FTC Antitrust Probe of Twitter

July 01, 2011, 2:58 PM EDT By Jeff Bliss and Brian Womack

(Updates with Gavil comment in eighth paragraph and software consultant comment in 13th paragraph.)

July 1 (Bloomberg) -- The U.S. Federal Trade Commission has begun contacting software makers as part of a preliminary inquiry into whether Twitter Inc.’s business practices harm competition, two people familiar with the matter said.

The agency is responding to complaints that Twitter is making it harder for some software developers to design applications that run in concert with the company’s service, said one of the people, who asked not to be identified because the matter hasn’t been made public.

The agency has been taking a more active role in examining the behavior of large Internet companies in recent months. Last week, Google Inc., the world’s biggest Internet-search provider, said it had received a subpoena from the FTC regarding a broad antitrust probe into its dominance.

Peter Kaplan, an FTC spokesman, declined to comment, as did Sean Garrett, a spokesman for San Francisco-based Twitter.

Twitter, which allows people to communicate in 140- character messages, has seen its usage surge since the company was founded four years ago. The website is now used by 13 percent of U.S. adults online, up from 8 percent in November, as more older Americans embrace the service, according to a report last month by the Pew Research Center in Washington.

Twitter, competing with social-networking service Facebook Inc., is trying to improve its products and attract more users and advertisers. Last year, the company added more features that matched what independent Twitter developers were already doing, such as applications for smartphones.

Nature of Accusations

Considering the nature of the accusations and the lack of strong legal precedent, the FTC would be on the boundaries of the law if the agency decided to bring a case against Twitter, one person familiar with the matter said.

Still, the complaints “sound a lot like some of the allegations that were leveled at Microsoft,” said Andrew Gavil, a Howard University law professor in Washington. Microsoft Corp. eventually signed a 10-year agreement allowing the government to monitor its business.

One developer, UberMedia, said in an e-mailed statement yesterday that “we have been contacted by the FTC and we intend to fully comply with their request for information.”

The Pasadena, California-based company didn’t say that the probe was targeting Twitter.

Independent Developer

On its website, UberMedia describes itself as the leading independent developer of applications that help users find and communicate with one another on Twitter.

In February, UberMedia Chief Executive Officer Bill Gross said in a blog posting that Twitter had temporarily shut off the access of several UberMedia applications to the Twitter service, accusing the developer of violating a contract.

“It was enough of a shot across the bow, so it got the attention of not only UberMedia but the entire developer community,” said Mark Evans, a Toronto-based social-media strategist whose clients include independent Twitter software developers.

Twitter has a legitimate goal of wanting to generate revenue by expanding its product’s features, Evans said. The trick will be that in doing so, it doesn’t “kill that developer ecosystem” drawing users to Twitter, he said.

Business Insider reported on the FTC inquiry earlier yesterday.

--With assistance from Sara Forden in Washington. Editors: Leslie Hoffecker, Laurie Asseo

To contact the reporters on this story: Jeff Bliss in Washington at jbliss@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editors responsible for this story: Mark Silva at msilva34@bloomberg.net; Tom Giles at tgiles5@bloomberg.net

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