The bird has been freed. After months of trying to wriggle out of the deal, Elon Musk took Twitter private for a whopping $44bn. Mr Musk announced his acquisition in his archetypal style: he tweeted a video of him marching into Twitter’s San Francisco HQ with the caption ‘entering Twitter HQ- let that sink in’. The eccentric billionaire has vowed to protect free speech in the ‘de facto public square’, having described himself earlier as a free speech absolutist. Will the brain behind SpaceX and Tesla manage to reinvent Twitter with his bold ideas?
With or without Mr Musk, Twitter has been beset with problems. It is burning an eye-watering $4mn every day. Its rapid expansion under Jack Dorsey has led to a bloated firm: it has 1.5 employees per $1mn to Meta’s 0.6. Its growth has stagnated over the years; although senior to Facebook by 2 years, it has lost out in the race to sign up users. With the rapid rise of Instagram, Snapchat and above all, TikTok, Twitter has lost out: it has undoubtedly failed to garner a younger audience. The chief reason for the same is a chronic lack of innovation. Its competitors led by Meta and Snapchat have been reinventing themselves, looking for greener pastures. Also worsening Twitter’s revenue problems is its dwindling share of advertisement revenue. With the advertisement market in the doldrums, Twitter’s finances have looked wobbly; more concerning is a structural reason: Twitter attracts a much smaller portion of advertisement revenue as compared to Meta or Youtube. Twitter has received flak for its content moderation policies, especially after its controversial ban on former President Donald Trump and anti-vaxxers.
Nonetheless, Twitter is influential globally. It has democratised the spread of information by giving people a platform; it is used extensively by governments, world leaders, and opinion makers. It was the public announcer of US policy during the Trump years. But what lies ahead for the company? Mr Musk vouches that it has tremendous growth potential. The question lingers on: is Mr Musk the man to lead the turnaround or is he a loud distraction?
The first change incorporated by Elon Musk was the pivot to a subscription model. Users will now have to shell out $8 a month to verify their accounts, earning a ‘blue tick’ in return. Most of Mr Musk’s plans have been announced through erratic tweeting and memes (after being publically rebuked by noted novelist Stephan King, he reduced the fee to $8 from $20). Secondly, Elon Musk has fired 3500 employees controversially, many of them from the Ethical AI and Human Rights teams; he has now vowed to set up a moderation council. He vows to delete accounts that only post content deemed illegal. Mr Musk’s grip on the job and seriousness have come under intense scrutiny by human rights groups and academics. No sooner did he complete the takeover than did far-right accounts start circulating conspiracy theories about the 2020 election and vaccines. His credibility has been further damaged by his own Twitter feed (he lately linked the attack on Paul Pelosi, Nancy Pelosi’s husband, to Hillary Clinton). Advertisers are wary about his next moves: led by GM, several have pulled down their ads awaiting his next move.
Despite having lamented about Twitter’s problem with bots- over which he wanted to pull out of the deal- and its moderation issues, his first moves have been to repair the company’s battered finances. In a major respite, he no longer has to explain his moves to shareholders. He has been courting advertisers and cutting costs by laying off employees (some of whom he has since rehired).
More concerning is a potential conflict of interest surrounding Mr Musk’s other business dealings. Elon Musk has funded the acquisition partly by selling Tesla’s stock. Mr Musk’s close relationship with the Chinese Communist Party has come under intense scrutiny, with even the White House expressing concern. China is the second-largest market for Tesla’s automobiles; Mr Musk has recently opened up large gigafactories in China. He lately disclosed of the Chinese seeking his assurance of not rolling out his Starlink internet over Taiwan (Mr Musk’s generous Starlink rollout in Ukraine has been pivotal to the war effort). Mr Musk’s hold over the commanding sectors of aerospace, electronics and semiconductors, internet and communication has been a major source of both ethical and business concern. Senator Chris Murphy, for example, has called on the Senate to conduct a comprehensive review of the Saudi investors he has on board. With a scaled-back team, Twitter risks increased cyber security breaches, making users’ data vulnerable to poaching.
The overall verdict remains that it is too soon to make a judgement on Mr Musk and the future of Twitter. Mr Musk’s fans tout as him being the talisman to turn things around with his ingenuity. Twitter is in need of reform both in the financial and long-term growth sense: but it is hazy as to how Mr Musk plans to turn it around into a ‘defacto public square’. So the question still lingers on among users, government and advertisers alike: the bird has been freed, but will it fly?
Image: taken by Sky News