In case you have been living under a rock for the past few weeks (or you are not chronically online, in which case I commend you), Twitter has recently been at the center of controversy after billionaire business magnate Elon Musk decided he wanted the service for himself. He bought it for a mere $44 billion.
This ordeal has caused quite the kerfuffle, as many have recently come to criticize his leadership and business practices while at the helm of Twitter. How did we get here? How did Musk even manage to purchase Twitter? And what does the future of the platform look like while under his command?
How Musk bought Twitter – the bird is sold
Our story starts in late Jan. 2022, when Musk first laid eyes on Twitter and began investing in the app. His stake continued to grow and reached its peak in mid-March at 9.2%, making him the largest shareholder in the company. But clearly being a mere investor wasn’t enough for the billionaire – he didn’t want just a slice of cake, he wanted the whole shebang.
And so, on April 14, Musk offered to purchase Twitter in its entirety for $54.20/share, which placed the platform’s value at a staggering $43 billion. In a public filing with the Security and Exchange Commission (SEC, a government organization that regulates the issuance, marketing, and trading of securities), he explained that he believed Twitter to be the next big thing for free speech. But, according to him, the platform needed to be privatized to fulfill that potential, and he was the man for the job.
“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” he stated in the filing, “However [in order to do that], Twitter needs to be transformed as a private company.”
The Twitter board wasn’t so thrilled at the offer. In the next few days they attempted to raise the price of the platform by allowing stockholders to purchase additional units at a discounted price, hoping that it would make things harder for Musk’s aspirations. But once they heard the final offer of a whooping $44B, Twitter decided to accept Musk’s proposition and sell its shares to the billionaire on April 25, 2022.
Hélas, it was too early to chant victory, as in mid-May the deal hit another roadblock. Musk tweeted that his Twitter takeover was temporarily on hold until confirmation that the number of spam accounts/bots on the platform was less than 5%, claiming that the platform was withholding information from him.
Musk’s sudden backtrack from the deal had various negative repercussions on Twitter, since the service had already begun changing its board and disrupting its operations, and was already seeing its stockholder value fluctuate massively due to the billionaire’s actions. Ergo, Musk’s sudden change of heart was not met well by Twitter, especially after he had made such public promises and displays of commitment to the deal. In fact, the platform’s shareholders decided to respond to the news by bringing a class-action lawsuit against Musk for stock manipulation and threatening to go to court if he didn’t see the acquisition through.
Musk now had to decide whether to pay $1B to Twitter as reparations for breach of agreement (i.e., backing out of the deal), or purchase it in full for $54.20/share ($44B tot.). Surprisingly, the billionaire chose the more expensive option and finalized the purchase on Oct. 28, 2022 – and just like that, he had become the owner of Twitter.
It is good to note that his decision was probably swayed by the fact that the SEC was already investigating Musk’s role in the Twitter acquisition for market manipulation, so if he hadn’t followed through with the purchase he likely would have had to pay more than $1B in reparations. And of course, his ego was probably an incentive as well, since he could have lost face if he didn’t pay the hefty sum.
So, Musk was now at the helm of Twitter and he was seemingly determined to continue his crusade for free speech. However, that is not what he seemed to be doing…
Musk’s first two weeks in command – the bird is not free
During his first two weeks in command, he decided to shake things up on the platform right off the bat and brought turmoil into the already messy situation.
To start things off, he fired half of Twitter’s workforce overnight, without any formal notice or announcement provided to the laid-off employees. With no warning from the company’s headquarters, thousands of people’s work email accounts were locked after midnight on November 4, while some of them were still actively at work. And a few days later, he began cutting off even more employees by firing over 70% of Twitter’s contractors, many of whom worked in content moderation (i.e., monitoring user-generated content to remove anything deemed as harmful) and other crucial sectors, like communications and cybersecurity.
Then, he decided on his next target – Twitter’s notorious blue checkmark. For those who are not familiar with the platform, the blue checkmark is a verification badge, indicating that the owner of the account has been recognized as a real person by the service. It may seem unimportant, but the blue checkmark system is actually incredibly helpful to big corporations and public figures, as well as to users who can verify the validity of sources they encounter on the platform.
Apparently, that wasn’t good enough for Mr. Musk, who decided to “democratize” the verification system and make it available to all users by introducing a blue checkmark option in its subscription service Twitter Blue for $8/month. Because you know, there is nothing more democratic than placing something behind a paywall.
Many users saw this as an opportunity for comedy and decided to go all in with the jokes and memes. Impostor accounts came flooding in, with users pretending to be public figures and posting troll and/or vulgar tweets for laughs.
Although most tweets were harmless, one big pharma company was caught in the crossfire and actually lost millions because of one fake tweet. On November 10, a fictitious parody account of Eli Lilly (one of the largest insulin manufacturers in the US) tweeted “we are excited to announce insulin is free now.” with a bought blue checkmark, which made many users believe it was tweeted by the real deal. The fake tweet was deleted shortly after being published, but it gathered enough attention to do some actual damage to the company – in less than a day, it is estimated to have lost around $15B in its market cap.
Eli Lilly has decided to halt their ad services on Twitter due to the unstable environment created after Musk’s takeover, and other major brands around the globe (such as Volkswagen and General Motors) have followed suit. Considering that advertising makes up about 90% of the platform’s yearly revenue, that is a huge problem for the service.
Brands are not the only ones who already have one foot out the door – the Average Joes of Twitter are not so happy with the platform either at the moment. The staggering decrease in content moderation has caused a dramatic rise in offensive slurs being posted on the platform, and the blue checkmark service for-pay has allowed people like Nazis and transphobes to gain legitimacy, so the platform’s environment is becoming more hateful and unwelcoming by the minute. In fact, several of its users are already beginning to skip town, looking for refuge in other social media platforms.
So, does this mean that Twitter is dying? Well, although its path seems to be going more downhill than uphill, I would wait to book the funeral for the time being…
The aftermath of Musk’s takeover – Is the bird dying?
Looking ahead, Twitter’s future is not too rosy, as the platform’s yearly growth increase has been declining since 2020 and is expected to continue on the downward path. Still, Twitter has around 450M active users in 2022, so even if some choose to turn their backs on the platform, they still represent nothing but peanuts compared to the service’s entire audience.
Twitter’s actual issues when looking into the future are its employees and its revenue – better yet, its possible decrease in revenue. Around 90% of Twitter’s yearly revenue comes from advertisers, but following all that went down in these past weeks, many corporations are opting to halt their advertising on the platform, unsure of the unfavorable environment. Plus, as Musk’s takeover has allowed harmful and offensive content to be shared, apprehensive brands are worrying about what associating with the service might do to their image. In a nutshell – brands aren’t happy, which means that Twitter’s pockets aren’t full.
Musk & Co. are trying to make it up by offering new features as part of their Twitter Blue package (e.g., the purchasable blue checkmark, putting videos behind a paywall, allowing users to pay to DM celebrities), but it’s clear that the majority of the audience isn’t biting. And that is easily understandable, given that the service’s most alluring feature is the blue checkmark, which used to be a status symbol on the platform. But if something is accessible to anyone for $8/month, it loses its appeal, and no one is going to be interested in spending money for it (something you would expect a business-savvy billionaire to know).
In fact, several publications have run numbers to figure out how much revenue could be gathered annually from Twitter Blue, and the results are disappointing, to say the least – various experts are estimating figures under $100M, which is not good for a digital company.
Plus, the platform’s (remaining) employees are not at all happy with the direction Musk is taking, particularly in regard to his demands for the workers. On Nov. 16, he reportedly issued an ultimatum to Twitter’s staff. Needless to say, employees were not enthusiastic about the demand. When Nov. 18 came, thousands of workers decided to leave.
It is still too early to assess how many actually resigned (though several reports place the numbers around 50%), but it is known that many of these former employees were engineers and individuals in content moderation. And these two branches of staff are particularly important to a social media company, since engineers ensure that the platform actually runs, while content moderators make sure the company abides by the global guidelines of digital content. Without such employees, Twitter shutting down (maybe for good) is no longer a matter of if – it is rather a matter of when.
Twitter was already hanging on by a thread in the social media competition, as Instagram accounts for over 2B active users and TikTok has a yearly user growth of around 15%, whereas Twitter is stuck at one-digit percentages. But even so, Twitter was doing fine existing in the shadow of these social media giants. Elon Musk saw its potential and decided to try and elevate it, but all of his attempts so far have gone the other way – as they say, if it ain’t broke…
Between the decimation of Twitter’s reputation amongst advertisers and its decrease in appeal to users, the platform is in waters hotter than ever before. All because one billionaire decided he wanted a new shiny toy to play with. And in doing so, he is running it into the ground.
Edited by: Katrien Nivera
Featured Image: Pexels