He did it. Twitter has cleared the way for Elon Musk to buy the platform. The richest man in the world wants to take over the platform and take it off the stock exchange for $44 billion. A schedule has not yet been set and many details are still unclear. But critics are already warning of serious consequences: for democracy and for social networks.
Many of these allegations are exaggerated. Elon Musk’s pending purchase of Twitter is good news. Twitter has fallen far short of its potential in the 16 years since the company was founded. The platform continues because it is very popular in the tech industry and with some politicians, journalists and celebrities. However, the platform failed spectacularly in becoming a product for the mass market.
Elon Musk’s goal is to change that. New impulses would do the landscape of social networks good. The Facebook group Meta has become far too dominant and sluggish. With WhatsApp, Instagram and Facebook, the company controls a number of important platforms at the same time. TikTok is not a worthy challenger. Twitter can change the balance of power.
The transformation of Twitter is likely to be a huge challenge. Musk faces four key challenges.
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The four problems of Twitter
The first problem is Twitter’s strategy. Because the platform currently has no clear course. Musk has announced that he will make Twitter’s algorithm public. He had said everyone should be able to analyze it and suggest changes.
That sounds good. In practice, this could be very difficult. Because the algorithms of social networks are very complex. There are no simple rules that determine who gets which content and when. They are complex systems that are trained to display relevant information to users according to their individual preferences. A public debate is important and right. But it is not yet a solution to the problems.
The second problem is Twitter’s reach. The platform still has a huge entry hurdle. Those who are among the power users of the platform have struggled for a long time to make the right selection of settings and identify the right accounts that are worth following. This process can take months, sometimes even years. Most newcomers give up after just a few days. Twitter is just too complicated and daunting to start with.
The third problem is the platform’s lack of a business model. Management has never really been able to figure out how to make money. On the one hand they rely on paid accounts, on the other hand on advertising. No approach was really pursued sustainably. The company bosses had formulated ambitious growth targets by 2023, but even within the company there are great doubts as to whether these plans can be achieved.
Funding Elon Musk’s purchase of Twitter could cost around a million dollars a year.
(Photo: REUTERS)
Musk has said he’s not interested in the purchase for the money. However, the economic pressure on the platform could not decrease through a takeover of Elon Musk, but increase significantly. This is partly due to how Musk financed the purchase.
The news agency Reuters reports that the financing structure of the Twitter purchase is likely to incur annual interest and fees of around one billion dollars. That’s a massive number for a platform like Twitter. For comparison: In the 2021 fiscal year, the operating result (Ebitda) was just under $700 million.
The fourth problem is dealing with misinformation and hate speech. Like all major social networks, Twitter is wrestling with a clear course. Under Agrawal, Twitter has expanded its bans on accounts that spread alleged misinformation. Elon Musk had indicated a completely different course, in which many more statements should be allowed.
Musk is also a problem
That cannot be a sufficient answer. It is important and right that opinions that differ in terms of content or politics are not excluded from a debate. But targeted disinformation campaigns are damaging and dangerous to debate. All major social networks wrestle with this problem. But no one has found a satisfactory answer yet.
And when would there still be Elon Musk himself – he too could get in the way of his Twitter mission. Musk describes himself as a “free speech absolutist.” At the same time, he polarizes. And there are several documented cases in which he excluded internal critics at Tesla or actively prevented the establishment of a works council.
Twitter is Musk’s main public mouthpiece. In order for the platform to thrive, he must take himself back. Modesty is not one of his strengths. He still has to show that he can strengthen the platform without pushing himself to the fore.
If Musk can overcome these problems, Twitter really has tremendous potential. Time and time again, Musk has been underestimated. It remains to be seen whether the critics will be right, and whether managing a social network is really more difficult than putting people on Mars. I trust Musk to solve Twitter’s problems.
More: Twitter accepts takeover bid from Elon Musk for $44 billion.