The time is right

Why Twitter finally caved and returned to Google

Following the release of its fourth-quarter earnings results, Twitter CEO Dick Costolo confirmed the company’s previously rumored new partnership with Google. Twitter had partnered with Google before to surface tweets in search results, but in 2011 it chose not to renew their deal because the terms weren’t favorable enough for the social media company. So why now, years later?

Costolo explained his thought process during a conference call following Twitter’s fourth-quarter results.. Since growth of monthly active users of Twitter is slowing, the company is starting to double down on measuring its impact outside of the core Twitter experience. It’s pushing new metrics, like logged-out users and syndicated views (when Twitter shows up places like Flipboard or CNN).

As a result, the time is ripe for a partnership with Google, which could be one more place to serve up tweets outside Twitter. “We’ve got the ability to drive attention and aggregate eyeballs to logged out topics and events,” Costolo said. “That’s one of the reasons it makes a lot more sense for us now.”

He didn’t go into any of the business deals of the agreement, and he said we shouldn’t expect to see the partnership come to fruition for a few months. In other words, it’s not going to impact Twitter’s bottom line during its next earnings call.

The other key point discussed in Twitter’s earnings call is, as I pointed out earlier, strong revenue and nearly flat growth in the fourth quarter. People considered what that meant for Twitter’s business model on (where else) Twitter.

Josh Elman, a Greylock investor and former Twitter employee, pointed out that growth, slow or fast, is a “lagging indicator of prior work.” Gigaom founder Om Malik said the trends show that although Twitter is a business force to be reckoned with, it now seems unlikely to ever become a huge powerhouse like Facebook. Farhad Manjoo at The New York Times agreed.

There was one other interesting item from the earnings call: Twitter CEO Dick Costolo blamed a mysterious iOS 8 bug and seasonality, saying that the fourth quarter is always Twitter’s slowest in terms of user growth. When asked to elaborate on the bug, he dodged the question.

“It’s an unforeseen bug as it relates to twitter integration,” Costolo told investors. “Once we understood the issue we moved as quickly as we could to minimize the impact on multiple fronts. The problem was complex and affected different users differently.”

He said based on January’s numbers, he believes Twitter’s MAU numbers will return to their former growth rate by the next earnings call.

2 Responses to “Why Twitter finally caved and returned to Google”

  1. Rick Knight

    There was/is no iOS “bug.” Twitter lost a million infrequent or inactive users who didn’t reactivate their accounts after upgrading to iOS 8; these folks shouldn’t have been counted as monthly active users anyway. They were also counting a variety of non-user-initiated access to their platform as MAUs (about three million).

    But… it’s all Apple’s fault for upgrading their phones and operating system.

    Uh huh.