Google had very healthy second quarter earnings. Yet, it missed Wall Street expectations and the stock has taken a hit. Advertising accounted for 96% of Google's revenues, with near 66% of that on Google's own sites. Overall, Google's revenues were $6.82 billion. Google's investment in Android "is not material to the company" meaning that Google spends little on Android yet gets a decent return on its investment. Yet, there is a powder keg of money under Android and Google is seeing next to none of it in proportion to the ecosystem. So, Google needs to protect the future of Android for the value of mobile search it can advertise against. There are untold billions that Google could tap if it was more vertically integrated. Enter Motorola.

Analysts: Android Development in a Less Open World After Google + Motorola

Google: Buying Motorola is "Pro-Competitive" [Transcript]

Defending Android & The Ecosystem

There is a patent war raging in the technology industry. Mobile is the forefront of the battlefield.

Google knows this and feels persecuted by it. In a blog post a couple of weeks ago, Google wrote about losing out on the Nortel patents to a group led by Microsoft, Apple and others. The going price for the patents was initially thought to be about $1 billion, yet the competition for the patents saw the final sale skyrocket to $4.5 billion. That is a hefty chunk of change, even for Google.

"We're not naive; technology is a tough and ever-changing industry and we work very hard to stay focused on our own business and make better products," wrote Dave Drummond, Google's chief legal officer. "But in this instance we thought it was important to speak out and make it clear that we're determined to preserve Android as a competitive choice for consumers, by stopping those who are trying to strangle it."

Motorola has 17,000 mobile patents, with 7,500 pending. The question that people have to ask is if Motorola Mobility (MMI), based on patents alone, is worth $12.5 billion. The acquisition price was near $40 a share, or a 63% markup from what MMI was trading for upon market close on Friday, Aug. 12.

The answer has to be no. If this was a pure patent play, Google would not have spent the time or money that it did to get MMI in pocket.

In the conference call, Drummond said "We think that protecting that [the Android] ecosystem is pro-competitive almost by definition."

This is surely a note to regulators in the U.S. and E.U. that are going to be taking a long, hard look at Google and Motorola. Google made sure that it got the rest of the major players in the Android OEM ecosystem on board with the acquisition before it was announced. The Google investor relationships page has some plastic quotes from Samsung, HTC, Sony Ericsson and LG leaders to roll out for the announcement.

Here they are:

"We welcome today's news, which demonstrates Google's deep commitment to defending Android, its partners, and the ecosystem," said J.K. Shin, president of Samsung's mobile division.

"I welcome Google's commitment to defending Android and its partners," said Bert Nordberg, president and CEO of Sony Ericsson.

"We welcome the news of today's acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem," Said Peter Chou, CEO of HTC.

"We welcome Google's commitment to defending Android and its partners," said Jong-Seok Park, president and CEO of LG's mobile division.

While those are some very nice canned answers by the major Android players that make a ton of money on the platform, they are a little too convenient (and similar) to be comfortable.

Forrester analyst John McCarthy notes that it is not as simple as it seems.

"The deal leaves Google in a very awkward position of being half-pregnant and trying to be a provider of an open source 'environment' while at the same time competing with its 'customers,'" McCarthy wrote in a blog post. "It also means that there are four integrated hardware/software offerings: Apple/iOS, HP/WebOS, RIM/QNX, and now Google/Motorola and potentially a 5th if this deal emboldens Microsoft to pull the trigger on the long-rumored full take over of Nokia. The Apple story of simplicity and focused innovation at the app level has won out over complexity and innovation at all levels."

Tristan Louis, an Internet pioneer and journalist, notes that there is very little downside for Google in purchasing Motorola. Motorola Mobility has near $3 billion in cash assets and makes about $3.3 billion a quarter. Louis notes that as a patent play (given the Nortel rate set in June), these patents come cheap.

Playing Against Android

Some question whether Google can tenably defend Android no matter what it does. A fair amount of Android code is based on Java, which is now controlled by Oracle after its acquisition of Sun Microsystems. Oracle wants to basically shut down Android, or at least take a large chunk of its profits from Google based on mobile search revenue.

Apple has been fighting Android by proxy, filing injunctions against Samsung in Australia and the European Union to keep the Samsung Galaxy Tab 10.1 off shelves. Apple is embroiled in patent litigation with nearly all the Android OEMs as well. Unlike Microsoft, which just wants a cut of the pie, Apple looks like it wants to keep Android from hitting store shelves in general. Apple has a right to be a touch ill at ease, especially when it comes to the tablet market. Though the iPhone is hugely popular, the Samsung Galaxy S has taken a significant amount of market share from Apple's popular device. With Samsung's strategy of supporting all carriers and standards and getting devices into every type of market vertical, Apple has to fear that the Galaxy Tab series will similarly cut into iPad sales.

Microsoft has been fighting the Android OEMs (and Google directly) over several issues, mobility included. Windows Phone has been a commercial flop since its release last November and Microsoft has to wait for Nokia to build a couple great devices before it can really see if it has something on its hands. There is a huge marketing blitz coming this holiday season for Windows Phone, similar to what Microsoft did with the Xbox, which eventually became profitable after years of Redmond fighting for market traction.

"If Microsoft passes on the Nokia aquisition, this deal could throw Windows Mobile a temporary life-line," McCarthy wrote. "Forrester can hear Steve Balmer and company pitching the Asian players on how Microsoft is the only hardware agnostic player left and that HTC, Samsung, and LG should increase their support for Windows Mobile as protection against Google favoring its own hardware play."

There is a Linux element that is playing against Android as well, or could be. As the FOSS Patents blog points out, there are potentially "thousands of people out there who could legally shake down Android device makers" because of disclosure of the GPLv2 license under which Linux is published. For more on that, head over to FOSS.

Being Greedy Does Not Mean Being Evil

Every time Google rocks the boat with an acquisition, the pundits come out of the woodwork and yell, "They are being evil! They said they were not going to be evil!"

It is getting kind of old.

What do companies do? They try to make money and grow. Google, fairly, creatively or not, has grown significantly and is moving aggressively into new market segments almost every month. The market has been fighting back for some time and the Nortel/Novell patent issues are only part of it.

Google is not being evil by purchasing MMI. Nor, as the company would want you to believe by rolling out its Android partners with nice things to say about "defending the ecosystem," is Google being entirely altruistic. The fact of the matter is that Google owns 43.4% of the smartphone market worldwide and that is split between five major vendors (Motorola being one) with a lot of smaller vendors doing well (Huawei, ZTE etc.).

Google is being greedy.

The best companies are greedy. It is a capitalist society and everybody is out for themselves. Google sees its future in mobile and in the cloud. Hence, it needs to defend its core mobile product in Android. Outside of Motorola, Google will fight for more patents that become available down the road. So will Apple, Microsoft and everybody who could possibly have a stake in the mobile ecosystem. Apple is greedy (for a lot of reasons outside of just patents) and so is Microsoft (ditto to Apple).

Apple is making billions upon billions of dollars through iOS. As one ReadWriteWeb employee pointed out today, Google looks to be trying to defend itself against the largest stockpile of cash in history. Apple is doing all of this by controlling only 18.2% of the smartphone market. The idea for Google is to grow Motorola so that it can control between 5% and 15% of the market for devices itself. This is completely reasonable, as we noted in our first post about Google/Motorola.

Good For Everybody? Bad For Everybody?

Outside of the AT&T/T-Mobile merger, this is the biggest thing to happen in the mobile market this year and probably since Android really started to rise in 2009 (sorry, Nokia/Microsoft, you just are not quite as big).

We will see how things shake out. Will the other Android OEMs, despite there current grinning expressions, take as kindly to this acquisition as Google would want everybody to believe? Is there an opening for Windows Phone as a "manufacturer agnostic" player to become the new Android?

How about new devices coming from Motorola, HTC, Samsung? Does Google drive up innovation through Motorola, forcing its partners to keep pace which would mean that Apple, HP, Microsoft, Nokia and everybody else would also have to accelerate innovation?

Or, does this kill Google? Is this too big a bet on a company that has been more or less failing since the Razr became outdated (regardless of the nominal success of the Droid series)?

Let us know in the comments what you think about the answers to these or any other questions surrounding Google's bid to protect the ecosystem, increase its bottom line and carve a significant niche for itself in the future of mobile.

The transcript below provides the highlights from the conference call that Google and Motorola held this morning after the announcement. Questions from analysts and financial companies have been stripped so as to show the answers to pertinent issues from Google and Motorola.

Patents, Partners & Capitalistic Greed: Factors That Led Google to Buy Motorola

Analysts: Android Development in a Less Open World After Google + Motorola

Larry Page - Google CEO

Opening Remarks

I'm very excited to announce that we have entered into an agreement to acquire Motorola Mobility this morning, an agreement that has been unanimously approved by both Boards. I believe the combination of the two companies is going to create tremendous shareholder value, drive great user experiences and accelerate innovation.

In May 2005 I met Andy Rubin for the first time. Andy had a crazy vision for the mobile industry. He wanted to align the standards across the mobile industry and the Internet. Andy felt that it was inefficient for each hardware manufacturer to have developed software constantly. Andy had a vision for an open-source platform that would accelerate the pace of innovation in the industry and deliver compelling user experiences.

That was just six years ago and Android is now one of the leading platforms in the industry. Andy has grown tremendously -- or Android, I should say, has grown tremendously since its launch in November of 2007. More than 150 million Android devices have been activated worldwide through a network of 39 manufacturers, 231 carriers in 123 countries. And there's more than 550,000 Android devices are lit up every day, that's just amazing progress.

Turning our attention to Motorola Mobility, they have an amazing track record of over 80 years of innovation in communications technology and the development of intellectual property, which helped drive the remarkable revolution in mobile computing we are all enjoying today.

Motorola's innovation in the mobile space has led to a number of industry milestones, including the introduction of the world's first portable cell phone nearly 30 years ago and the StarTAC, the smallest and lightest phone on earth at the time of the launch.

Not long after the launch after Android Motorola Mobility had a new CEO and he got together with Andy and they shared a vision for the mobile industry. Sanjay made a big bet; he bet big on Android as the sole operating system across all of Motorola's smartphone and tablet devices. That bet has seen him transform Motorola Mobility into one of the leading Android smartphone developers in the world.

It's no secret that Web usage is increasingly shifting to mobile devices, a trend I expect to continue. With mobility continuing to take center stage in the computing revolution, the combination with Motorola is an extremely important event in Google's continuing evolution that will drive a lot of improvements in our ability to deliver great user experiences.

Motorola Mobility has a great team with experience in developing solutions for mobile computing and for the home devices market. I'm impressed by the transformation of Motorola Mobility that the team there has initiated. I think they have an exciting product roadmap, a strong vision for the future and are poised for growth.

I think there's an opportunity to accelerate innovation in the home business by working together with the cable and telco industry as we go through a transition to Internet protocol. Motorola also has a strong patent portfolio which will help protect Android from anti-competitive threats from Microsoft, Apple and other companies.

Many hardware partners have contributed to Android's success and we look forward to continuing our work with all of them on an equal basis to deliver outstanding user experiences. We built Android as an open-source platform and it will stay that way. We've committed to that since the formation of the Open Handset Alliance nearly four years ago. Our plan is that Motorola will remain a licensee of Android.

Having spoken to some of the key partners of the Android ecosystem, they share our enthusiasm for this combination. I'm really excited about the acquisition and the possibilities it opens up for the Android ecosystem. My intention is to work closely with the Motorola teams and let Sanjay and his management team drive the business, that way we can supercharge both the Android ecosystem as well as the Motorola business.

David Drummond - Google Senior Vice President and Chief Legal Officer

On Patents

We've been saying for some time that we intend to protect the Android ecosystem; it's under threat from some companies who are looking to use patents (technical difficulty).

And so I think while I'm not prepared to talk about specific strategies, we think that combining with Motorola and having that kind of a patent portfolio, which Sanjay can talk about in a moment, to protect the ecosystem is a good thing.

Sanjay Jha - Motorola Mobility Chairman & CEO

On Patents

Thanks, David. Just talking about the patent portfolio that we have here at Motorola Mobility, we have over 17,000 issued patents worldwide, we have on top of that over 7,500 patent applications in process. We have tremendous strength not only in wireless standards but also wireless non-essential patents which are the patents which are required to deliver competitive products in the marketplace. And as a result of the combination of these patents we believe we'll be able to provide much better support to the businesses at Motorola Mobility as well as support the Android ecosystem.

Andy Rubin - Google Senior Vice President of Mobile (Android Founder)

On Ecosystem

I spoke yesterday to I think it was the top five Android licensees and they all showed very enthusiastic support for the deal. Android obviously was born as an open platform; it doesn't make sense for it to be a single OEM. We want to go as wide as possible and obviously all of our existing OEM partners help make it what it is today.

Larry Page

On Ecosystem

I'm really excited about this deal and I think while there are competencies there that aren't core to us so, we're also -- as I mentioned, we're operating -- we'll plan to operate Motorola Mobility as a separate business so that they have competency there.

And I'm really excited about protecting and supporting the Android ecosystem. And I think that their patent on Android two and a half years ago has really paid off and there's evidence from their success in the smartphone space.

And we really believe that Motorola Mobility has tremendous opportunity for growth and will really create a lot of value in the future.

And we really believe in the plans of the Motorola team, Sanjay and their vision for the future and really expect them to be successful. So I think this is a really unique opportunity and one that I'm tremendously excited about.

David Drummond

On Ecosystem

Sure, this is David. Look, I think that we've seen some very aggressive licensing demands in the Android ecosystem and we think this is a result of having the patent portfolio we'll be able to make sure that Android remains open and vibrant and the kind of platform that lots of companies can (technical difficulty).

Andy Rubin

On Motorola and Ecosystem

Thank you. Look, I mean, Motorola existed as one of the really, really early licensees of Android, they were a founding member of the Open Handset Alliance. After this transaction nothing changes, they're going to be a separate business and it's business as usual for Android. So I see it as basically protecting the ecosystem and extending it as well.

David Drummond

On Regulatory Concerns

Sure, this is David. On the first question, this is a transaction obviously given its size that will require regulatory approval and a number -- certainly in the United States, certainly in Europe and possibly some other jurisdictions.

We're quite confident that this will be approved. We believe very strongly this is a pro-competitive transaction and there are lots of reasons for that. But a couple of them -- Android has clearly added competition, innovation, increased user choice. We think that protecting that ecosystem is pro-competitive almost by definition.

This is not a horizontal transaction. Google has not materially been in the handset business, so we think there are -- so this certainly doesn't draw those kinds of concerns and we certainly think this is a very competitive transaction.

In terms of the -- you mentioned terms of the agreement. I think we'll be filing the agreement between Motorola and Google's public filings. We'll have the details of the agreement in those filings and those will be forthcoming shortly.

Andy Rubin

On Nexus Device Strategy and Ecosystem

Sure, and to add to Larry's points, we have this strategy where we have the Nexus program and we have this lead device strategy.

That strategy has worked quite well to help focus the team. What we do is we select each -- around Christmas time of each year we select a manufacturer that we work very closely with to release a device in that time frame.

That includes also semiconductor companies and all the components that go in the device. And essentially the teams huddle together in one building, they jointly work on these development efforts, they go on for 12 -- nine to 12 months and ultimately at the holiday season or right before it devices pop out that are based on the this effort.

We don't expect that to change at all. The acquisition is going to be run as a separate business; they will be part of that bidding process and part of that lead development process. And obviously Android remains open to other partners to use as they are today.

David Drummond

On Patent Defending

I think we've said for some time that we need to build our patent portfolio to make sure that Android and other businesses can be successful. So we will continue to do that.

Larry Page

Closing Remarks

Yes, absolutely. Thanks, Patrick. I think one thing I'd say is that we are really excited about this whole business and working with the Motorola team and all the employees and all the hard work there that's gone on over the years. And we at Google are very excited about this and I think the Motorola Mobility folks are as well and there's tremendous opportunity here.

Android is growing like crazy; we think that will benefit all partners in the Android ecosystem including Motorola. And we're very excited about those opportunities going forward. It really allows us to supercharge the whole Android ecosystem.

They made a great bet on Android that was really successful and that's made them the leading Android smartphone maker and we really believe that Motorola Mobility is poised for tremendous growth. And furthermore I'd say that the leading -- they're a leading home devices maker, that's also a big opportunity. And we're working with them and the industry to really accelerate innovation.

So with that I want to thank everyone for joining us on such short notice and thank all of the employees at Motorola Mobility and at Google for all of their hard work and for all of you for spending time with us this morning.

It makes absolute sense for Google to buy Motorola. The last couple of weeks have seen Google take significant body blows to its Android vertical. First they lose the Nortel patents to Apple and Microsoft (among others) and then Apple comes out with its second quarter earnings statement to reveal that it now has $76 billion in the bank and making more than $10 billion in profit every quarter. Most of that is from iOS. Android is not making that kind of money for Google and the search giant has to be feeling that it missed an opportunity, especially considering that Apple only has 18.2% of the worldwide smartphone market and Android has 43.4%. How will Google's addition of Motorola shake up the industry?

Analysts: Android Development in a Less Open World After Google + Motorola

Google: Buying Motorola is "Pro-Competitive" [Transcript]

In a press release, Google's CEO Larry Page, said, "Motorola Mobility's total commitment to Android has created a natural fit for our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers."

What Page really means is, "I can't believe how much money Apple is making. We need to get into the handset business now. We have always liked Motorola and since HTC and Samsung are kicking their butt, they come relatively cheap. No better time than the present to swoop in."

Motorola has been a preferred Android vendor for Google since Day 1. The original Droid phone was from Motorola and the first Honeycomb tablet was the Motorola Xoom. Motorola only sold 10.2 million devices in the second quarter and not all of those were smartphones. Motorola, a once-proud company that dominated the mobile space in the years leading up to the Era of the Smartphone (remember the Razr?).

Regulators Cannot Block This One Since Apple Is So Big

The deal is subject to regulatory approval in both the United States and the European Union. Yet, unlike many of Google's acquisitions in recent years, this one should go through relatively quickly. That is because of what Apple has done to the ecosystem. There is no way that regulators can look at what Google makes from Android, the worldwide smartphone market and the juggernaut that Apple has become and say that Google's acquisition of Motorola is in any way anti-competitive. It is a necessary move by Google to keep pace with its biggest competitor in the mobile realm.

Yet, that is excluding the Android ecosystem itself. If Android is "open" (and many people doubt how open it actually is, even if it is licensed for free), then what is going to happen with Samsung and HTC? Do they still get preferential treatment, such as the ability to release the Nexus line of Android phones which are considered the developers' build and the flagship of the operating system? Will they be allowed to use their own value-added products and skins on top of Android? What about LG, ZTE and Huawei that are making modest, if decent, livings off of Android? In the short term it is hard to speculate on how Google's acquisition of Motorola will change the very large and complex dynamic of the Android ecosystem, but it is hard to imagine that Android would be more "open."

How Does This Affect The Ecosystem?

Then again, nothing could change. Google could just start creating new devices through Motorola and HTC and Samsung remain strong and healthy competitors like nothing has changed (except for a likely inevitable rise in Motorola sales cutting into HTC/Samsung profits). Though, in the long term, what if Google (purposely or not) ends up driving HTC and Samsung out of the Android market in straight towards Windows Phone 7? Or maybe even to join the MeeGo project, which is still alive even without Nokia.

Android lovers should be excited that Google now has Motorola under its thumb. There should be more and better Android devices coming to market. Google lovers should be happy because it means that Google is defending itself in the patent wars and should raise the bottom line of the company. Apple, Microsoft, Nokia and the Android ecosystem should be wary because Google now has the capability of completing disrupting the balance of the environment in the same way that Apple has.

Do you think that Google's acquisition of Motorola is a good thing for mobile competition or a reactionary, anti-competitive move by Mountain View? Let us know in the comments.

Reading between the lines of the talk there are a couple of things that become apparent for what Microsoft has planned for Skype. Foremost, Ballmer said Skype will continue to be a cross-platform service.

"I said it and I mean it. Microsoft will continue to support non-Microsoft platforms because it is fundamental to the value proposition of communications," Ballmer said. "We are one of the few companies that has a track record of doing this. Take a look at the work we have done over the years with Office, for example, for the Mac ... we have a track record of understanding our customers and the need to support our customers as they want to travel."

"We have had an incredible uptake in our Lync unified communications client and we are committed to want to build on that success," Ballmer said. "The product is off to a fantastic start and we have plans to enhance it in addition to connecting it through the rest of the Skype customer base which, in and of itself, I think is a great value."

Microsoft and Skype anticipate that the acquisition will get regulatory approval within the year.

Ballmer spoke a lot of about how Skype will integrate in to Window Phone and the various other platforms that Microsoft owns. From Kinect and Xbox down through the Microsoft product chain like Hotmail. At the same time, Microsoft has often been a company that wants to be your everything, everywhere. There was a sense from Ballmer and Bates that they would want to roll out Skype integration to every possible service they can get it on. Skype as a platform by itself could not do that. It has a massive user base but probably not the cash resources for the breadth and scope that Microsoft envisions for it.

The words "calendar" and "BlackBerry" have been together a lot recently. That is because RIM's new tablet, the BlackBerry PlayBook, shipped without a native calendar, contacts or email clients, all of which RIM has promised for "later this summer." There is no official word yet if RIM plans on integrating Tungle into the PlayBook but it would make a lot of sense.

Like the Gist team, the entire Tungle team will be joining RIM to carry its product over the smartphone maker.

"Yup. It's official. The team at Tungle will now be sporting new BlackBerrys," wrote Tungle CEO and founder Marc Gingras on the Tungle site. "We're really excited about this. We know there isn't an industry more exciting than the smartphone and tablet markets. And RIM is a dominant player in this space."

RIM still is a dominant player in the smartphone space but its hold on market share has become tenuous with the rise of Android and iOS. The long-awaited BlackBerry 6 operating system was met with little praise when it debuted last year and the smartphone OS is about a year's worth of development behind its top two rivals. One way to fix this would be to merge the QNX OS with the BlackBerry smartphone OS and the ability of the tablet software to support native applications on smartphones. The bridge that RIM needs to cross to merge the two platforms is likely to be paved with acquisitions such as Tungle.me and Gist.

Merging of operating systems is a bit of a trend right now in the mobile space as companies that historically do one thing well try to incorporate other mobile strategies. Windows 8 may be a mashup of Windows Phone 7 and Windows 7, Hewlett-Packard is going to wedge the WebOS it acquired from Palm into its computers running Windows and there is a significant chance that Android and Google Chrome OS will one day be one and the same.

The most direct comparison to RIM merging BlackBerry OS 6 and QNX will be when Google unveils Ice Cream Sandwich, the next Android version that is said to be a mix between smartphone Gingerbread and tablet Honeycomb. In the middle of it all stands Apple, smug and content with one very effective system: iOS.

Brown's statement was videotaped and reported on by Alastair Goldfisher of private equity blog PEHub this afternoon. We've embedded the key part of the video below.

Goldfisher rounded up all of Facebook's 2010 acquisitions thusly:

Altogether, Facebook announced eight acquisitions in 2010, including Hot Potato; Drop.io (another RRE Ventures-backed company snapped up for about $10 million); Divvyshot (a photo management tech company that grew out of Y Combinator and was bought for an undisclosed amount); Chai Labs (acquired for $10 million); and Nextstop (bought for $2.5 million). Facebook's largest purchase this year was the $40 million it paid to take ownership of social networking patents from Friendster.

It's notable that none of the startups acquired in 2010, as far as I know, are still open for business and providing their services to their old users. FriendFeed, which Facebook acquired in August of 2009, is unusual in that it is still operating, in part as a test-bed for future Facebook features. When Facebook announced a new user registration technology yesterday, for example, the company referenced how well the technology had performed in testing on FriendFeed.

Startup founders, this means your odds of getting acquired by Facebook are looking better than ever. Startup technology lovers, this probably means you're twice as likely to have your heart broken next year. Facebook lovers - it sounds like you're going to see some more cool features coming to the world's biggest social network, at a fast and furious pace.

Thanks to Atul Arora for finding and sharing this news.

Zynga has built up its estimated $5 billion in worth and with 200 million users, largely on games like Farmville and Mafia Wars, popular on Facebook. But it has been going to town in an effort to extend its popular franchises. Challenge may provide it with a means of turbocharging its in-game economies.

Virtual goods and virtual currency provide a major avenue for online gaming revenue. Challenge being folded into Zynga may help shore up that aspect of its business model. Staying on Facebook, Zynga must use that company's "Facebook Credits." Outside, there may be additional opportunities.

Backed by Sequoia Capital and Globespan, the Austin-based Challenge Games launched in 2007 to focus on immersive, virtual goods Web games. The company has already been renamed Zynga Austin. Challenge CEO and Co-Founder, Andrew Busey, has been named general manager and vice president of the Austin studio and Zynga said its 35 employees will be retained.

Zynga's SEC filing indicates a "total offering amount" of $20,571,454.

What a cynical bore. Here's the new formula, meant only to tease users with innovation and ultimately enrich a select few Valley darlings:

Check out the Etherpad company blog post about the deal. They didn't even pretend to be sorry about closing the service. They didn't thank any community of users for help along the way. They just said the deal is done, here's what's happening to the money you paid, now get out.

Maybe Google Wave will change the world, maybe it won't. It's hard for a person who loves startups and innovation not to feel a little toyed with by this kind of drama though.

The acquisition he's referring to is Twitter's purchase of Summize, a real-time search engine that has now become search.twitter.com. Since that original purchase in summer of 2008, Twitter has made no other moves or indications that they were interested in buying other companies, seemingly more focused on quashing bugs, acquiring funding and partnering with major search engines like Bing and Google. Meanwhile, the ecosystem of Twitter applications exploded, and now includes hundreds if not thousands of apps powered by or integrated with Twitter's service. But which of these apps deserve to become an official company offering?

What Companies are on Twitter's Radar?

Which applications do you suppose have crossed Twitter's radar? Some insight may be found on Twitter's "goodies" page where the company lists a handful of apps, widgets, and website buttons which Twitter users can browse through and download. Here, desktop Twitter clients like Twhirl and TweetDeck are promoted alongside mobile applications like Twitterific and PocketTweets.

However, the complete app list seems a little out-of-date when compared with what today's Twitterers are actually using, especially on the mobile front. According to a study from August of this year, iPhone apps like Tweetie and TwitterFon are just as popular as Twitterific - if not more so - as is the Blackberry app TwitterBerry. And the one-time popular Twitter app Twhirl, an Adobe AIR desktop client, has long since been overshadowed by the more robust TweetDeck and similar web counterparts.

Among those web counterparts are the new tools from Seesmic and Brizzly, both of which have been garnering attention as of late, especially when they each introduced support for Twitter's new "lists" feature earlier this month.

But client applications are only a small slice of the entire Twitter app universe. There are also games, blog and email plugins, utilities, analytics and search tools, shopping services, URL shortners and so much more. Plus, there are sites that attempt to aggregate the chaos into some sort of meaningful structure, like the oneforty.com website, for example, often called Twitter's unofficial "app store" by its fans.

While we could only guess at which applications Twitter would want to adopt as their "official" clients or services, a good guess may involve some of the media sharing tools that have been popularized by a number of Twitter users wanting to share photos and videos in addition to plain text. TwitPic comes to mind as one of the top photo-sharing clients and TwitVid or Tweetube may be considered for video shares. These sorts of acquisitions seem to fit better with Twitter's goal of expanding upon the core functionality of Twitter. Where before, the company was content with its simple 140-character updates, recent changes, including the integration of the URL-shortening service bit.ly, Twitter lists, geolocation features and a new implementation of the "re-tweet" structure seem to hint at Twitter's desire to add more layers of complexity to the once-basic service.

More Acquisitions Could be Too Much of a Good Thing

However, Twitter needs to be careful not to add too much. Up until now, the service has grown organically, with a lot of its features and conventions implemented by its own user and developer community outside of the official channels. Bog it down too much with extra add-ons and new behaviors, and Twitter may scare off potential new users who already often struggle with figuring out what to do with the service in its simple form. Plus, longtime Twitterers may also be put-off to see their favorite clients or services ignored in favor of whatever companies Twitter chooses to bless through an acquisition deal. And once acquired, competing companies could wither and fade away, unable to compete, eventually leading their developers to cut their losses and move on.

What Should Twitter Acquire?

Earlier this year, we listed ten companies that Twitter should acquire next. Not surprisingly, some of the companies or their features have already been implemented, including bit.ly's URL shortening service and the geo-location feature we mentioned. Meanwhile, another app on the list, FriendFeed, has already been acquired by Facebook, leaving our original list much shorter and now in need of an update.

Given Twitter's intentions to start a shopping spree sometime in the near future, we wonder what apps will make their list. We also wonder if more Twitter acquisitions will end up being a good thing for the company and the community as a whole, or if it will end up stifling competition in what is now a thriving ecosystem of innovation and development. We hope Twitter proceeds cautiously and wisely in this area - any major unwelcome changes have the ability to alienate the very community that made Twitter what it is today.

This June, Brightcove's CEO Jeremy Allaire told Sillicon Alley Insider that the company was now profitable and that he expected the company to see a 50% revenue growth in 2009.

Is Google Buying Brightcove's Tech or Its Customers?

While Google could obviously offer the same kind of services Brightcove currently offers on its own YouTube platform, Brightcove has already locked in most of the customers that Google would also be competing for. Also, while YouTube was designed as a consumer platform (even as Google is slowly moving to featuring more commercial content on the site), Brightcove has set up a platform that gives enterprise customers the flexibility and metrics they need. In the end, though, if this rumor is true, Google is most likely more interested in Brightcove's customer base than in its technology.

We asked both Google and Brightcove for a comment about this rumor and will update the post when/if we hear from them.

Update: as Dan Rayburn points out in the comments below and on his blog, Brightcove's setup requires its customers to use third-party content-delivery networks like Limelight to stream their videos. If Google really acquires Brightcove, this could turn out to be a problem, as it would keep Google from being able to use YouTube's (cheap) infrastructure.

Image by Peachtree Media Advisors

Mike Macadaan started Twiistup two years ago when he was a UX/design creative executive at AOL. When he moved from NorCal to SoCal, he started the event to make friends and networking connections, not planning on growing the event beyond the initial two instances. Instead of just concocting another mixer, he added a few twists, and Twiistup gained popularity and a hundred or so attendees with each occurrence.

Photo by Mike Macadaan.

"Conferences are boring as sh*t, but Twiistup was just this party. He sold 600 tickets and had 600 people on the waiting list. At at that point, Twiistup became L.A.'s flagship event. Twiistup 5 this February was held in a hangar in the Santa Monica airport, all decked out in this cyberpunk, Blade Runner kind of thing. Mike had 1,000 people with a 400-person waiting list. He really never planned for it to be this big. It's too big and valuable to just stop, but it also became too big for Mike to take it to the next level."

Enter Dao, a "funemployed" SoCal entrepreneur, author, and blogger.

"It's a natural fit when you learn that, in a former life, he was both a standup comic and life coach," wrote Sean Percival of Dao in today's installment of LaLaWag.

"Tired of having to make a scene at other people's events, Francisco started to arrange his own unique series of fun-inspired get-togethers. Rumor has it he may even make a career out of it, bringing you a new type of tech event, with a twist."

Hint, hint.

So when silent investors bought the brand, Dao was brought on board. He is raising the stakes by making Twiistup 6 a two-day event. He's thinking of it as "a mini-TED" with an evening party and a all-day stage event the following day. Already, Dao has secured several tech and mainstream persons of note as speakers.

Photo by Mike Macadaan.

Twiistup is already known for its New Tech-esque "Showoff" competition and signature evening event; the addition of a full conference agenda and the seeding of similar event models in other cities are two immediate enhancements announced with the influx of new capital.

"The groundswell of community support for Twiistup in other states, let alone Los Angeles, has been incredible to watch and it's the driving reason Twiistup's reputation has spread so far and wide," said Macadaan. "People from New York, Colorado, Miami, Seattle, Atlanta, Chicago, and even Switzerland have reached out wanting to create a similar experience to help bring their communities together. I'm thrilled that Twiistup will get the dedicated time and focus it needs to become bigger and even better."

There have also been suggestions that Twiistup should be a regional event with national reach, such as South by Southwest. "It should be on the level of Blogwold, TechCrunch 50, a young and hip tech show," said Dao. "The one thing I'm sure about is that Twiistup is going to be a lot bigger."

The next Twiistup will take place July 30-31 at the Universal Hilton in Universal City, Los Angeles.

Integration with WordPress

PollDaddy and WordPress were already working on integrating PollDaddy into the WordPress.com platform, and, as PollDaddy's founders put it, "in the end, it just seemed like the perfect fit for us to join them." As has been the standard for Automattic's acquisitions, PollDaddy will continue to operate as a standalone platform and the company will continue to support and develop it on other blog and social networking platforms.

WordPress.com has already integrated PollDaddy's functionality for its users, who can now easily add surveys to any blog post, which will surely give PollDaddy's user numbers a significant boost. Automattic is also making a PollDaddy plugin available for self-hosted WordPress blogs.

Here is a short overview of how the WordPress.com integration works:

Dba.dk is Denmark's largest online classifieds and auctions site and has been able to challenge eBay in its own market.

Fewer Auction - More Direct Transactions

EBay's move to acquire classifieds sites and payment services is part of the company's strategy of putting less emphasis on auctions and more on direct transactions. EBay is currently in a bit of a slump and its workforce reduction is clearly meant to keep cost under control while the company restructures its business.

The shares were bought by internet investment firm Digital Sky Technologies, which now controls 50.6% of Mail.ru. You can see a clumsily Google-translated version of the site's "blogs" section here.

Context

Traffic analysts Quantcast estimate the site sees almost one million visitors each month from the US. For context, Facebook says it sees 100 million unique visitors per month from around the world.

Another 32% of Mail.ru is owned by South African conglomerate Naspers, the same company that we reported acquired African social media aggregator Afrigator earlier this month. Naspers says that Mail.ru generated $56 million in revenue last year, meaning presumably that it's either growing revenues quickly and/or is now drastically over-valued. 40X annual revenue is the kind of valuation that people make fun of Silicon Valley for.

The moral of the story here is that there is huge internet activity all around the world and not just in Silicon Valley. Many of our international readers are fully aware of that but even we need occasional comments or multi-billion dollar valuations in order to remember.