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Google acquisition rumours reflect Twitter's importance

Google acquisition rumours reflect Twitter's importance

While rumours 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 websites 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.

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.

While Google doesn't need to boost its audience, the acquisition might keep Twitter out of the hands of competitors, namely Yahoo and Microsoft, he said. "I think an acquisition would make sense, and if they can get it for less than $1 billion, the better it is," Weide said.

Others believe Twitter should actively entertain the option of getting acquired by Google and strike while the iron is hot.

"Other tie-ins short of an acquisition could make sense, but would be harder to sustain since Twitter already uses such open interfaces. It will be hard to do something that others can't replicate. Now is the time for Twitter to sell. It is at the top of its hype range now. Monetizing on its own would be a long, hard slog," wrote Gartner research vice president Jeff Mann in a note e-mailed to reporters.

The rumours erupted late Thursday when tech blog TechCrunch reported the companies were engaged in "late stage negotiations" for an acquisition, citing two anonymous sources. TechCrunch later tempered that report, saying a third source characterized the discussions as "early stage" and possibly revolving around a search engine collaboration. On Friday, The Wall Street Journal's All Things Digital tech blog, also quoting anonymous sources, said no acquisition discussions were on the table, but rather talks about collaboration on real-time search and better crawling of Twitter's content.

It would be interesting to see what emerges from a collaboration between the companies to fine-tune Twitter's usefulness for search engine users, Sterling said.

"Right now, it's problematic using Twitter as an alternative search engine. There's a lot of noisy results you get on Twitter's search," Sterling said. "If you can remove some of the noise, it could be quite powerful."

For example, Twitter could turn into the next evolution of question-and-answer search engines, especially for users tapping into it from mobile devices, Sterling said. "It becomes a word-of-mouth network that is kind of instantaneous," he said.

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