TweetUp Makes More Moves to Compete With Twitter — But Why?

TweetUp‘s relationship with Twitter has always been a bit awkward. Born out of Idealab founder Bill Gross’ inspiration to create a marketplace for tweets — similar to what he created for search advertising with GoTo — TweetUp announced a sponsored tweet product in April, just a day before Twitter announced its own Sponsored Tweets product.

Today, TweetUp announced the acquisition of Twidroyd (a popular Twitter client for Android) (s GOOG) and popurls (a news aggregator), both created by the Austrian developers Thomas Marban and Ralph Zimmerman, who will be joining TweetUp and Idealab. The acquisition gives TweetUp access to both mobile client and web test-beds for its ad units of contextually related Twitter accounts. But again it brings the company into competition with Twitter, which has its own Android Twitter client. Further, TweetUp partners TweetDeck and Seesmic — which make a number of Twitter clients — have deals to use TweetUp ads but have yet to integrate them, as the TweetUp API was only released last week.

TweetUp also has yet to release its promised bidding system for Twitter users to buy keywords. TweetUp CMO Steve Chadima said that would come out this quarter, and that there are already sponsored campaigns for Dish Network (s DISH) and Tide in the system. On a call this morning, Chadima also pointed out that Twidroyd (formerly known as Twidroid) is more popular than Twitter’s own Android client (although they both have less than 1 percent market share of all tweets, according to stats from, and that Twitter has yet to fully roll out its Sponsored Tweets product.

What I don’t understand is why a company trying to play in the Twitter ecosystem would move even further to compete with Twitter. Sure, it wants to help monetize the overall marketplace, but aren’t there more defensible ways to create value? Chadima answered:

“We’re trying very hard to work with them. We do have common investors and we do try to talk with them as much as possible but we’re pretty small compared to the issues that they’re facing right now. We do let them know ahead of time what we’re doing and that we’re not trying to take them on head-on.”

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