Deals with Google, Microsoft push Twitter into profitability

Deals with Google, Microsoft push Twitter into profitability

New York: Internet firm Twitter Inc. will make around $25 million (Rs117 crore) from Web search deals with Google Inc. and Microsoft Corp. announced in October, enough to push the site into profitability, people familiar with the matter said.

An agreement that made Twitter’s messages searchable on Google’s site will generate around $15 million, said the people, who asked to remain anonymous because the terms aren’t public. A similar deal with Microsoft’s Bing search engine will earn Twitter around $10 million.

The multi-year agreements will allow Twitter to make a small profit in 2009, said the people, who estimate that its operating costs are around $20 million to $25 million a year. The San Francisco-based company, which started in 2006, has around 105 employees, according to its website.

Until earlier this year, Twitter wasn’t even focused on revenue—let alone profit. The firm attracted millions of users with a free service that posts 140-character messages, known as tweets. Chief executive Evan Williams said two months ago that the firm was spending almost all its time improving the product, rather than seeking ways to make money. That left many analysts and investors wondering how Twitter would convert its popularity into earnings.

Twitter has at least 58 million global monthly users, according to US research firm ComScore Inc. The service is the third most popular social-networking site in the US, after Facebook Inc. and MySpace.

The firm’s co-founder, Biz Stone, declined to comment on its finances, saying only that Twitter is proud of the work it accomplished in 2009. “We’re thrilled about the partnerships we’ve formed this year and we’re looking forward to opening Twitter even more in the future," Stone said in an email.

Jane Penner, a spokeswoman for Mountain View, California-based Google, declined to comment, as did Pete Wootton, a spokesman for Redmond, Washington-based Microsoft. When the agreements were announced in October, none of the companies involved disclosed their value.

Twitter got help achieving profitability by reducing expenses, the people familiar with the situation said. It used to pay more money to telecommunications firms for distributing its billions of tweets over wireless networks. Twitter’s popularity has given it bargaining power with phone companies, helping it renegotiate deals to bring down costs.