Musk could herald Twitter’s largest shake-up yet
The very first tweet was sent on March 21, 2006. “Just setting up my twttr,” was the message, posted by company co-founder Jack Dorsey, at the time a clean-cut 29-year-old university dropout. In the entirety of 2007, there were around 1.6 million tweets posted.
Some 16 years later Twttr, which was almost immediately renamed Twitter, now dominates news and political discourse across much of the world. It’s the platform of choice for journalists, businesspeople and politicians to blast out short missives to the few hundred million Twitter users and beyond. There are around 500 million tweets posted every day.
Over the years Twitter has become more and more important. It’s a constant and persistent public discussion about public issues, a barometer for the popularity of new ideas and public figures, and an endless feed of news from around the world and across countless topics.
It’s facilitated real-time conversations between people on Earth and astronauts, introduced new phrases and terminology, given visceral access to wars happening half the world away and offered direct communication with celebrities and world leaders.
But it has also become a vehicle for rampant harassment and political polarisation. Users, many anonymous, viciously trolled women and progressives in the video game industry in a 2014 frenzy that included rape and death threats and became known as “Gamergate”.
As president, Donald Trump wielded Twitter like a cudgel to direct his admirers against enemies, while conspiracy theories about voter fraud and even more unhinged claims such as the world being run by paedophile cults circulated despite Twitter’s best efforts.
In Australia, some of the most persistent abuse has been targeted at female journalists, such as the ABC’s outgoing 7.30 host Leigh Sales, who received sexist slurs and worse from some left-wing social media users.
Now — after fundamentally changing the way so much works online — Twitter is being bought by the world’s richest man for more than $60 billion in one of the most fascinating corporate transactions in recent history. And everybody wants to know, will Elon Musk make things better or worse?
The service has no shortage of issues to fix; it is after all known to its most ardent users as “the hell site”. Aside from its inability to mitigate those growing issues of abuse, hate speech and misinformation, its attempts to do so have been attacked as censorship. Including by Musk.
And, for all its importance, it just doesn’t make enough money, which is reflected in its mediocre stock chart. Twitter’s shares were worth more in late 2013 than they are today while Facebook, now called Meta, went public in 2012 at $US38 a share and now trades at more than $US200. The reason is plain: Meta produces more than $US100 billion ($140 billion) a year in revenue compared to Twitter, which takes in about $US5 billion.
Musk says he’s not purchasing Twitter for financial reasons, but he will still need it to make money to generate interest payments for the $US13 billion in debt he is using to buy it. Shares in one of his other companies, the buzzy electric vehicle maker Tesla, are on the line to secure $US12.5 billion in loans too and their value has been plummeting in recent days.
There’s never been an online platform with a bigger gulf between how influential it is and how much revenue it brings in, meaning Musk has a big opportunity to turn it around.
At the same time, Musk’s self-described approach of free-speech absolutism, which seems to presage the return of divisive but engaging figures banned from the site, most notably former US president Donald Trump, risks making the platform even less desirable for users, further weakening its proposition to advertisers. After all, platforms that have pursued a similar no-holds-barred approach to free speech such as messaging platform 8Chan and right-wing social network Gettr remain on the fringes of the internet. And that is if Trump, who has said he does not want to be lured back to Twitter, can be persuaded to return.
Steve Johnson, co-founder and chief investment officer of fund manager and Twitter shareholder Forager, says the buyout was fair but frustrating. Shareholders are getting an appropriate price given where the company is, he says, but won’t get a piece of returns that are likely ahead.
“I think the thesis for a long time, for investors, has been that the platform has been dramatically under-monetised,” he says.
‘The ad platform itself is still bizarrely disappointing. Just really dumb things.’
Steve Johnson, co-founder and chief investment officer of Forager
“[Twitter’s] not generating anywhere near as much revenue as they should be for the amount of people using it, and the amount of time that they spend on it.”
Forager bought shares in Twitter in 2020, seeing the potential that new activist investors could raise the company’s revenue per user, but Johnson says things have not gone well. Product improvements have driven a little more engagement, but aren’t bringing in more money.
“The ad platform itself is still bizarrely disappointing. Just really dumb things. A fellow investor we know went to Thailand on holidays. Twitter knows where he lives and what he tweets about, knows everything about him, and he starts getting ads written in Thai on his Twitter feed. You don’t see that from places like Facebook,” he says.
“The other massive thing was an extraordinary ramp up in staff-based compensation and the expenses side of the business, that was again supposed to drive all of these improvements, and we weren’t seeing a lot of evidence of it.”
It’s not like Twitter doesn’t know what the problems are, but it’s been extremely hesitant to make core changes, possibly for fear of breaking parts of its old and cumbersome technology stack.
The building blocks of Twitter, like retweets and hashtags, were after all community creations born of necessity. The key will be identifying further needs and serving them, rather than Twitter’s current approach of offering supplementary options like an ad-free subscription or NFT profile images. For his part, Johnson says he thinks Musk can do it.
“[Musk] has a track record of doing difficult things and doing them well, effectively forcing or incentivising or driving people to achieve those outcomes, and that’s probably what Twitter needs from a business perspective,” Johnson says.
“There are people building very, very valuable businesses off the back of Twitter’s shortcomings. It should be Twitter building those things.”
Musk has an extraordinary track record of success. He was a founder or otherwise instrumental in the success of payments behemoth PayPal, rockets and satellites company SpaceX, carmaker Tesla, and tunnelling firm the Boring Company. His boosters say that means he is better placed than anyone to turn Twitter around.
And what do the people who’ve run Twitter in the past think of Musk’s chances?
Jack Dorsey, who continued as Twitter’s CEO on-and-off until leaving for good late last year, and whose public comments about the service have become increasingly spiritual and metaphysical over the years, is full of optimism.
“I don’t believe anyone should own or run Twitter. It wants to be a public good at a protocol level, not a company,” he tweeted.
“Solving for the problem of it being a company however, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.”
Whatever the force of Dorsey’s observations, which have also included endorsements for various changes to Twitter’s features, they are odd coming from a man who had the power to make them as chief executive but did not do so.
Musk will also suffer from the same problem as Dorsey, who is also the boss of fintech company Block (the owner of Australia’s Afterpay). Both men helm more than one multibillion-dollar company, making it impossible to give any one project their full attention.
Dorsey also commended Musk’s plan to take Twitter back from Wall Street, and ended his thread by saying “I’m so happy Twitter will continue to serve the public conversation. Around the world, and into the stars!”
Dick Costolo, who served as chief executive between Jack Dorsey stints, was less poetic.
“Bullying is not leadership,” he tweeted in an apparent reference to tweets by Musk criticising controversial moderation decisions by Twitter legal staff, though Costolo did not tag Musk or respond to his public reply demanding an explanation.
Musk’s deal agreement to buy Twitter comes with an unusual clause permitting him to tweet about the transaction but forbidding posts that insult the company or its staff.
That Musk is walking so close to the line with his tweets, potentially risking the transaction, is an indication of how determinedly and impulsively he will pursue his stance on freedom of speech. Musk long criticised Twitter for banning people at all, and suggests a politically impartial approach that doesn’t punish users for saying whatever they want, even if it upsets others.
Australian charity Digital Rights Watch expressed concerns that Musk’s billionaire status put him at odds with Twitter’s ability to empower everyone to take part in public discussions.
“While free speech is important, you have to account for asymmetries of power and other barriers that stop people from speaking freely,” says board chair Lizzie O’Shea.
“Musk’s style of free speech absolutism will tilt the scales in favour of the rich and powerful who can silence or bully critics.”
Musk has clarified his position on free speech in recent days, saying he didn’t think it was the place of Twitter or other companies to police expression beyond what was required by law. It is for some an appealingly old-school vision of free speech that would see Twitter exist as a digital town square, with the best ideas rising to the top. His version of Twitter would double down on authenticating the identity of users, and would take action if their posts broke the law, but O’Shea is not convinced.
“Musk’s proposed approach to content moderation will likely make Twitter a less safe place for many people to speak freely, while allowing powerful disinformation and propaganda campaigns to spread unchecked,” she says.
Twitter, after all, is not an analogue communication platform. Algorithms determine what people see, character limits curtail nuanced and qualified arguments, crowds of ill-informed users enjoy the spectacle of political figures they admire hurling barbs at each other and reward that behaviour with likes. In that sense, the digital town square is more like a coliseum.
eSafety Commissioner Julie Inman Grant, a former Twitter executive, says she is glad Musk is committed to observing local laws, but emphasises that he is wading into the exceptionally complex arena of keeping users safe online.
“We will be keeping a close watch and making sure that Twitter and other platforms are taking the steps required under Australian law to address online safety issues,” she says.
“The entire technology industry needs to lift its game when it comes to safety standards and protecting their users from harm.”
This is all assuming that Musk’s deal to take control of Twitter does eventually go through. The board has accepted his offer, but it’s not a sure thing yet.
“There’s still a lot of water to flow under the bridge here. It’s a small break fee, so he can walk away by paying them a billion dollars, which is not large in the context of the size of the transaction,” Forager’s Johnson says.
“And I think you’ve got political and regulatory interest here that is bound to be very, very high.”
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