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Google and Microsoft are in an all-out battle to be the first to
make a search-advertising deal with Twitter, technology news and
opinion site All Things D reported Thursday. Twitter’s search potential
has been coveted since it acquired third-party search app Summize and
integrated it into its own site.

Currently, according to industry statistics, Google dominates the
general search market, with Microsoft struggling to move up from third

Twitter currently serves no ads, search or otherwise, with the exception of the rare "sponsored" company such as ExecTweets.

Of course, the question of whether Twitter will continue its
explosive growth or fizzle out into a once-hyped fad has caused both
Microsoft and Google some consternation, sources say. Considering how
tight IT budgets are these days, it’s certainly prudent that even a
huge tech company such as Microsoft or Google would want to ensure
they’d get a significant return on investment, analysts say.

Earlier this month, unconfirmed reports swirled that Google would
buy Twitter, after purchasing two other short messaging services:
Dodgeball, which was eventually shut down, and Jaiku, a once-direct
Twitter competitor with a now-uncertain future.

And Google’s normal pattern is to spot trends early and jump on
them, such as with the firm’s acquisition of Blogger and YouTube.
Twitter CEO Evan Williams already has ties to Google, having sold
Blogger to the search giant in February 2003. 

Microsoft, meanwhile, has a $240 million stake in Facebook (yet
another suitor angling for Twitter) as well as display ad deals with
both Facebook and Digg. What’s really heating up this competition is
that when Microsoft made its $240 million investment, Google was widely
rumored to be vying for a piece of the social networking site as well.

The king of the social networking world remains Facebook, which
welcomed its 200 millionth active member this week. While a remarkable
community building achievement, analysts say Facebook remains
unprofitable and struggling to find a viable recurring revenue model.