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Facebook is taking its business rivalry with Twitter into the realm of symbols: #Feud.

Facebook is working on incorporating the hashtag, one of Twitter's most iconic markers, into its service by using the symbol as a way to group conversations, said people familiar with the matter. It is unclear how far along Facebook's work on the hashtag is and the feature isn't likely to be introduced imminently, these people said.

On short-messaging service Twitter, the hashtag—a word or phrase preceded by the "#" pound symbol—is a way for people to collate many Twitter messages about a single news event or topic, like the selection of the Pope (#PopeFrancis). The hashtag is closely associated with Twitter, and fans of the service use the hashtag as short-form creative expression.

Facebook is testing whether to follow Twitter's lead and allow users to click on a hashtag to pull up all posts about similar topics or events so it can quickly index conversations around trending topics and build those conversations up, giving users more reason to stay logged in and see more ads. Instagram, which Facebook acquired last year, already uses hashtags, allowing users to sort photos by the symbol.

Facebook's work on a hashtag is a sign of the heightening battle between Facebook and Twitter, as both compete for mobile users and fight for advertising dollars. For years, Twitter and Facebook seemed to occupy different poles of the social-media spectrum. While Facebook was the home of close friends and family, Twitter was the real-time broadcasting device for the rest of the world.

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Read more on Facebook's plans at The Wall Street Journal.