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Why Twitter Is Paying For Your Cell Phone Number

This article is more than 9 years old.

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 where Twitter foots the bill to send costly registration texts.

That seems generous of Twitter, but there's a catch: Twitter gets to keep those phone numbers too, and store them on its servers.

It can then use them to enhance its mobile advertising network MoPub. Phone numbers give Twitter a better read on who app users are, to better target them with ads (assuming developers also install MoPub, which Twitter owns and offers them access to for free).

Most consumers won’t know about Digits because it will work entirely in the back-end. In fact you may never see the name Twitter when you give the company your number, beyond some tiny, gray text at the bottom of the registration screen that says Digits is "powered by Twitter."

Privacy concerns notwithstanding, Digits is a crucial selling point for developers, and one that could benefit Twitter's advertising business in mobile.

Twitter did not wish to comment on how it processes and stores user phone numbers. It also does not discuss what it does with a new batch of user phone numbers that Digits will net, 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.