This should enable Twitter to further their data collection and statistics endeavors, as well as provide an URL shortener that should last as long as Twitter does. It will be interesting to see how things play out.

But what of Bit.ly? How will they fare? Apparently, it won’t effect them much, as Twitter stopped automatically shortening links as of December. Bit.ly is still “encoding” about 3 billion links per month, and their Bit.ly Pro service should help them build a viable business. (There is quite a market for custom-branded short URLs, as well as enhanced statistics.)

The impact on bit.ly may be negligible, at least in the shortrun. It turns out that Twitter stopped using bit.ly as it’s default shortener on Twitter.com back in early December, except for one specific use-case. And even before then, Twitter.com accounted for only about 5 percent of link encodes. Now it is less than 1 percent. Yet bit.ly encoded more than 3 billion links last month an is still growing quite nicely. That is because it is used by many Twitter clients, including Tweetdeck (a betaworks portfolio company).