Elon Musk has emerged from the battle over his $44 billion (€44 billion) takeover of Twitter to face an even more daunting task: trying to fix the social media platform he claims to love.
As the deal closed late on Thursday, a new era began for one of the most powerful communication tools to come out of Silicon Valley — but also for Mr Musk himself, who can now add ‘social media mogul’ to his curriculum vitae.
The change in ownership has been welcomed by those who view the billionaire entrepreneur as the man to overhaul a struggling business they believe never reached its full potential. Already, the self-declared “Chief Twit” has outlined grand plans to inspire a faster pace of product innovation and shift into new revenue streams, while transforming to a leaner operation. On Thursday, he began cleaning house, firing top executives including chief executive Parag Agrawal and head of safety, Vijaya Gadde.
Other than being a prolific Twitter user, the mercurial Mr Musk is a novice to the intricacies of the social media industry, where stocks including Meta, Alphabet and Snap suffered a devastating sell-off this earnings season amid continuing macroeconomic hardship.
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Some experts note that he will now be elevated to a crucial political gatekeeper, given Twitter’s outsize importance among politicians and campaigns, and are fearful that his leadership could do more harm than good.
Mr Musk has pledged to restore “free speech” to the platform and undo permanent bans, paving the way for former president Donald Trump to return as the US midterms loom just days away.
“We’ve seen people’s businesses and reputations rise and fall by what happens on Twitter, we’ve seen markets rise and fall by what happens on Twitter, we’ve seen elections rise and fall by what happens on Twitter,” said Joan Donovan, research director of the Harvard Kennedy School’s Shorenstein Center on Media Politics and Public Policy.
“Musk has intention here, he’s going to be led by his techno-libertarian politics.”
For users, advertisers, investors and staffers, the question is what’s next, and what are the implications of the Musk takeover for the social media platform?
Mr Musk, who identifies as a “free speech absolutist”, has said he will respect the speech laws of each country, and reassured advertisers on Thursday that Twitter “cannot become a free-for-all hellscape”. Rather, users will have the freedom to choose their “desired experience according to [their] preferences”, he said.
He will also toss out permanent bans, telling the Financial Times in an interview in May that he would allow Mr Trump back on the platform after he was booted off in the wake of the January 6th attack on the US Capitol in 2021.
[ Kathy Sheridan: What happens to Twitter under a megalomaniac?Opens in new window ]
Casey Mattox, senior fellow at the Charles Koch Institute, is among those who welcome a Musk takeover, arguing that he is likely to move Twitter to a fairer, less “centralised system” for moderating content, towards user-determined content moderation.
But some speech academics warn that Mr Musk’s approach could open the floodgates to toxicity, hate, extremism and misinformation, arguing that it ignores the risk of platform manipulation.
“Musk frequently talks about Twitter as a ‘digital public square,’ which conjures up quaint images of individuals with equal voices exchanging ideas,” said Eddie Perez, who sits on the board of the OSET Institute, an election security non-profit organisation, and used to be Twitter’s director of product management.
“That’s naive; it’s often more akin to well-resourced asymmetric warfare, with bad actors [and] nation-states working in the shadows to try to manipulate the platform and amplify disinformation.”
Others question whether Mr Musk could be susceptible to pressure from foreign powers, particularly given his recent public positions on the Russia-Ukraine conflict, calling publicly for a negotiated settlement to end the war in the country, and the praise he received from Beijing for comments on Taiwan.
Either way, Mr Musk has an uphill battle ahead. In buying Twitter, he inherits a company that has long struggled to grow at the same pace as rivals or develop a compelling advertising offering, according to multiple people in the industry.
Mr Musk himself acknowledged last week that he and investors were “obviously overpaying” when paying $54.20 a share for Twitter, leaving him under pressure to deliver for those who backed the deal during a wider economic downturn.
He previously said that Twitter needed to “get healthy” and he would cut jobs and costs to deliver this. This will involve overhauling management; text messages revealed as part of Musk’s legal battle with Twitter showed that he had been inundated with recommendations from associates for top roles. But Mr Musk only floated one name himself as a potential board member: chat show host Oprah Winfrey.
He suggested that he would not appoint any C-suite management positions at all, writing that he would personally “oversee software development”. Mr Musk is also likely to gut Twitter’s relaxed remote working culture in favour of the long-hours, in-office workplaces that he is known to run at his other companies, which could lead to clashes with staff.
At the centre of his plan for the social company, Mr Musk has hinted that he wants to build a WeChat-style superapp, tweeting: “Buying Twitter is an accelerant to creating X, the everything app”. These are apps that typically allow users to message, shop, send payments or order taxis all in one place — and are popular in China where antitrust laws are less stringent than the US.
In an early presentation to investors, he promised to quintuple revenues by 2028 to $26.4 billion compared with 2021 and reach 931 million users, up from about 238 million today, according to someone familiar with the document. The boost would come from a new payments business, as well as subscriptions and data licensing.
Changpeng Zhao, chief executive of Binance, which was one of the equity investors in the deal, said in a statement on Friday that he hoped to help Mr Musk “realise a new vision for Twitter”, including broadening “the use and adoption of crypto and blockchain technology” — signalling that cryptocurrencies might form part of Musk’s payments plans.
Ms Donovan noted that Musk, a co-founder of PayPal, might look to turn Twitter into a banking entity given his background, but warned: “If Musk is truly as anti-establishment as he has pointed himself out to be, then there is a risk of him destabilising currencies with the power of these Twitter networks.”
Others are more enthusiastic about Mr Musk’s prospects when it comes to boosting the business.
Mr Musk has suggested that the company will shift away from relying so heavily on advertising in future — down to 45 per cent of revenues by 2028 from around 90 per cent in 2021. However, on Thursday he sought to woo brands, posting that it was “essential to show Twitter users advertising that is as relevant as possible to their needs”.
Pinar Yildirim, associate professor of economics and marketing at the Wharton School of the University of Pennsylvania, said that Twitter “has a lot of potential to deliver a high-quality user base to advertisers” and that Musk clearly understands that “advertising will have to be more efficient on Twitter”.
She added: “This is a low-hanging fruit, it’s not a difficult thing for Twitter to improve. Once they have done this I’m sure Twitter will be able to attract more advertisers.”
Much will depend on Mr Musk’s approach to speech, however, as some advertisers are already nervous that Twitter will no longer remain a safe place for brands if it becomes a hotbed of toxicity and abuse.
Kieley Taylor, global head of partnerships at global advertising group GroupM, said that some of her clients’ brands told the agency to suspend their advertising on Twitter if Trump’s account is reinstated, for example. The Wall Street Journal first reported news of the brands’ requests.
“Twitter’s major advertisers should make it clear right now that if Musk rolls back the brand safety policies that he has said he was going to roll back, that they plan on walking immediately,” Angelo Carusone, president of left-leaning non-profit Media Matters, wrote, on Twitter. — Copyright The Financial Times Limited 2022
