Elon Musk Buys Twitter – So What Now?

In a shocking flip of occasions, Elon Musk now appears set to become the sole proprietor of Twitter, after Twitter’s board met on the weekend to vote on accepting his $44b takeover supply.

Initially, it appeared that Twitter would rebuke Musk’s bid, even initiating a ‘poison pill’ mitigation process to cease Musk from buying the corporate by way of a share buy-up. However based on reviews, Twitter’s board in the end felt that that they had little selection however to simply accept the billionaire’s supply – which signifies that Elon himself will now be the one setting the foundations, and giving the inexperienced mild on the best way ahead for the platform.

So what does that imply?

Nicely, nobody is aware of for positive, probably not even Musk himself, who lately admitted that he’s still working through his plans.

However we do have some fairly clear indicators about Musk’s intentions, starting from restoring ‘free speech’ to combating bots.

Right here’s a have a look at Musk’s key areas of focus, primarily based on his public statements to this point, and the way he may go about tackling every.

Restoring Free Speech

Free speech has turn into the primary focus of the Musk-Twitter push, with the Tesla proprietor publicly decrying Twitter’s previous actions in silencing sure customers.

Musk has additionally criticized Twitter’s decision to ban former US President Donald Trump, whereas he’s additionally had his own share of issues associated to his tweeted remarks and statements.

Will Twitter take a distinct strategy to such beneath Musk’s management?

You must suspect it would – however how, precisely, that may look is anybody’s guess.

Musk’s primary competition right here is that by taking Twitter into personal possession, that may allow it to be extra free in what it permits, because it gained’t be beholden to shareholders or advertisers on this respect.

However advertisements, in fact, are Twitter’s key cash maker – in Twitter’s Q4 21 results, advert gross sales made up the overwhelming majority of Twitter’s income consumption.

Twitter revenue - Q4 2021

Then once more, beneath personal possession, Twitter gained’t be beneath the identical income pressures, when it comes to rising income and bettering efficiency according to shareholder expectation. However Elon’s nonetheless paying $44 billion for the corporate. You’d assume that he want to recoup at the very least a few of that expense.

So what could be a worthwhile income goal for the platform?

Twitter’s numbers, it’s nonetheless paying some excessive working prices, with the corporate reporting an operating loss of $493 million for FY 2021.

Twitter operating costs

That signifies that, whereas Twitter introduced in $5.08b in income for the 12 months, it really paid out $5.5b in prices.

A few of these bills had been once-offs (like a one-time litigation-related net charge of $766 million’ as a consequence of a shareholder class motion), however breaking them down into particular person parts, a few of Twitter’s key prices for 2021 had been:

  • Analysis and Improvement – $1.2b
  • Gross sales and Advertising and marketing – $1.2b
  • Basic and Administrative – $584 million

Making an allowance for cloud and different infrastructure prices, you’re a baseline operational value of at the very least $3b-$4b, so at a naked minimal, Musk might want to generate at the very least that to keep away from it costing him cash, and with out advertisements, that’ll be a troublesome ask.

So how will Musk do it?

I believe that is the reply:

Elon Musk tweet

Musk’s view is that by authenticating actual folks, and giving them a checkmark, that may reduce the influence of bots (one other of his key focus factors), and forcing folks to pay for Twitter Blue, at $3 per thirty days, could possibly be the best way that he does it.

However would folks really pay for Twitter? Does anybody really want the app that a lot that it might justify a $3 per thirty days cost?

Proper now, only a few persons are signing up for Twitter Blue, with the lure of some customized coloration choices and ‘undo tweets’ actually not transferring the needle for normal customers.

But when Musk reduce everybody off, except they paid the charge, perhaps that will get extra folks to really pay-up – and if a number of distinguished customers did find yourself paying, that will then entice others to signal on, so that they don’t miss something.

At current, Twitter has 217 million daily active users, which, in the event that they every paid $3 per thirty days, would usher in $7.8b in annual income for the app. In fact, not all of those customers are going to pay, however I believe additionally that Twitter is definitely an important software for people who do use it, even when its person numbers pale compared to Fb or Instagram.

Let’s say solely half of those folks signal on – that’s nonetheless $3.4 billion in annual income, with out advertisements, and with Musk additionally vowing to chop prices, by both getting rid of Twitter’s San Francisco HQ or eliminating salary for board members, there could possibly be methods to make this a workable possibility.

But it surely’d be a giant danger. If Elon determined to lock each non-paying person out, that would additionally see conversations transfer to different, free networks as an alternative, which may go away Twitter with nothing, and scale back his $44 billion funding to zero very quick.

However I do assume it may work, and if Musk also can add new features, as he says, to make that $3 month-to-month funding even higher, Twitter may turn into a hub for extra engaged, energetic and accountable dialog very quick. And as I say, I believe a number of media people, in any case, could be prepared to pay to have interaction in that group chat.

That is the form of wager that I believe Musk will take, and whereas it may scale back Twitter’s presence within the social media sphere, by lessening its person base, it may nonetheless be sure that it stays a related, helpful entity, and doubtlessly a worthwhile one for Musk long term.

And in the end, that may be Musk’s pathway to free speech. With each person registered and accountable, and solely paying customers in a position to get into the app, that places extra onus of accountability onto every contributor, whereas trolls wouldn’t so simply have the ability to make new accounts simply to assault and harass others.

It could be free speech with accountability – which is probably not precisely what free speech advocates have been calling for. But it surely looks like one of many solely viable methods for Musk to attain a few of his key, said objectives right here.

Open Sourcing the Algorithm

One other ingredient of Musk’s Twitter takeover push has been algorithmic transparency, and giving customers the chance to grasp, and even management, how the system decides what’s most related to them.

As per Musk:

“Any modifications to folks’s tweets – in the event that they’re emphasised or de-emphasised – that motion must be made obvious, so anybody can see that that motion has been taken so there’s no kind of behind-the-scenes manipulation, both algorithmically or manually.”

Twitter’s already exploring by way of its ‘bluesky’ initiative, and the idea that common customers may have a greater understanding of such techniques does make sense – although the complexities might be misplaced on us non-coders and common people (i.e. the overwhelming majority of Twitter customers) who simply wish to take a look at the most recent tweets.

A key danger on this entrance is that by opening up its algorithmic parameters, Twitter would allow customers to establish key features that they might wish to emphasize or not inside their expertise. Which is smart for, say, eliminating mentions of ‘The Kardashians’ out of your feed, however what for those who wished to eradicate ‘Liberal bias’ or different parts that would contribute to the echo chamber impact?

It may additionally result in new qualifiers being constructed into algorithms that won’t ship nice, and even authorized outcomes.

TikTok, for instance, has faced criticism in the past over its efforts to suppress posts from customers with ‘dangerous enamel’, ‘huge bellies’, bodily disabilities, and extra. The truth that that is even attainable means that TikTok’s system is ready to categorize content material primarily based on such parameters, and with these varieties of choices in place, that would result in some regarding use instances within the app.

It’s not a straightforward highway, and Musk could have his work reduce out on this entrance, however once more, Twitter is already transferring on this path, and Musk’s impetus will probably see the bluesky undertaking develop rather a lot sooner.

Eliminating Bots

Musk can be eager to eradicate bots, which, as famous above, a brand new checkmark system for all customers may help with in some ways.

Twitter’s been working to address its bot problems for years, although the view is that it may do extra, with bot accounts seemingly straightforward to establish for many customers.

The query up to now has been whether or not Twitter really desires to sort out bots, or whether or not it’s extra helpful for the platform to proceed counting them as ‘energetic customers’. With market strain on Twitter to boost usage numbers, perhaps, by turning a blind eye to a few of these bot profiles, that helps to prop up these figures.

Going personal eliminates that emphasis, and Twitter may, at the very least theoretically, now take stronger motion on bot accounts.

It looks like Musk will likely be pushing for that, and it’s one other space that Twitter has been growing, whereas a shift to elevated accountability for all human customers will, once more, be of profit right here.

These are the three key pillars of Musk’s Twitter push – or at the very least, those that we all know of to this point, and it does seem to be these would be the focal factors of his platform management when he takes over on the helm of the app.

Which could possibly be quickly, and whereas the deal continues to be topic to numerous approvals and processes, it does appear that we’ll discover out in a short time what Musk’s plans are for the app.

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