After multiple disputes, Elon Musk eventually completed the Twitter deal. He is now the owner and CEO of the world’s most influential social media platform. However, the Twitter he is taking over is a stagnant one. Twitter has been hit with slow growth and consecutive huge losses. It will be a tough task for Musk to stabilize the company. Elon Musk is not a fan of Mark Zuckerberg. Even while both men were in completely different businesses, Musk has been critical of Zuckerberg. Now, that they are now in the same business, we expect some sort of rivalry. Elon Musk is now in the social business himself, can he do better than Zuckerberg?
Elon Musk – set to clean Twitter?
Musk’s acquisition of Twitter is not on a whim. He has always been a heavy Twitter user. After deleting his Instagram account in 2018, Twitter became his only social media. Despite his busy work, Musk, tweets almost every day. He even knows and cares more about the specific product experience than Twitter executives.
Like all heavy users, Musk has had many thoughts and dissatisfaction with Twitter for years. However, Elon Musk’s complaints about Twitter only started recently. Why? Because Twitter’s CEO was Jack Dorsey, a close friend of Musk. Dorsey stepped down as Twitter’s CEO late last year under pressure from Twitter investors. Musk, who no longer had any scruples, began to recklessly and publicly mock Twitter’s new CEO. He directly vents his dissatisfaction with Twitter’s slow product development. Also, he criticizes the suppression of conservative remarks. He then had the idea of acquiring Twitter and transforming it according to his own plans.
On the same day he completed the deal, Musk arrived at Twitter with a gun. He fired three core executives, the CEO, CFO, and general counsel. In addition, some middle-level directors and vice presidents had to go. In order to implement his plan more efficiently, Musk takes the position of interim CEO. He used over 50 top personnel from his other companies (Tesla, Boring and Neuralink) to review Twitter code.
As we all know, Musk despises Zuckerberg very much. He has ridiculed and belittled the founder and CEO of Meta many times in public. He even removed Tesla and SpaceX from Facebook and Instagram at some point. Now, Musk is now at the helm of affairs at Twitter. He has become Zuckerberg’s peer and competitor. Can he successfully reinvent Twitter and prove that he can not only excel in electric cars and aerospace? Can he prove that he is better than Zuckerberg, who he despises?
How will Elon Musk revamp Twitter? Here are some plans
Content review to go external
Content moderation is, of course, the aspect he most wants to revamp Twitter. Musk is not happy with Twitter’s speech moderation standards. This is the main reason for his acquisition of Twitter. Musk believes that Twitter blocks too many conservative accounts and speeches. He believes that there is no need to block the account of former President Trump. As a result, conservatives and Republicans are looking forward to his takeover of Twitter. However, liberals and Democrats worry that Twitter will become a breeding ground for extreme rhetoric and conspiracy theories.
However, Musk did not immediately overturn Twitter’s platform policy after taking over. He instead announced the formation of a “content review committee with diverse perspectives”. Twitter content moderation remains the same until the committee is ready for work. Also, it will not restore any blocked accounts. The committee will make the recommendations.
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This is actually the countermeasure Zuckerberg has taken before. Handing over the toughest potato to a third party. In recent years, social conflicts in the United States have become increasingly intense. There are various extreme and conspiracy remarks. Facebook’s content censorship policy has been criticized by American society and public opinion. Especially during the racial riots in the 2020 election year. Facebook’s inaction made Zuckerberg a target of public criticism. This is different from Twitter’s frequent flagging of Trump’s controversial remarks.
Facebook uses the same policy
Mark Zuckerberg had to spend $130 million to form a content review committee. This includes 20 outsiders. The 20 commissioners include academic experts, media reporters, activists and outgoing politicians. Of these 20, only five are Americans.
Musk has not disclosed information on how the Twitter content moderation committee will be formed. The committee will determine whether Twitter will significantly change its content moderation policy. If its policy changes, then Trump’s account may come back. Obviously, the composition of this committee will be the focus of attention. Interestingly, the Facebook Content Moderation Board also retweeted Musk’s tweet. Twitter is welcome to borrow their model.
Twitter, however, did fine-tune its political stance under Musk. Yesterday, the White House released a tweet showing off its achievements, saying that U.S. pensions hit a new high during the Biden administration. Twitter immediately and mercilessly flagged it to explain that pensions are linked to inflation and have nothing to do with the policies of the Biden administration. After the slap, the White House then quietly deletes the tweet.
Increase revenue to fill the gap
Elon Musk had to lay off thousands of Twitter employees. The layoff was inevitable as Twitter had very big baggage. Elon Musk’s other big challenge is to increase Twitter’s revenue. 92% of Twitter’s $1.18 billion in revenue in the second quarter came from advertising. However, ad spending has been reducing. The slowdown is not specific to Twitter. Google, Snapchat and Meta all had lower ad spending. YouTube ad revenue fell for the first time, with Meta revenue down 4%.
To make matters worse, after Musk completed the acquisition, many big advertisers such as L’Oreal, Pfizer, food giant General Mills, and IPG temporarily stopped advertising on Twitter. They have concerns about the future prospects of the Twitter platform. Tesla’s competitors, Ford Motor, General Motors and Audi also stop ad investment on Twitter.
Under such unfavourable circumstances, Musk must find new revenue sources for Twitter. It has to reduce its dependence on advertising revenue. Musk is already looking for alternative sources. Twitter will be charging $8 every month for the “Blue Tick”.
However, this revenue-generating plan is facing stiff opposition. Why is Musk so eager to open source and throttle Twitter? The world’s richest man is also facing economic pressure. Musk paid $44 billion to buy Twitter, of which $13 billion came from bank loans. According to Dealbook estimates, Musk is repaying the bank $1 billion a year for this. At present, Twitter is still in a serious loss situation. The company lost $340 million in the second quarter of this year.
With Tesla’s stock price at a low level, Musk is unlikely to continue to sell shares. This is because he will pay huge taxes on the sale of shares. Twitter is bleeding and Musk needs to stop it. He needs to convert Twitter’s losses into profits. This is the real reason behind Musk’s massive layoffs. However, Twitter currently has only 400,000 verified users. Even if everyone is willing to pay $8 a month, the annual revenue is only $38 million. That’s nowhere near enough to cover Musk’s annual bank repayments. Musk also needs to find new revenue models to boost Twitter’s valuation.