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Google acquisition rumors reflect Twitter's importance

Juan Carlos Perez | April 6, 2009
While an acquisition is unlikely, a formal partnership or collaboration wouldn't be surprising

MIAMI, 3 APRIL 2009 - While rumors of an imminent Google acquisition of Twitter were apparently offbase, it wouldn't be surprising to see the companies strike up a formal collaboration or partnership.

Twitter, a microblogging service in which millions of people post brief text messages, has emerged as the custodian of a valuable online index of real-time facts, comments, musings and announcements, information that is clearly valuable for Google's search engine index.

Google routinely collaborates with major Web sites to determine the best way to crawl and index their content for its search engine, so sitting down with Twitter for that purpose would be consistent with its modus operandi.

"Twitter is clearly hot. The phenomenon of real time search and the ability to capture this stream of 'tweet' discussions is an important development in social media and search because people are trying to mine data for information that might otherwise be sought in a search engine," said industry analyst Greg Sterling from Sterling Market Intelligence in a phone interview. "This whole phenomenon Twitter represents is here to stay and needs to be addressed by search engines."

However, it's much less clear why Google would want to spend major-acquisition money on Twitter at this time. After all, Twitter doesn't represent anything close to a clear and present danger to Google in the search market. "Twitter exemplifies the category of real-time search, but it's not a Google killer," Sterling said.

In addition, Google, like most companies, is in cost-cutting mode and Twitter, while wildly popular, hasn't figured out a way to generate much revenue yet.

"There's a very interesting parallel between Twitter and YouTube. When Google bought YouTube, they did it because it was extremely popular, got tons of traffic and represented this new trend of video hosting and sharing. Now, Google still hasn't found a way to effectively monetize YouTube in a big way," said Allen Weiner, a Gartner analyst, in a phone interview. "Does Google really want to spend another huge amount of money on another extremely popular service that hasn't figured out a way to make money? I don't see it happening."

Others aren't so sure.

In an e-mail interview with IDG News Service, IDC analyst Karsten Weide said Google would gain "tremendous stickiness and traffic" from Twitter. "Microblogging is becoming an accepted new channel of online communications in addition to email and instant messaging, and it is here to stay," he said.

But he agreed that Google needs to know that it's highly likely Twitter will never make significant amounts of revenue. "That would mean -- just as Web mail -- it would be a loss leader that one cross-finances in order to have the indirect benefits," Weide said.


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