Oct 27 (Reuters) – Overspending on Twitter Inc for $44 billion was the straightforward half.
Now, Tesla Inc (TSLA.O) Chief Govt Elon Musk should show why he believes that Twitter is value 10 occasions that quantity and switch round a social media platform that he has spent months ridiculing.
Earlier this month, the outspoken billionaire stated: “Myself and the opposite traders are clearly overpaying for Twitter proper now. The long run potential for Twitter for my part is an order of magnitude higher than its present worth.”
Musk has offered few concrete particulars about his plans, and what he has shared seems far-fetched or contradictory.
Here’s what lies forward for Musk, the self-proclaimed “Chief Twit”, in line with present and former Twitter workers, analysts and traders who thought-about funding the deal.
OBEYING THE LAWS
Musk has promised to protect free speech of all types, however has additionally struck a extra conciliatory tone with world leaders who goal to rein in Large Tech, worrying activists and former leaders of Twitter.
Simply three hours after Musk declared victory by tweeting “The chicken is freed,” European Commissioner Thierry Breton shot again: “In Europe, the chicken flies by our guidelines.”
He reshared a video from Could, through which he stated in a Twitter video that he agreed with the European Union’s new digital media regulation, which can power Large Tech to do extra to deal with unlawful content material or threat fines of as much as 6% of world income, in one of many world’s most extreme approaches to regulating content material on-line.
In India, regulators additionally reminded Musk on Friday on the rule of legislation. “Our guidelines and legal guidelines for intermediaries stay the identical no matter who owns the platforms,” stated Rajeev Chandrasekhar, India’s minister of state for electronics and data expertise. learn extra
For years, Twitter has waged a “refined battle” with the federal government to guard free speech on-line, and this battle can be in danger with Musk in cost, stated Jason Goldman, a former Twitter board member.
Tesla’s increasing enterprise in China, the place it generated $14 billion final 12 months, might additionally put Twitter in danger, Goldman stated.
“The concept that he’s going to be the one liaising with the Chinese language authorities and doubtlessly turning over info on customers, that’s very scary,” he stated.
Twitter is staffed with specialists who assessment information requests from governments, however Musk has proven his contempt of those specialists, he added.
“Whether or not or not (former U.S. President Donald) Trump goes to return again on, I feel that is a parlor recreation,” Goldman stated. “However what’s really going to occur is a dissident’s IP tackle shall be dropped on the ground.”
CUTTING CONTENT MODERATION
Present and former workers who spoke with Reuters stated Musk’s plans to decrease the guard rails which are widespread throughout all social media platforms would result in a deluge of hateful, dangerous and doubtlessly unlawful content material on Twitter. Already, it has struggled with figuring out and eradicating youngster porn. learn extra
Members of Twitter’s belief and security workforce, which incorporates content material moderators, are anticipated to be amongst Musk’s deepest job cuts, workers worry.
[1/3] Twitter emblem and a photograph of Elon Musk are displayed via magnifier on this illustration taken October 27, 2022. REUTERS/Dado Ruvic/Illustration
“Think about a world the place all these individuals are gone,” one worker stated. “It is going to be a hellscape.”
PREVENT ADVERTISERS FROM FLEEING
In 2019, Musk tweeted “I hate promoting.”
On the eve of the deal’s anticipated closing, he appealed on to advertisers in an open-letter tweet: “Twitter clearly can not develop into a free-for-all hellscape, the place something could be stated with no penalties!… Twitter aspires to be essentially the most revered promoting platform on this planet that strengthens your model and grows your enterprise.”
Advertisers will not be shopping for it.
They level to Musk’s plan to reinstate Trump’s account as a serious obstacle to spending cash on Twitter. Twitter completely suspended Trump for threat of additional incitement of violence after the Jan. 6, 2021, assault on the U.S. Capitol.
Welcoming again Trump might alienate reasonable and liberal-leaning customers, and because of this push away main family manufacturers who goal to market merchandise and attraction to individuals throughout the political spectrum, stated Mark DiMassimo, founding father of advert company DiMassimo Goldstein.
At a presentation for advertisers in Could, some advert companies and types had been already skeptical and anxious for Twitter’s future. learn extra
Till Musk finds new sources of income, he cannot afford to set off a backlash from a bunch that contributes 90% of Twitter’s income.
X SUPER APP
Musk’s largest wager borrows from China’s biggest hits of the 2010s. “Shopping for Twitter is an accelerant to creating X, the the whole lot app,” Musk tweeted earlier this month.
The thought of an the whole lot app, additionally known as an excellent app, originated in Asia with firms like WeChat, which lets customers not solely ship messages but additionally make funds, store on-line or hail a taxi. The all-in-one service appealed to customers who had fewer selections in a area the place Google, Fb and others had been blocked.
Musk has instructed traders he plans to construct one that may promote premium subscriptions to cut back reliance on advertisements, enable content material creators to make cash and allow funds, in line with a supply briefed on the matter.
There aren’t any super-apps in the USA as a result of the barrier is excessive and there are app selections aplenty, stated Scott Galloway, co-host of tech podcast Pivot and a professor of promoting at New York College.
Apple Inc and Alphabet Inc’s Google, which management the app shops on iPhones and Android telephones, see themselves as tremendous apps and can be unlikely to permit different tremendous apps to develop, Galloway stated. Contemplate Apple’s current rejection of Spotify’s plan to promote audiobooks as one instance of boundaries to entry.
Including funds, which typically require id verification, might complicate a service which has allowed anonymity to flourish, making Twitter a strong device for political activism in hostile environments, Goldman stated.
“(Tremendous apps are) not doable at this level within the evolution of the cell web,” he added.
Reporting by Sheila Dang in Dallas, aditional reporting by Hyun Joo Jin in San Francisco
Modifying by Kenneth Li, Matthew Lewis, Nick Zieminski and Deepa Babington
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