Twitter Makes A Profit Thanks To Google And Microsoft

Twitter has reached an important commercial milestone after it reached profitability, thanks to a deal worth $25 million (£15.5 million) to let Google and Microsoft index its tweets, according to a Bloomberg BusinessWeek report.

Twitter will earn $15 million (£9.3 million) from Google and $10 million (£6.2 million) from Microsoft Bing, according to the report, which cited sources who asked for anonymity because the terms of Twitter’s deals with both companies are closely guarded secrets.

Twitter Co-Founders Evan Williams and Biz Stone and Google search executives such as Marissa Mayer, vice president of search and user experience, have been asked several times about terms of the agreements. All have steadfastly declined to discuss the particulars.

Microsoft kicked off this movement 21 October by announcing that it would index Twitter tweets on a special site called Bin Twitter. Google’s Mayer said the company would also serve users Twitter content, but said it would take a couple months to come to fruition and declined to provide other details.

Google’s data deal with Twitter came to light 7 December when the company said it was indexing tweets and other content in real time. Google also integrated Twitter data into its Friend Connect service and Google Search Appliance.

Still, questions persisted about how much money Twitter was making from those deals because it was the closest tangible thing Twitter that pointed to a viable revenue stream: charging companies for access to its Firehose API, which corrals the millions of tweets that stream into the site daily.

Bloomberg BusinessWeek said these deals are multi-year agreements that will allow Twitter to make a modest profit in 2009 at a time when its operating costs are a reported $20 to $25 million (£12.4 to £15.5 million) per year.

That Twitter is profitable is big news in itself because it points to the viability of a social network that banked $100 million (£62 million) in funding, valuing the company at $1 billion (£622 million).

Twitter plans to offer online advertising, which could prove wildly successful considering that companies such as Dell have made millions of dollars promoting products on the microblog.

Nor has the company yet offered commercial accounts for businesses, offering businesses analytics and promotional tools for fees.

Twitter did strike deals with Citysearch and UrbanSpoon, though Citysearch said no money is exchanging hands for such integration deals.

Through all of this, 2009 was Twitter’s busiest year in terms of innovation. The company added Twitter Lists to let users curate content and created a Geolocation API to help boost the platform’s relevance.

Twitter in 2010 will preside over Chirp, its first developer conference, to celebrate the new technologies and those built by third-party programmers.