Twitter buys TweetDeck for $US40m

Twitter has acquired third-party app TweetDeck in a deal worth $US40 million, in the latest of a recent series of big money buy-outs in the tech sector.

Earlier this month, it was reported that Twitter was in talks to acquire TweetDeck for US$50 million, significantly more than the final deal was worth.

TweetDeck, which acts as a personal real-time browser for Twitter users, was founded in 2008 by British entrepreneur Iain Dodsworth.

The deal with Twitter comes just a few months after TweetDeck was reportedly discussing a takeover by UberMedia for $US25-30 million, at which point Twitter entered into the discussions with a higher bid.

Both Twitter and TweetDeck have declined to comment on the acquisition. However, the deal highlights how far Twitter is willing to go in order to control its ecosystem, which has expanded exponentially through third-party clients such as TweetDeck.

Twitter has already made a number of efforts to control the power of third-party clients, which for many users are their preferred method for reading and writing tweets.

It pulled API access for UberMedia back in February, which was later reinstated, and UberTwitter was forced to change its name to UberSocial.

Twitter is keen to boost its small revenue base with advertisements, but the popularity of third-party clients means many users won’t even see them.

By taking control of a popular ecosystem such as TweetDeck, Twitter will have the ability to put ads in front of more users and hopefully become profitable.

TweetDeck does not make a financial contribution to Twitter. Although the company received $300,000 in seed funding in 2009, along with $2 million from unnamed investors in the same year, it has yet to turn a profit.

Industry observers believe there is a high possibility Twitter will kill off TweetDeck – it has already pumped a lot of resources into the Twitter.com site and encouraging TweetDeck’s millions of users to stay away would hurt that process.

But other analysts have pointed out that keeping some of TweetDeck’s functionality could serve as a problem, as the program allows users to integrate accounts with Facebook and Foursquare.

Last week, fellow social media giant LinkedIn made its debut on the New York Stock Exchange with shares hitting $US122, pushing the value of the company up to $U10 billion.

It was the highest market value for a US internet company appearing on the New York Stock Exchange since Google went public in 2004.