Is Twitter biting the hand that feeds it?

We’ve been watching and writing about Twitter for over a year now and a recent Mashable article highlights some of the concerns we’ve seen with recent Twitter developments. Earlier this year, Twitter held its first developers conference, Chirp. It was there that the microblogging site announced its first app – an iPhone app called Tweetie. 

With this announcement, Twitter said loud and clear that they aren’t just going to sit back and let others dictate how their site is used. Overnight, Twitter killed a whole burgeoning development segment. Third party app developers went on alert and some were sent running scared. Venture capitalist took notice as well and funding for Twitter based apps dropped from $21.6 million between June 2008 and May 2009 to $10.4 million between June 2009 and May of this year. That’s a 50% drop in early-stage investment over the past year.

Twitter has seen rampant site growth and third party app development over it’s short life. If it wasn’t for the company allowing anyone and everyone to build on top of their system, they wouldn’t be the powerhouse site they are today. The microblogging site owes its success to the independent developers that created applications to make the user experience more rewarding. 

Twitter has added Android and BlackBerry apps to the smartphone mix, effectively cornering the market. Their iPad app has all but killed development in that area and the addition of the Tweet Button ousted Tweet Meme and other sites that do the same. So far, we haven’t seen Twitter purchasing additional apps, but we wouldn’t be surprised if they develop more location based systems a la Facebook and Foursquare, purchase an official url shorting system and photo sharing app, as well as better use of analytics and trending topics. All of these areas seem natural for Twitter expand into. 

With less focus from developers on Twitter apps, we could be coming to an end of the golden age of the site. If developers perceive the site as a direct challenger, the site will be left to develop their own apps and this will stagger innovation and creativity that has, to date, been one of the defining characteristics of Twitter. Could this be the beginning of the end of Twitter’s market dominance or is this just a bump in the road we try to figure out Twitter’s next move?