I recall that Fred Wilson of Union Square Ventures commented a few times on http://avc.com that Twitter needed to control its experience more. I don't know what their other investors thought, but I imagine that this API company might be a tougher sell to those with money in the game.
Also, how much could Twitter monetize the service as an API until people a competitor started taking their business?
For example, with the Twitter API, if I had a Hubskier's Twitter username, I could know who they follow on Twitter, and maybe use that data to help make following recommendations here on Hubski. i.e. you follow Bob on Twitter. Bob is here on Hubski, so I'll suggest that you follow him here too. I assume that Twitter would be in the same business, more or less, but make $ my sharing their API, rather than by ads. Eventually, Twitter could fade further into the background, I suppose.