Here’s a good clue as to why Google should be interested in Twitter. It’s not just search. It’s currency. Google isn’t good at currency. It needs content to ferment; it needs links and clicks to collect so PageRank can determine its value.
But in this report (full PDF here), Google chief economist Hal Varian and analyst Hyunyoung Choi demonstrate that Google search trends are good at predicting the present. That is, rather than waiting weeks or even a month to get aggregated figures on auto, retail, home, or travel sales to be collected and analyzed and released, Google search patterns can give a good indication of sales now.
Note that to do that, Google’s value is not in its analysis of content but in its collection of our behavior, which is faster.
Of course, Twitter is even faster, even more immediate. It collects what we’re doing and talking and thinking of doing right now. I’d love to see Varian et al take its data and put it through their algorithms.
Imagine the value of that knowledge, harnessed, for retail and manufacturing forecasting, stock and currency trading, and politics. There’s the vein of value in Twitter. Monetizing it may not come from advertising but from knowledge.
When analyzing the value of enterprises in the digital economy, it’s important to figure the value of its knowledge. I argue in my book that Amazon is really a knowledge company, that delivering books and stuff - atoms - is the price it pays to know more about our shopping than any other company on earth. Google knows the most about what we’re looking for. With maps and mobile, Google is also trying to be the company that knows where we are. Facebook knows the most about our relationships. And Twitter is headed to knowing more about what we’re doing and thinking. (Next: just wi-fi the brain.)