social media

Twitter plays defense with deal for Gnip

April 15, 2014: 11:11 AM ET

Deal follows Apple's acquisition of Topsy, one of just four Twitter data resellers.

Gnip CEO Chris Moody

Gnip CEO Chris Moody

FORTUNE – This morning Twitter (TWTRacquired Gnip, a social data company, for an undisclosed amount. The deal will likely mint Gnip's early investors a healthy return, as the Boulder-based startup had only raised $6.64 million in venture backing with 85 employees. Back-of-the-envelope estimates say the company had been running on its own profits for some time.

The deal marks a turning point for social data. Twitter only makes its "full firehose" of Tweets available to a few data partners, who filter, package, and resell that data to clients. Data reselling has never been a huge business for Twitter, but it is important because this data helps make Twitter valuable to advertisers and brands.

Gnip was one of those partners. Datasift, a social data company with $71.7 million in venture backing, is another. NTT Data, a Japanese company, is the third. And the last one is Topsy, a startup which Apple (AAPL) acquired for more than $200 million in December.

It is understood that Apple's acquisition of Topsy raised red flags at Twitter HQ. Twitter relies on its ecosystem of data resellers, however small. With one of its few data resellers in the hands of Apple, it made sense for Twitter to bring a big data company in-house. The company needs to protect its interests and keep the remaining few data resellers out of the hands of competitors. The other option would be less attractive: If Gnip and Datasift were acquired by competitors, Twitter would have to scramble to build out comparable big data infrastructure itself.

MORE: How a quiet Boulder startup is finding 'million-dollar tweets' for businesses

So Gnip is now a part of Twitter. This will likely signal changes to the data Gnip has access to, and it could signal changes to who has access to Twitter's firehose. This deal may lead to the social data ecosystem becoming slightly less open.

That's because, in addition to reselling Twitter data, Gnip also resells data from Tumblr, WordPress, YouTube, Facebook, Instagram, and Foursquare. Gnip has no plans to stop offering data from those services, but those services might decide to cut Gnip off now that Gnip is not an independent third party.

Likewise, Twitter may wind down its data relationships with Datasift and Topsy now that it has its own in-house data seller. The company has no immediate plans to do so, but it is understood that Topsy's long-term plan is not to be a Twitter data reseller, so it will not likely continue to purchase Twitter data once its contract is up. Datasift was not available to speak to the press at the time of publication, but the company is expected to publish a blog post on the topic soon. (Update: The company has posted a blog post on its site.) Twitter and Gnip have declined to comment beyond the deal announcement.

Founded in 2008, Gnip's initial value was that companies could access Twitter data from Gnip, rather than from Twitter itself. This was especially useful in Twitter's early "Fail Whale" days, when too many data requests to its system would crash the young service. Since then, Gnip has evolved to help brands unearth "million-dollar tweets" from Twitter's ever-expanding trove of data.

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