Elon Musk Buys Twitter – So What Now?

In a shocking flip of occasions, Elon Musk now appears to be like set to turn out to be the only 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 tablet’ mitigation course of to cease Musk from buying the corporate by means of a share buy-up. However in accordance with studies, Twitter’s board finally felt that they’d little alternative however to just accept the billionaire’s supply – which signifies that Elon himself will now be the one setting the principles, and giving the inexperienced mild on the best way ahead for the platform.

So what does that imply?

Effectively, nobody is aware of for certain, doubtless not even Musk himself, who just lately admitted that he’s nonetheless working by means of 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 so far, and the way he would possibly go about tackling every.

Restoring Free Speech

Free speech has turn out to be the principle 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 personal share of points associated to his tweeted remarks and statements.

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

You need to suspect it’ll – however how, precisely, that can look is anybody’s guess.

Musk’s essential rivalry right here is that by taking Twitter into non-public possession, that can allow it to be extra free in what it permits, because it received’t be beholden to shareholders or advertisers on this respect.

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

Then once more, beneath non-public possession, Twitter received’t be beneath the identical income pressures, by way of rising income and enhancing efficiency according to shareholder expectation. However Elon’s nonetheless paying $44 billion for the corporate. You’ll assume that he wish to recoup a minimum of a few of that expense.

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

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

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 have been once-offs (like a ‘one-time litigation-related internet cost of $766 million’ on account of a shareholder class motion), however breaking them down into particular person components, a few of Twitter’s key prices for 2021 have been:

• Analysis and Growth – $1.2b
• Gross sales and Advertising – $1.2b
• Common and Administrative – $584 million

Taking into consideration cloud and different infrastructure prices, you’re a baseline operational value of a minimum of $3b-$4b, so at a naked minimal, Musk might want to generate a minimum of 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:

Musk’s view is that by authenticating actual individuals, and giving them a checkmark, that can reduce the affect of bots (one other of his key focus factors), and forcing individuals to pay for Twitter Blue, at $3 monthly, may very well be the best way that he does it.

However would individuals really pay for Twitter? Does anybody really want the app that a lot that it might justify a $3 monthly cost?

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

But when Musk minimize everybody off, except they paid the charge, possibly that may get extra individuals to really pay-up – and if plenty of outstanding customers did find yourself paying, that may then entice others to signal on, so that they don’t miss something.

At current, Twitter has 217 million every day energetic customers, which, in the event that they every paid $3 monthly, would usher in $7.8b in annual income for the app. After all, not all of those customers are going to pay, however I believe additionally that Twitter is definitely a vital device for people who do use it, even when its person numbers pale compared to Fb or Instagram.

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

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

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

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

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

It might be free speech with accountability – which will not be precisely what free speech advocates have been calling for. But it surely looks as if one of many solely viable methods for Musk to attain a few of his key, acknowledged targets right here.

Open Sourcing the Algorithm

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

As per Musk:

“Any adjustments to individuals’s tweets – in the event that they’re emphasised or de-emphasised – that motion needs to 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 means of its ‘bluesky’ initiative, and the idea that common customers might have a greater understanding of such programs does make sense – although the complexities could be misplaced on us non-coders and common people (i.e. the overwhelming majority of Twitter customers) who simply wish to try the newest tweets.

A key threat on this entrance is that by opening up its algorithmic parameters, Twitter would allow customers to establish key points that they could wish to emphasize or not inside their expertise. Which is sensible for, say, eliminating mentions of ‘The Kardashians’ out of your feed, however what should you wished to remove ‘Liberal bias’ or different components that would contribute to the echo chamber impact?

It might additionally result in new qualifiers being constructed into algorithms that will not ship nice, and even authorized outcomes.

TikTok, for instance, has confronted criticism up to now over its efforts to suppress posts from customers with ‘unhealthy tooth’, ‘large 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 simple highway, and Musk can have his work minimize out on this entrance, however once more, Twitter is already transferring on this path, and Musk’s impetus will doubtless see the bluesky challenge develop rather a lot quicker.

Eliminating Bots

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

Twitter’s been working to handle its bot issues for years, although the view is that it might 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 spice up utilization numbers, possibly, by turning a blind eye to a few of these bot profiles, that helps to prop up these figures.

Going non-public eliminates that emphasis, and Twitter might, a minimum of theoretically, now take stronger motion on bot accounts.

It looks as if Musk shall be pushing for that, and it’s one other space that Twitter has been creating, 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 a minimum of, those that we all know of so far, and it does appear to be these would be the focal factors of his platform management when he takes over on the helm of the app.

Which may very well 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.