personally, I always favored the Reddit aesthetic to Digg. It might not be pretty, but it puts the content front and center. And that's why people are there. Also, hi Hellsadvocate!