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Jul 18 11

Twitter and Microsoft Hammering Out Bing Integration

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Having recently lost a Google contract that added tweets to the company’s search results, Twitter is treading shaky waters in ongoing negotiations with Microsoft over a similar use arrangement.

According to All Things D’s Liz Gannes, there are a few pain points over which the two companies are currently chatting. But, if successfully negotiated, Microsoft could ultimately land the keys to the real-time kingdom: long-term access to the real-time updates provided by both Facebook and Twitter, which would accompany the site’s standard search results.

The two companies have six extra months to hammer out the details—Twitter signed real-time search contracts with Google and Microsoft in the fall of 2009, but Microsoft got a slightly longer timeframe than its big competition. Twitter is allegedly asking for an increased licensing fee for use of its real-time information: $30 million, or double the cost of the company’s original contract with Microsoft.

While that sounds like a lot, Gannes reports that it’s actually one of the “less contentious” parts of the negotiations. Twitter wants increased control over Bing’s user interface, or how its information is presented within Microsoft’s search, in addition to more links to Twitter itself within Bing. The two sides also have yet to come to terms with advertising: Specifically, how both companies will split revenue for advertising that appears in conjunction with Twitter information.

The elephant in the room, however, is just how much Microsoft needs real-time feeds. And more importantly, how the company’s apparent push into the social space could affect ongoing negotiations. Consider Google: While the company lost access to the official Twitter firehose once contract negotiations imploded, Google went right around and deployed its own social network, Google+, which it will invariably use to build real-time social information into its search results in some extended, future capacity.

While Twitter might already have the established user base, it’s possible that Microsoft sees a future where its own alleged social service, code-named Tulalip, becomes the company’s real-time information repository.

And it’s also possible that Microsoft could eschew the entire idea. As Gannes writes, real-time search has yet to become a driving factor on today’s Web: In fact, the market for third-party real-time search services has been imploding as of late. To Microsoft, establishing complicated licensing arrangements with other companies just to gain access to a firehose of real-time chit chat about the latest Harry Potter movie might not be worth the effort in the long run.