After months speculation, the rumors turned out to be true: Twitter bought its biggest third-party app, Tweetdeck, sweeping it out of the hands of Ubermedia, which had also made a play for the company.
Twitter did not comment on the deal price, but reports have the purchase price as high as $50 million.
Why did Twitter buy TweetDeck? Essentially, to keep the Twitterati that use the app happy and in the fold but, more important, to deliver more ad impressions to a bigger part of the Twitter audience.
"Since TweetDeck users rarely visit the Twitter.com website, they don't see Twitter's advertising, and that 's a big hole that needs to be filled," said eMarketer analyst Debra Williamson.
Twitter especially wanted to keep those elite power users out of the hands of Bill Gross' UberMedia, a company that develops third-party Twitter products that was in talks to buy TweetDeck before that deal fell apart. Mr. Gross' company, which had purchased Twitter client Echofon in January, was sanctioned by Twitter last year for serving its own ads on Twitter content.
It only makes sense that third-party services wanted to start making money off Twitter's content, and it also makes sense that Twitter would put a stop to it, gaining control of an unruly ecosystem that includes more than 600,000 developers and close to 1 million apps.
In March, Twitter platform head Ryan Sarver told developers that Twitter needs "to move to a less fragmented world, where every user can experience Twitter in a consistent way." Owning TweetDeck makes that world less fragmented, though TweetDeck will continue to operate and develop its software and tools under the Twitter umbrella.
Twitter and TweetDeck did not disclose how many users the app has, but a March report by research firm Sysomos calculated that as many as 5.5% of tweets originate from inside TweetDeck. Twitter said that its users generated 1 billion tweets a week in March.
The new structure of the ecosystem was laid out by Twitter in March -- following changes initiated by Twitter about a year ago -- declaring that companies wanting to build complementary services to Twitter's bread and butter were encouraged to do so. But companies wanting to do what Twitter was doing to earn cash -- advertise against the Twitter stream -- were asked to stop.
Twitter's company blog described TweetDeck as a "groundbreaking dashboard for monitoring what people are saying in real-time." That dashboard is what TweetDeck users love so much and many can't imagine using Twitter without it.
"TweetDeck is a great example of a third-party developer that designed tools for the incredibly important audience of Twitter power users and, in turn, created value for the network as a whole," Twitter said in a company blog post. The post went on to describe those power users as "brands, publishers, marketers and others with a powerful platform."
Twitter earned $45 million in global advertising revenue in 2010, and is expected to rake in $150 million in 2011, according to estimates from eMarketer. Even though Twitter usage is growing in the U.S., it's still a fraction of Facebook's. In 2011, eMarketer estimates that 20.6 million people will use Twitter at least once a month in 2011, up from 16.4 million in 2010. Facebook has 132.5 million people in the U.S. using the service at least monthly this year.