Thursday, October 23, 2014

 

Why Twitter Is Paying For Your Cell Phone Number

Twitter wants to gain a bigger presence in the lives of consumers, and so from today it’s going behind the scenes of how we connect to our smartphone apps. The most obvious route? Our phone numbers.

On Wednesday it launched a new mobile platform for developers called Fabric, and a core feature called Digits that foots the bill to send costly registration texts. Consumers won’t know about Digits because it will work entirely in the back-end. You’ll probably never see the name Twitter when you use it — only a button, like the one above, that says “use my phone number” when you register for an app.

But the service is a crucial selling point for developers, and one that could help Twitter gain a bigger presence in mobile. Digits lets app developers register users with just their cell phone numbers, avoiding the cumbersome need for passwords. In processing those numbers, Twitter gets access to them too. That could help Twitter get a better read on who those users are, to better target them with ads through its MoPub advertising network.

Twitter did not reply to questions about exactly how it would process or possibly store user phone numbers. It also does not discuss what it will do with user phone numbers in its blog post about Fabric and Digits.

SMS registration is a very appealing route for getting people to sign up to an app. It’s one of the reasons WhatsApp became the first globally popular messaging service. Users didn’t have to remember a new user name and password. All they needed to do was give their number, and then wait for a text from the app with a verification code.

But texting verification codes can be cripplingly expensive for most apps, even as they grow larger.

For instance in an interview with Forbes in January 2014, WhatsApp co-founder Brian Acton explained that SMS verification made up a third of the company’s overall costs, running up a bill as as high as $500,000 a month. In its early days, WhatsApp navigated a cutthroat industry of SMS brokers who would charge prices as high as 65 cents for sending an SMS to a user in the Middle East, and 2 cents for sending to one in the U.S. Sometimes the SMS message would fail, and the company would have to call the user with an automated voice provider. That could cost double or 10 times more than an SMS. Registration by text is alluring, but out of reach for most developers.

Enter Twitter. It built Digits on its own infrastructure, and says it’s paying for all those charges. “[App developers] don’t have to worry about managing multiple relationships with carriers and SMS interchanges,” the company said in a blog post today. Developers can use Digits to send SMS codes for free to 216 countries in 28 languages.

Twitter won’t say how it’s doing that, but a Sept. 30 story in The Information, which first reported the Digits feature, cites a person briefed on the project as saying that Twitter “struck deals with wireless carriers around the world to plug directly into their text-message systems.”

Twitter now denies a segment of that report that says it would use Digits as a stealth sign up tool for Twitter itself, keeping people’s phone numbers handy for a shadow account (though it’s possible it could have changed that policy in the two weeks leading up to today).

Twitter hasn’t denied that it will use people’s phone numbers to better identify who they are. The Information points out that cell phone numbers are better identifiers than email addresses. That could prove more valuable for a mobile advertising network like MoPub. That appears to be the primary way that Twitter will make money from its new, behind-the-scenes Fabric platform, after giving away nifty features to developers like Digits.
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