The 5 Big Challenges That Could Eventually Doom Musk’s Takeover of Twitter
This is what he has to watch out for
Even Elon Musk isn’t guaranteed success in a new business venture and yes, there is a possibility that his takeover of Twitter could end in disaster. Just as a starting point, it’s worth noting that Musk correctly admitted that he started out by overpaying for the website on his third-quarter earnings call with Tesla:
“Although obviously, myself and the other investors are obviously overpaying for Twitter right now, the long-term potential for Twitter in my view is an order of magnitude greater than its current value.”
Still, anyone who has followed his career knows that Elon Musk is no fool and he quickly set about remaking Twitter in a variety of ways, starting with personnel changes. Since then, we’ve seen article after article claiming that Twitter is doomed because Musk got rid of so many of its staff, but that seems highly unlikely.
To begin with, it’s hard to understand why a rarely changed social media site with minimal customer service and no physical product to ship needed 7,500 employees in the first place. There’s no question that the website had a lot of dead wood, unnecessary expenses, and people that Musk didn’t need to run the company. Allegedly, Musk has cut the staff from 7,500 all the way down to 2,700 and counting. This has led to hysterical claims by former employees that Twitter won’t even be able to keep the website running, but there doesn’t seem to be much likelihood of that, and, duh, you can be sure that Musk will hire more people. They’ll just be HIS people, not the sort of staffers that were running Twitter like an unprofitable, left-wing mean girls club before he arrived.
So, while the media has obsessively focused on staffing problems, those don’t seem likely to be big issues over the long haul.
The other issue you hear brought up incessantly is the supposed fear that Musk is going to allow Twitter to turn into some kind of crazed, violence-ridden, racist hellscape. This seems highly unlikely for a variety of reasons, the first of which is that Elon Musk is not stupid and understands that he needs a product that advertisers feel comfortable using. For example, that’s why hateful and abusive conduct is still banned on the website:
Abuse/harassment: You may not engage in the targeted harassment of someone, or incite other people to do so. This includes wishing or hoping that someone experiences physical harm.
Hateful conduct: You may not promote violence against, threaten, or harass other people on the basis of race, ethnicity, national origin, caste, sexual orientation, gender, gender identity, religious affiliation, age, disability, or serious disease.
Additionally, you have to keep the scale of things in mind. For example, if you’ve ever used Gab, you’ll find that there’s a lot of overtly racist content on the site. That’s not because the people that run Gab are racist, it’s because they have a small user base and in that environment, a relatively small number of white supremacists can make an outsized impact. In a social media network as large as Twitter, people like that tend to be just a teaspoon full of water in the ocean. That means their impact will be very limited, even assuming that they don’t run afoul of Twitter’s terms of service.
However, there are other things that could be major stumbling blocks to the long-term health of Twitter. That doesn’t mean that they will, but they could.
1) Could advertiser boycotts and/or revenue shortfalls make Twitter unprofitable? There have been claims that Twitter has lost 50% of its advertisers due to liberal activist pressure since Elon Musk took over, but stories like that almost always turn out to be at least partially false.
Liberal activist groups have every incentive to lie to try to make themselves look more effective, their activist/journalist pals in the MSM rarely check their work and the companies listed may have stopped advertising earlier than claimed, may have simply run out of advertising money for the year or may be planning to restart their campaigns in the following year.
Will some companies stop advertising on Twitter because of activist pressure? Sure, but it seems unlikely that a majority of them would and it’s entirely possible Musk might bring in a lot of new advertisers. Still, advertising revenue is reportedly 90% of Twitter’s income, so any amount lost is a big deal.
Musk is hoping that an $8 Twitter Blue subscription push could help offset advertiser losses, but it’s entirely possible that it could have substandard results. If the features aren’t compelling enough, maybe the number of users paying $8 per month won’t make up for left-wing sympathetic advertisers that flee AND the money Musk will save by getting rid of so many staffers.
Keep in mind that in 2021, even before Musk bought Twitter, it lost 221 million dollars and he noted earlier this month the website was losing 4 million dollars per day.
Is all of this an unsolvable problem? Absolutely not, but it’s not a shocker that Elon Musk has raised the possibility that Twitter might go bankrupt. Certainly, it’s possible that Musk might use bankruptcy to restructure debt in a way that’s more favorable to Twitter in that case, so even bankruptcy wouldn’t necessarily be the end, but when it’s all said and done, the revenue has to be there to float the product.
2) What if his grand vision for the website doesn’t work? Elon Musk isn’t just planning to tinker around the edges of Twitter. His vision is much, much bigger than that:
What is Musk talking about there? Essentially, a “super app:”
The concept of an everything app, often referred to as a "super app," is massively popular in Asia and tech companies across the world have tried to replicate it.
A super app, or what Musk refers to as an "everything app," has been described as the Swiss army knife of mobile apps, offering a suite of services for users such as messaging, social networking, peer-to-peer payments and e-commerce shopping.
These mega apps are widely used in Asia because mobile is the main form of access to the internet for many people in the region, wrote Scott Galloway, a New York University professor of marketing and co-host of tech podcast "Pivot," last year.
Chinese super app WeChat has more than 1 billion monthly users, according to one estimate, and is a ubiquitous part of daily life in China. Users can hail a car or taxi, send money to friends and family or make payments at stores. In 2018, some Chinese cities began testing WeChat for an electronic identification system that would be tied to users' accounts, according to the South China Morning Post.
Is something like that theoretically possible? Absolutely. However, could Musk simply copy what WeChat is doing in China wholesale and bring it to the United States? Probably not. There are simply too many differences between the environment in the United States and China.
That being said, could Musk create something similar that Twitter users embrace for a lot more than just tweeting? Yes. If anyone can potentially thread that needle, it’s Elon Musk, but of course, MAYBE NO ONE CAN THREAD THAT NEEDLE.
If, down the road, Musk eventually concludes that it’s not possible to turn Twitter into a revolutionary “everything app” with a truly massive number of users, does he lose his enthusiasm for the whole project? For a big-picture guy like Musk who gets excited about going to Mars, building self-driving cars, cleaning up the earth via solar power, and building devices to interact with your brain, maybe so.
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3) Could government regulations kill profits? Republicans, Democrats, and bureaucrats in Europe have all become increasingly hostile to social media companies in the last few years. Of course, privacy issues are a big thing, but in the US, both parties have become disgruntled over competing issues.
Republicans are concerned about censorship, conservatives being targeted for their political views and liberal social network monopolies increasingly controlling the flow of information in the country. On the other hand, Democrats are upset that these same liberal social network monopolies aren’t doing enough to censor people that disagree with them.
While it may be impossible to square these concerns, Republicans and Democrats may at least be willing to work together to hurt, hamper or break up social networks. Europe also has new rules that go into effect in February of 2024 that impose draconian fines on social media networks that supposedly don’t do enough to fight misinformation. While regulatory changes would be unlikely to drive Twitter or any of the other social media giants out of business, the increased costs of compliance could dramatically cut into revenue enough to make it difficult to reach profitability.
4) Does Musk have the time to make Twitter a success? Even before he bought Twitter, it was hard to understand how Elon Musk managed to do what he does.
He was already the owner of Tesla, Space X, The Boring Company, and Neuralink. He also has 10 kids and somehow, found time to meet women, get to know them, and MAKE the 10 kids. This is a guy who, even-pre Twitter, supposedly put in 80-90 hour weeks, slept 6 hours per night, and had his day blocked out into 5-minute increments.
Has must repeatedly proven that he can come up with a plan, hire competent people, and get them to implement his vision, even without him looking over their shoulders every second? Absolutely, but Musk has also proven to be an earned media machine for Twitter and is personally driving a lot of conversation and excitement about the website. Will Elon Musk ultimately have the time to float this thing? That remains to be seen.
5) Could Twitter face user drift? At one point, MySpace was the dominant social media network in the United States. After they imploded, Facebook became the dominant social media network. However, for the first time ever, even Facebook has started losing users (albeit barely) as they’ve begun running out of places to expand and younger Americans have started favoring other platforms:
Facebook lost around 500,000 daily users in the last three months of 2021, Meta’s quarterly earnings report revealed, falling from 1.93 billion logging in around the world each day to 1.929 billion.
Its number of monthly users stayed relatively flat at 2.91 billion, and growth across Meta’s other platforms WhatsApp, Messenger and Instagram was modest.
In a rare direct nod to competition, Zuckerberg emphasized the threat Meta faces from growth in video platforms like TikTok and YouTube as people watch more and more short-form videos online.
So far, under Musk, Twitter has been rapidly gaining new users:
However, we don’t know exactly where those users are coming from. A good guess might be conservatives that previously felt unwelcome, users that once left for social networks like Gab, GETTR, Parler, and Truth Social, along with people that are intrigued by the non-stop news coverage of Musk’s takeover. If that is where the new users are coming from, you have to expect that it’s going to slow down in the next month or two.
Additionally, there is a possibility that the far left-wingers at Google and Apple could use their monopolistic control of what applications can be used on phones to try to stop Twitter’s growth, although targeting Twitter that way would likely lead to all-out war not just with Musk, but with a Republican Party that has fully embraced the Ron DeSantis attack on Disney and has a decent chance of being in control of the White House, the Senate and the House after the 2024 elections.
Right now? Twitter feels like a breath of fresh air compared to a stale, censor-happy, metaverse-focused, too-big-to-care behemoth like Facebook, but that can change. It’s very hard to say how people will feel about Twitter or any social network long-term. What does the user count look like in 2024? 2028? 2032? The fickleness of the public and the unpredictability of technological advances make that extremely difficult to predict. Again, Musk’s seeming commitment to changing and improving the site may be enough to overcome this issue, but this is a factor that is at least partially beyond his control.