Twitter: Five scenarios for the future of the short message service

In the end, it all happened very quickly: On Monday, Twitter’s board of directors accepted Elon Musk’s offer to take over the short message service for USD 44 billion. What the richest person in the world really intends to do with the company is still a mystery. Musk himself said he wanted to “make Twitter better,” for example with new features and a transparent algorithm. That he his far-reaching notion of freedom of expression will impose on the company is considered likely. So how will Twitter change with the new owner? These are some possible scenarios:

1. Finally a better product

Musk’s statements so far have been clearest in relation to Twitter as a product – and there is certainly still a lot of room for improvement here. Compared to other tech platforms, Twitter has changed little or not at all over the years, the most radical change was probably the introduction of the 280-character tweet in 2018. Ideas that Musk has already considered publicly include, for example, a Edit button. This should allow users to adjust tweets that have already been sent afterwards. Many users have wanted such a feature for a long time – how effective this change would be remains to be seen.

Another idea is to completely overturn the character limit of the messages. It would only be consistent and would make the complicated and unwieldy Twitter threads obsolete. But it would be a significant step away from Twitter’s DNA.

And finally, Musk has already announced that he wants to put an end to the countless bots on the platform. Nobody will have anything against that – if they succeed. Because that’s the big question: why should Musk do what countless Twitter managers have failed to do in recent years?

There were always plenty of ideas for a meaningful further development of the product, but there was a problem with their implementation. A stringent strategy never seemed to result from this. The result was user numbers that have never been able to develop at the pace of other social media platforms in the past decade. And a company that remained tiny compared to Facebook, for example (sales 2021: $117 billion on Facebook vs. $5 billion on Twitter) – was never able to develop its full potential commercially.

Of course: Elon Musk is a brilliant, product-oriented entrepreneur – and maybe he can create a new, innovative field of energy on Twitter. But the conditions for this are not exactly favourable. There is a lot of rumbling in the workforce about the new owner, many fear Musk’s political views and the ruthless management style known from Tesla. It is quite possible that many employees will accept one of the lucrative offers that they could get from Silicon Valley at any time.

2. Finally a healthy business

Google: worth $1.7 trillion. Facebook: $583 billion. Twitter, before the Musk offer: just $36 billion. This reflects the limited economic success of the platform, which never even came close to the dimensions of the competition. This was due to the fact that Twitter is financed by advertising customers who rely on reach – and that is significantly greater with the competition. The fact that the entrepreneurial, political and other elite of the world cavort here and not on Tiktok – that never made the difference for the advertising industry. Or: Twitter was never able to create a convincing offer for advertisers or otherwise capitalize on it.

It is possible that Musk will do better. How exactly is still unclear. Here, too, the first ideas are already buzzing around: for example, various payment models that would only allow users to tweet for a fee (per tweet? on a subscription basis?). But are the users ready for it? And would it add up if the range was reduced in return? Maybe he will also succeed in creating a larger user base by making changes to the product (see above), which in turn could increase revenues.

Or he uses short-term leverage, which would by no means be unusual for takeovers of this kind – and simply reduces the cost base, which in the case of Twitter would primarily be based on the number of employees. Because it must be clear that the Twitter purchase, despite all cloudy assurances, is not a non-profit venture by Musk – even the richest man in the world has to keep his money together. And he just pledged a purchase price for a company that’s 38 percent higher than what investors recently thought was reasonable. That has to come back first.

Especially since the purchase price is financed to a considerable extent by banks, which also want to see their money back.

3. A place of freedom (and hate)

Musk, as a self-declared “absolutist when it comes to freedom of expression”, is extremely critical of the moderation of content on social media platforms and should try to reduce it (which is also a way of reducing the workforce, by the way). A democratic forum, he believes, must also endure hate speech and disinformation.

The problem is that there’s little to no evidence that this would make Twitter a better place for users. On the contrary: the proportion of hateful or conspiracy theory content is already high, and the discourse is often poisoned.

One who knows about it is Yishan Wong. He was CEO of the forum aggregator Reddit ten years ago and saw for himself what happens when you give users the greatest possible freedom. At some point it becomes unbearable. Musk has an outdated understanding of freedom on the internet, argues Wong, the Tesla boss simply has no idea what it means when all conceivable culture wars take place on your own platform – and what happens if you just let them run. Musk expects a “world of pain”, believes Wong.

4. A useful tool

Musk was impressed by the fact that Twitter kicked former US President Donald Trump off the platform after the storming of the Capitol. He thought the decision was a mistake, but above all, according to another reading, he himself fears that one day he will be canceled. However, entrepreneur Musk is dependent on a mouthpiece like Twitter, on which he can influence the agenda and generate attention and media coverage with wild suggestions and crude ideas. This is the Musk marketing machine – the basis of his entrepreneurial projects, perhaps also a prerequisite for possible political ambitions.

With the acquisition, Musk secures himself from losing this access. But he also runs the risk of Twitter being perceived as an instrument of Musk – something that should massively damage the platform and would probably be the most powerful catalyst to drive users away.

5. Everything stays as it is

Difficult to imagine with this acquisition, which will go down in economic history – but it may not change that much. On the one hand, the purchase is far from done. The approval of the shareholders is still pending. And competition and regulatory authorities can still put obstacles in the way, especially if political pressure against the purchase continues to increase.

And even if the takeover goes through, don’t underestimate the convenience of users – if Twitter stays essentially what it is, users will probably stay, too. Not least thanks to the network effect of such platforms, because on Twitter they are Everyone – and with the competition, should it arise, only a fraction.

This article first appeared on Capital.de

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