Apple gets access to Twitter’s firehose — and Google doesn’t

Twitter (NYSE: TWTR) makes money in two ways. While the majority of Twitter’s revenue comes from advertising, about 11% of the microblogging social network’s revenue comes from Twitter’s data-licensing business, often referred to as the firehose. Though it may be a small business for Twitter, it is important enough to get Apple (NASDAQ: AAPL) interested. In Apple’s recently confirmed acquisition of Topsy, Apple has effectively bought access to Twitter’s firehose.

The Topsy acquisition
Though Apple isn’t required to disclose all acquisitions, Topsy is the second of two large acquisitions in just the last few weeks. In November, Apple bought PrimeSense, the Israeli company behind the motion-sensing technology in Microsoft’s Xbox video game consoles for $350 million. Now Apple just dropped another US$200 million on the Topsy acquisition.

A description of what Topsy does. Source: Topsy website.

While the PrimeSense acquisition had obvious implications on how Apple might make use of the company’s technology (adopting its motion-sensing technology in its own products), the applications Topsy may be used for are less clear. With access to Twitter’s firehose, Topsy analyses Twitter’s data to provide meaningful and instant insights. The technology could be applied in many different areas. A few examples include bolstering that data available for advertisers on its iAds platform, or improving search results in the App Store and Siri. It could also be used to improve suggestions in the App Store, iTunes, and iTunes Radio.

Key takeaways
AppleInsider’s Neil Hughes points out one of the most important implications from the acquisition: It gives Apple data Google (NASDAQ: GOOG) doesn’t have. “The agreement to purchase Topsy is key because Apple’s chief rival in the mobile software space, Google, does not have access to such data from Twitter,” writes Hughes. Google’s partnership with Twitter to get access to the data was severed in 2012.

Apple would be joining Microsoft‘s Bing as one of the few companies with access to the data. With just five clients making up 73% of Twitter’s data-licensing revenue, Apple would be joining a very exclusive club, one that Google isn’t in. This would be an important win for Apple, especially considering the advantage would likely be gained in an area in which Google is typically always far ahead of Apple: search.

Want more stock ideas? The Australian Financial Review says "good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit." Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

A version of this article, written by Daniel Sparks, originally appeared on

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.