Apple Taps Into Twitter, Buying Social Analytics Firm Topsy

A Twitter Inc. tweet regarding the company ringing the opening bell on the New York Stock Exchange is displayed on an Apple iPhone. Bloomberg News

Apple Inc. AAPL +1.64% is looking for more of a social life.

Apple recently acquired social-media analytics firm Topsy Labs Inc. for more than $200 million, according to people familiar with the matter.

Topsy specializes in analyzing the global conversation on Twitter. TWTR +0.42% Its tools can decipher how often a term is tweeted, find an influential person on a specific subject, or measure the exposure of an event or campaign.

The company is one of a handful of Twitter Inc. partners with access to the so-called “fire hose”—the full stream of tweets since 2006, which now average roughly 500 million a day. Topsy then analyzes this information and resells it to customers.

Industry executives said it was unlikely that Apple and Topsy would have agreed to a deal without Twitter’s blessing.

A Twitter spokesman declined to comment. Topsy didn’t respond to requests for comment.

An Apple spokeswoman confirmed the deal but wouldn’t comment further. “Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans,” she said.

Apple’s goals for Topsy are unclear. Analysts said Topsy’s insights could be useful in several Apple services, including the iTunes media store, Siri voice assistant or iAd advertising platform.

Susan Etlinger, industry analyst at Altimeter Group, said Topsy’s analysis could help Apple recommend songs, movies and TV shows to iTunes users. Topsy engineers could help Apple learn how to extract similar insights from other large data sets.

Apple “could benefit from a more forward looking view of what people’s interests are,” Ms. Etlinger said. “Twitter is optimized for understanding conversations around entertainment.”

People in the online-ad industry said this offers advertising opportunities for Apple’s iTunes Radio, an online-streaming-music competitor to services from Pandora Media Inc. P +0.18% and Spotify AB.

One analyst said Topsy’s data could benefit a range of Apple partners, including media companies that provide content to the iTunes stores, developers who create apps for iOS, and advertisers in iAd.

“All of these businesses would appreciate having access to more of this real-time data,” said Debra Aho Williamson, principal analyst at eMarketer. “Now Apple has a new tool to help the companies that use its services become better, smarter marketers.”

Apple has been wrestling with a tepid response from marketers for iAd, which was launched in 2010 to sell ads within mobile apps on iPhones, iPads and iPods running on the company’s iOS software.

Apple initially required advertisers to spend $1 million in an iAd campaign. It has since lowered that threshold to $100,000 per campaign in an effort to broaden its appeal to advertisers.

Topsy, which competes with startups such as DataSift Inc. and Gnip Inc., also could help Apple better monitor the social-media conversation around its products including targeted advertising on iTunes radio or Apple’s iAd platform.

Another possible application of Topsy’s technology is to refine the search feature in Apple’s Siri voice assistant in the iPhone and iPad. Siri already asks users to access their Twitter account to personalize search results. Apple has purchased at least one other startup with expertise in search. It paid more than $50 million last year for Chomp Inc., a tool for searching mobile apps.

The acquisition marks Apple’s latest foray into social networking, after past missteps. Its Ping music-sharing service was closed last year after it failed to excite users.

Apple last year made it easier for users of its devices to share photos and messages on social networks including Twitter and Facebook FB -0.76% without opening those apps.

Topsy was founded in 2007 by Vipul Ved Prakash, a former Napster Inc. engineer who had founded Cloudmark, a company specializing in anti-spam software. In 2011 it brought on Duncan Greatwood, a former Cisco Systems Inc. CSCO +0.28% executive, to be CEO.

Since its founding, Topsy has raised more than $32 million from investors including BlueRun Ventures, Founders Fund Management LLC and Ignition Partners. It also arranged $3 million in debt from Western Technology Investment LLC, according to Dow Jones VentureSource, a service owned by Wall Street Journal parent company News Corp. NWSA -0.65%

Earlier this year, Topsy enhanced the ability to track tweets by the geographical location from which they were sent.

Using references to landmarks or local events, Topsy says the service can identify the country of origin for about 95% of tweets and the city of origin for close to one-quarter of all tweets.

—Elizabeth Dwoskin and Yoree Koh contributed to this article. Read in Wall Street Journal