The latest shockwave to hit the highly-competitive microblogging space is Google’s announcement that they will be ceasing development on Jaiku. Danny Sullivan reports that Jaiku, along with several other Google products, is being scaled back in order to streamline efforts and focus on products with greater usage.

Google acquired Jaiku in October 2007 with the intent to “expand [Jaiku's] technology in ways [Google] hope[s] you’ll find interesting and useful.” Since Google acquired Jaiku, however, traffic to the site seemed to slow down from previous levels and much of the buzz passed on to other popular alternative platforms.

Unlike Six Apart’s recent move to acquire Pownce and disband the platform, Google announced that they are still in the process of porting Jaiku over to Google App Engine, which would allow organizations, groups and individuals to build their own microblogging services, just like you can install Gmail and Google Docs on your own domain.

Vic Gundotra, Vice President, Engineering, said,

“After the migration is complete, we will release the new open source Jaiku Engine project on Google Code under the Apache License. While Google will no longer actively develop the Jaiku codebase, the service itself will live on thanks to a dedicated and passionate volunteer team of Googlers.”

If you’re currently using Jaiku (or just bought the Jaiku iPhone app), don’t worry about getting a refund or having to export your messages to another service. Jaiku looks to be here to stay, just in a different capacity then most expected. With Google’s plans to release Jaiku on Google Code, it will be interesting to see how the open source microblogging arena heats up. Identica is the clear winner so far in terms of open source microblogging platforms and a strong supporter of developing a federated microblogging solution.