Twitter – Take no prisoners.

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Another ruthless demonstration of the value of data.

• The closing of Twitter’s data feed to third parties is a great example of how valuable user data is becoming and how dangerous it is to have large dependencies in a business model.
• Twitter announced on Friday (April 10^th 2015) that it will remove access for third parties to its firehose data feed.
• This feed is all of the raw data that is generated by the Twitter service that is then analysed by third parties and the results sold onto their clients.
• In April 2014, Twitter acquired Gnip which is a big data analysis company that sells the results of that analysis onto third parties.
• At the time of the acquisition, Twitter promised that nothing would change with Gnip continuing to operate independently and being treated the same as the other companies using the Twitter feed.
• However, the writing has always been on the wall, and now that Twitter is ready to funnel its data to Gnip exclusively, it has moved to cut the other third parties off.
• This runs the risk that Gnip will now be denied access to the firehose data of other companies, but this is a risk that Twitter had to take.
• The raw data itself it is not of much value until it has been refined and analysed into something meaningful that advertisers are willing to pay for.
• Now that Twitter can do this itself, there is little point in giving away revenues and margins to third parties.
• This is especially the case as Twitter is in danger of running out of growth and needs other avenues from which to derive revenues.
• I suspect that all of the other major ecosystems who collect vast quantities of data will all end up doing the same.
• This strongly reinforces RFM research which has long believed that collecting one’s own data from one’s own Digital Life services is a key element to being a successful ecosystem.
• It also further reinforces the view that dependencies are always dangerous.
• No matter what assurances one is given, things can quickly change meaning that the dependent can have its business severely damaged in a heartbeat.
• This is exactly what happens to websites that are dependent for their traffic from Google.
• When Google changes its algorithms, it invariably has unforeseen effects and can cause an 80-90% collapse in the traffic arriving at a website without warning.
• At the end of the day Twitter’s first loyalty must be to its shareholders and that means that if it has to cut third parties out for the good of its business then that is what it must do.
• I expect to see more of these types of moves as the ecosystems become more mature with the easy growth over, forcing everyone dig deeper in the barrel to find the next leg of growth.
• Microsoft and Google remain my top two choices to look at to gain exposure to the ecosystem.