The sum is astronomically high: Elon Musk has now invested around 44 billion dollars in the takeover of the social network Twitter. Last April, Musk became a shareholder, then it went back and forth for an agonizingly long time. “I’m not doing it, I’m doing it, I’m not doing it” – that’s how it went almost every week, both sides overrun each other with threats and allegations. Multi-billionaire Musk knew his bid for Twitter wasn’t really worth it – and tried to roll it back.
It didn’t help: Musk has been the owner of Twitter since the end of last week. He bought the company “to help humanity that I love,” more pathos is not possible. He still has no answer to a crucial question: What does Twitter’s business model actually look like, and how is the company supposed to be profitable in the end? Musk is an entrepreneur, he has made a whole series of companies very successful economically, Tesla, for example, is today the biggest competitor of the established car manufacturers. The big question is whether he can also stabilize Twitter economically. But that is exactly what is necessary if the company is to have a future and the takeover is not to turn into a huge entrepreneurial mistake.
The carmaker GM has temporarily stopped its ads
Founded by Jack Dorsey in 2006, Twitter is anything but a money machine, unlike Marc Zuckerberg’s meta-corporation, which makes billions from Facebook, Instagram and Whatsapp. Twitter, on the other hand, with almost 240 million users recently, mostly made losses, with a few exceptions. In the past quarter, when sales were also falling, the minus alone was around 270 million dollars. The problem: Despite all the media attention, the social network never got out of its niche position. Twitter never became a real medium for the masses like Facebook, Instagram or Wechat in China. Although Twitter repeatedly made headlines, it has remained a medium primarily for celebrities, politicians and journalists – a target group that is not particularly interesting for an advertising industry geared towards the masses.
That has an impact. If Twitter users are not to pay subscription fees, the offer must be financed through advertising. Ad sales recently accounted for more than 90 percent of revenue. These would have to increase, but this will not become easier in the future. The American carmaker General Motors (GM), for example announced at the weekendto temporarily halt its paid advertising on Twitter. The lack of clarity about the further course on Twitter could put more advertisers to flight.
“Twitter must not become a lawless hellhole where you can say anything without fear of repercussions,” Musk wrote over the weekend to reassure advertisers. But that is exactly what many fear. Companies do not want to appear with their advertising in an environment in which hate speech, hate speech, disinformation and suppression of freedom of expression are the order of the day and where only a few cranks cavort. But that’s exactly what many critics expect after the takeover by Musk. The fact that he immediately fired the top management of Twitter around the previous boss Parag Agrawal and apparently also wants to initiate extensive job cuts will not exactly improve the relationship with the advertising customers.
Musk promises that his goal is to make Twitter the “most respected advertising platform in the world”. But one thing is clear: the company cannot be further from this claim.