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Why Topsy Went With Apple Instead of Twitter

Apple (NASDAQ: AAPL) could have missed out on its chance to acquire Topsy Labs if Twitter (NYSE: TWTR) had been more proactive in its attempt to acquire the social media analytics startup.

AllThingsD cited sources familiar to the matter that said, "Twitter considered buying Topsy a number of times throughout the company's six-year history."

Twitter reportedly liked Topsy's instant social insights, which allows users to search and analyze all tweets since 2006. Searches can be filtered by links, tweets, photos, videos and influential users.

Twitter was reportedly attracted to Topsy because it had developed search tools and technology that were better than Twitter's own creations, a feat that was possible because Topsy had access to Twitter's Firehose. Without it, Topsy might not have developed its tools in the first place.

No one knows why Twitter backed away from its plans to acquire Topsy, but AllThingsD's Mike Isaac speculated that the $200 million price tag was one of the turnoffs, claiming that Twitter's engineers may have felt that Topsy's work could be replicated internally, therefore diminishing the value of the acquisition.

Whether or not that's true, Apple took the bait. Instead of developing its own social media analytics firm from scratch, Apple acquired one for a couple hundred million dollars.

Many bloggers and analysts have theorized about the various things that Apple could accomplish with Topsy.

Justin Maas, VP of Client Relations at fishbat, a Long Island ad agency, is convinced that Apple acquired Topsy to enter the big data race.

Related: Apple's iPhone 6 Could Have Curved, Pressure-Sensitive Display

Azeem Azhar, founder and CEO of PeerIndex (another social media analytics firm), theorized that Apple acquired Topsy to gradually replace Google as its primary search component.

There is also the possibility that Apple acquired Topsy for technology that has not been shown publicly.

For additional clues, investors may want to look at Apple's previous acquisitions.

Related: The 10 Apple Acquisitions of 2013

When Apple purchased AuthenTec for more than $300 million, many assumed the obvious. Apple was expected to improve the security of its products by developing an iPhone that could scan a user's fingerprint.

The following year, Apple released the first iPhone with a fingerprint scanner.

Sometimes the most obvious explanation turns out to be the right one.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ

Posted-In: AllThingsD Apple AuthenTecNews Rumors M&A Startups Tech Best of Benzinga

 

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