Strategy in the information technology space is a lot like game theory – or at least it’s like kid’s game theory.  The normal inclination of companies is to acquire other companies in order to grow.  This is especially true when the target of an acquisition has a capability that you lack in your own service portfolio.
But during times of economic distress, it’s hard to cost-justify such an acquisition.  At the same time, it is very hard to justify a “buy” when you aren’t quite sure how federal regulators will perceive such an acquisition.  Enter kids games… If you remember Red Rover, you know that sometimes you call a weak player just to get numbers on your side.  And then sometimes you call a strong and pivotal player with the hopes of building your own line.  During economic situations like we are facing today, a courageous company may just try and call another company to come play on their team.
Last night, Twitter announced that they will be playing in the OAuth games.  For those not intimately familiar with OAuth, it is an open authentication model that promotes application authentiaction and data sharing.  OAuth is not the same thing as OpenID (which is for user/personal authentication).  At the same time, they DID NOT annouce support for OpenID.
Why is this important?  Well, user/personal authentication goes straight to the heart of your customer base.  If you maintain your own user database, then you can leverage that base directly.  If you rely upon someone else’s user database (e.g., Google or Yahoo’s users), then you can’t directly tap that base – at least, not as easily.  So I’m not suprised that Twitter is signaling OAuth.  They want to have a broader reach of interoperatiblity.  Unlike Facebook, Twitter doesn’t have a “platform” to exploit.  So it is in their interests to play on a field where other company’s can agree to work in a friendly (coopetition-based) model.
It also makes sense that they aren’t announcing any plans for OpenID.  Twitter just said “no” to becoming an appendage on someone else’s platform.  But they aren’t big enough to do the same thing that Facebook wanted to do (i.e., buy others and build themselves). This is especially true since there isn’t a LOT of spare VC funding these days.  So Twitter will keep its user base and “play nice” with others – for now.
By announcing OAuth support, Twitter is making itself an even bigger target.  But this time, they may be the target of a different corporation – and it smells like an infrastructure player might be in the mix.  Specifically, I see either Google or Yahoo! making a play (hostile or otherwise) for Twitter.  Personally, I think that Google is trying to bring Twitter into their universe.  It would make Google an even more compelling services “platform” if they had a “partner” who could pull the micro-blogging crowd into orbit.
Is Google thinking about it?  Who knows?  But they are certainly a big player in OAuth.  Their entire OpenSocial initiative hinges on the success of OAuth.  And recent posts by Google seem to indicate that they want to “play nice” with other companies and other services.  If nothing else, maybe they can drive more services to rely upon Google infrastructure (i.e., not their search infrastructure).
At the same time, Yahoo! might surprise us.  Their new CEO wants to make a big splash.  And there could be no bigger splash than an outright pruchase of Twitter by Yahoo!  I hope that this does not happen.  But if I were the CEO at Yahoo!, I’d really be tempted.
-Roo