Twitter’s Fear of a Meta Platform

Posted on: April 12, 2010
Posted in Social

Twitter

This week Twitter made clear its choice between (1) remaining a platform play, largely helping third party developers to be successful and taking a cut, or (2) becoming a destination site, owning end-users and monetizing via some combo of ads, virtual goods etc.

Why did Twitter so abruptly move toward #2? On the surface, there is investor pressure to monetize. But strategically speaking, Twitter may believe it’s simply too risky to wait while complementary providers of Twitter services work to become de-facto ‘meta platforms’ running on top of Twitter.

Nothing exists today, but it’s very possible some ‘meta platform’ could eventuate, as Twitter use-cases are in their relative infancy. If such a platform were to prove wildly popular, the provider could wield power from Twitter -e.g. dragging its feet adopting Twitter features, offering off-platform interactions, etc. Sure Twitter could fire back (aka withdraw API use), but that would be a defensive play which would already signal loss of control.

Concern about such ‘meta platforms’ must be present in the Twitter boardroom, not only because monetization is still unclear, but also because barriers to entry are essentially non-existent in the Twitter ecosystem. Barriers are incredibly important, because competitive / substitution threats and buyer / seller bargaining power are ultimately determined by a company’s barriers.

How low are barriers to entry? Consider that Tweetie was live in the app store 1 month after 1st line of code with essentially zero capital. This is a compelling example of the network effect that an open platform / API bestows on 3rd party developers (Tweetie is the most successful mobile Twitter client ever).

To some extent low barriers are dangerous for Twitter, since it could be usurped by a substitute / complementary platform player within its own ecosystem. For anyone that honestly thinks Twitter has the asynchronous micro-blogging landscape locked up, look at this chart on MySpace.

Translation: as much as the ecosystem network effect has helped Twitter, it could also hurt them.

This is likely why Twitter is redoubling its open API / platform concept and taking back some control. Developers are already seeing signs of Twitter using private APIs, which sets the stage for an incredibly contentious ‘Chirp‘ conference. With the move to private API features, Twitter could distance itself in more meaningful ways than by simply offering clients for free.

This drastic switch in behavior must relate to concern over the monetization land grab within the ecosystem. Apple exhibited similar behavior recently, creating a private API for iBooks (Instapaper creator Marco Arment lamented the private API here). It’s obvious there’s just one reason why Apple decided to take this ‘unfair’ advantage with iBooks’they are very afraid of losing the e-book market to Amazon.

No such immediate / tangible threat exists on the surface now, but Twitter’s change in body language seems to recognize that low barriers present a risk in that they make monetization almost as tangible for ecosystem complements as for Twitter itself. This is the real reason I believe Twitter is moving to attack complements prior to monetization being completely clear: they believe waiting is dangerous.

Only time will tell whether it’s too premature (slowing momentum and creating developer backlash). It should be pretty interesting to watch how far Twitter goes to take back its ‘unfair share’ of users to become a destination site as all of this unfolds.

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