The Rationale for Twitter's $40 Million TweetDeck Purchase

Twitter goes on defense to buy the popular Twitter client

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Twitter has acquired the popular Twitter client TweetDeck for around $40 million "in a mix of cash and stock," reports CNN. Earlier this month, TechCrunch editor Michael Arrington reported that the deal had been completed around May 2, but sources with CNN say the acquisition papers were signed on Monday. TechCrunch had also reported in February that UberMedia, a company that owns a handful of Twitter-related businesses, acquired TweetDeck but the deal never materialized.

So why did Twitter purchase a client that the company could've presumably built on its own? For one, many of Twitter's power users use TweetDeck, says Trevor Mogg at Digital Trends. "Owning a client like TweetDeck means Twitter now has direct access to its users, among the most active in the Twitter community, which could help with efforts to monetize the microblogging site at some point in the future," he writes. "Despite its huge popularity, Twitter hasn’t yet found an effective way to actually make any money."

CNN's Laurie Segall says the purchase squares with the vision of Twitter's new product head. "After a management shakeup, with co-founder Ev Williams out and Jack Dorsey back as head of product, the company is focusing on building and owning Twitter's most compelling features and interfaces."

Mike Butcher at TechCrunch says this was more of a defensive move than anything else. He imagines the alternative, if UberMedia had purchased TweetDeck.

UberMedia buys Tweetdeck, thus gaining around 20% of the userbase of Twitter.

With one fell swoop UberMedia has market power relative to Twitter, plus most of the high value users.

As a result, UberMedia has the power to say to Twitter “We have 20-30 percent of Tweets. So, are you feeling lucky? Are ya?”

UberMedia can then say “Unless you let us sell our own advertising, not yours, against those Tweets, we will have to migrate our user base onto a different platform.”

* Boom *

This is the .44 magnum Bill Gross is holding to Twitter’s head.

This article is from the archive of our partner The Wire.