The Verdict for Brands in PeopleBrowsr vs. Twitter

A Warning For Analytics Startups Attempting to Build Businesses on Twitter

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Twitter has made plenty of enemies this year, but one just took Twitter to court and won an opening battle. As tempting as it is to root for the underdog in PeopleBrowsr vs. Twitter, the only crime Twitter may be guilty of is false advertising.

PeopleBrowsr, a social media analytics company, has paid for full access to Twitter's "fire hose" – its entire database of tweets – since 2008. Twitter cut off access, claiming it did so with the 30 days' notice required by its contract. PeopleBrowsr was not amused, so it took Twitter to court and won a restraining order that temporarily requires Twitter to keep the fire hose flowing to its longtime customer.

Twitter's move to cut off access to another business is hardly surprising. It has spent this year evolving from an open platform to one that is sealed off and tightly controlled. The only surprise is that it has taken another company this long to file a lawsuit, and then blog about its crusade.

In its blog post on the matter, PeopleBrowsr's CEO and founder Jodee Rich said, "We relied on Twitter's promise of openness when we invested millions of dollars and thousands of hours of development time." The blog adds, "Earlier this year, Jack Dorsey said at the DLD conference in Munich, 'Twitter is an information utility.'" This argument will likely resonate better on emotional levels than legal ones.

PeopleBrowsr's case is that Twitter claimed it would be open and marketed itself as a utility, so PeopleBrowsr invested a lot of time and money into building a business around it. PeopleBrowsr's biggest problem is buying into Twitter's marketing. Just because Twitter's team claimed it's a utility doesn't make the claim true. As early as 2007, Facebook described itself as a "social utility" because Mark Zuckerberg wanted to differentiate it from other social networks. It's hard to imagine many people wishing that the government regulated Facebook.

Technology companies are not utilities. Companies constantly adapt as they aim to generate returns for their shareholders. Facebook was once so open that Zynga built a business on it and went public, but Zynga's investors can't be thrilled with that approach anymore. Microsoft is now selling Surface tablets and promoting the Windows Store for buying apps, angering many companies selling Windows-centric products. Before Apple launched Passbook, a slew of other iOS wallet apps had looked promising, but now most are irrelevant.

When companies build their businesses around another, it's always risk. That's true whether the business is built around Twitter, Toyota, or Tupperware. While many developers have abandoned dreams of making fortunes off of Twitter, there's always another target on the horizon. A new wave of companies has emerged to offer brands opportunities to tap into Pinterest, such as TripleLift, Curalate, Pinbooster, and Pinpuff. As Pinterest comes out with its own business model and sets rules for developers, a few of the third parties will adapt quickly enough to survive, a few may earn enough to please investors before folding or pivoting, and then most others will fade away. Meanwhile, Tumblr named Union Metrics its "preferred analytics partner" and recommends it to marketers, but in time Tumblr could compete with it. Plus , there's no guarantee that Pinterest and Tumblr will last past 2013.

Marketers need to place bets. For marketers that want to run ads that integrate with Pinterest or access enhanced analytics for Tumblr, there are few options, and pilots with startups can prove to be invaluable learning experiences. Yet the landscape constantly changes. How many times have marketers needed to adjust the size of their page's main Facebook photo or their approach to optimize sites for Google's search index? Marketers, like developers, must adapt; neither brand managers nor software developers are granted tenure.

Returning to PeopleBrowsr's blog, the company writes, "Robert. G Harris…, an expert witness in the case, said in an affidavit, 'Twitter promoted its "open ecosystem" to encourage third parties to risk their time and money building businesses that depended on Twitter to survive.'" The key word there is "risk." There is no certainty. There shouldn't be certainty. There will always be risk. As PeopleBrowsr learned, few bets are riskier than believing every claim a brand makes.

David Berkowitz is vice president of emerging media at 360i and spearheads the agency's Startup Outlook. .
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