Probably no other blog has done so much to fuel the rise and popularity of Twitter than Michael Arrington’s TechCrunch. Currently number 3 on Technorati’s internet top 100 blog list, TechCrunch has posted updates on Twitter multiple times a week since the site’s launch in 2006 and constantly boosted & stirred the hype around the service. This week, TechCrunch published a post reporting from sources located within both the Google and Twitter camps, stating that Google was in late stage negotiations to purchase Twitter. The post quickly swept across the internet and mainstream media, being covered by Reuters, CNN, the Wall St. Journal, and commented upon across the blogosphere. Arrington followed up with a post stating that Twitter likely wouldn’t sell for less than $1 Billion USD.

Facebook was reportedly in similar talks with Twitter last year, but it looks more likely that the two companies are squaring off and developing / evolving the market for real-time, streaming updates of personal & business information in competition. Recent changes to make Facebook’s “Wall” posts more public is seen as a step in Twitter’s direction. The other players in the field are essentially minor in comparison at this point. Some are suggesting Microsoft could step in and make a bid for Twitter as well – they have already been reported to have invested in a large advertising stake in the company.

So what will this mean for Twitter’s user community and future? That is what has the bloggers active and engaged in discussing the topic. For the most part, judging by the way Google has managed YouTube after its purchase from the original developers / venture capitalists who founded the company, this would be great for Twitter and the community. Google could solve problems that haunt the site – downtime, server problems, search integration, as well as improving and advancing the service in new ways or synching it with other parts of the Google network.

Google could also solve what many see as Twitter’s main weakness – the lack of a revenue producing income stream. The offset of this would be something like Adsense monetization of the site, which may turn off users somewhat, but is so proven and ubiquitous on the web it could probably be introduced with very little difference in the overall user experience. Since the development team behind Twitter also built and sold the site “Blogger” to Google at the height of the blog hype cycle, it is really easy to see the same thing happening again.

“The Stream” appears to be as powerful of an upcoming internet meme at this point as “The Cloud”. Few people really believe that search is solved, and the rise in popularity of Facebook and Twitter has many discussing “real-time search” as the next game changer. In countries so soaked in public opinion reports, polls, and marketing statistics for feedback on politics, media, ad campaigns, products, and so on, having a way to monitor the pulse of real-time internet communications is incredibly powerful. Twitter created the flow, circulation, or traffic of that communication from nothing, empty web space, and that is what makes it so valuable.

Google’s search tools would apparently order and organize Twitter in a way that it becomes much more of an effective means of social communication. Has “Delicious” changed much and become better and more efficient since Yahoo took it over (del.icio.us)? All things considered it is probably not a big issue and most people likely never noticed it. But is it possible for a site to become more popular, attain much higher / web-leading traffic statistics, but at the same time become more boring, and less popular among the community that was active in its early days? That is the story of many sites, and could easily happen to Twitter.

Discussing the issue from afar, it is easy to minimize the difference between $250 million and $1 billion USD, or to forget what a massive amount of money that is. According to Wikipedia, “About $57 million of Twitter is owned by venture capitalists. (Evan)Williams raised about $22 million in venture capital. Twitter is backed by Union Square Ventures, Digital Garage, Spark Capital, and Bezos Expeditions (led by Jeff Bezos of Amazon). Institutional Venture Partners and Benchmark Capital backed Twitter in 2009, investing an additional USD 35 million.” If this is true, and venture capitalists typically target a 40:1 return on this type of start up, they may have reason to hold on to sell at closer to $2.4 billion USD.

On the other hand, Twitter is a Ruby on Rails site – a Eastern European group reported building a local language-specific clone of the site in a 48 hour code sprint. Until recently, the site was run on just a few servers held together with chicken wire and shoestrings. The concept is so simple, it could easily be integrated and offered on any other website. Will the host of competition ultimately dilute Twitter or will the other main web companies just develop their own equivalent, in-house solutions (like Orkut)? Right now the appreciating market price for Twitter is based on something other than these fundamentals – it is the Twitter brand, concept, and community, now part of global consciousness and interconnectedness (like Blogger) that is to be bought & sold.

In my opinion, the next stage of Twitter’s growth and development will be something quite different from its start up period, and is well managed globally by Google. If the founders cash out and use the capital to start up a new company like Tesla, SpaceX, 23andme, or the next, Web 3.0 version of Blogger and Twitter, it is a win-win for everybody.

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TechCrunch stirs Google-Twitter Rumor Mill