This article originally appeared in the Province.
By Richard Shimooka, May 27, 2022
Even though Elon Musk is now sending mixed signals about his pending acquisition of Twitter, his move to buy the global platform has nonetheless fuelled much controversy. Many commentators have questioned whether he has the temperament and ability to run the social media company, but this same man is a talented engineer and extremely savvy business person.
Musk can draw upon his day-to-day business acumen to correct some of these issues. Aspects of his plan have already been revealed, including cutting pay of employees and pursuing different monetization options on the site. These promises seemed sufficient to convince investors and lenders to provide funding, and for Twitter’s board to approve the sale.
If addressing some of Twitter’s structural issues was the extent of Musk’s proposals, then the likelihood of success might well be high. However, Twitter’s challenges go far beyond that. A core part of its business is managing the social interactions of hundreds of millions of users on its platform. It faces significant challengers, such as Facebook and TikTok, and it also faces the potential for increased regulation by governments.
This is a position that Musk is not as familiar with. The most successful businesses he has run or been associated with are innovative companies that capitalized on unrealized market opportunities — PayPal in secure online payments during the 1990s tech boom, Tesla in the emerging luxury EV market in the early 2010s, and SpaceX in low-cost commercial space launch — are not analogous to the market that Twitter finds itself in.
One would hope he has some innovative ideas to kickstart Twitter’s growth, but none have been revealed thus far. Musk has teased a brand new product called “X” that he believes will quadruple the number of users. He has revealed no details about the idea.
More worrying are some of his other plans. Based on his public statements, Musk’s views seem heavily based on a strand of thinking that emerged within tech communities: Rooted in libertarian ideals, one of its core tenets is the concept of openness and free speech — that censorship is morally wrong — a line that Musk repeated in regards to Twitter’s ban on former U.S. President Donald Trump.
Perhaps Musk believes this approach will provide a unique market niche over competitors. Yet his views seem like a throwback to the 1990s, oblivious to the state of social media in 2022. Congressional scrutiny of Twitter has increased substantially, particularly after the Jan. 6 riots and COVID disinformation efforts. Other governments, like those of Canada, Australia and the European Union, have either implemented regulations or considered regulating Twitter. This will greatly complicate Musk’s effort to remake the social media giant in his vision.
Even if increased government regulation does not materialize, it is questionable whether loosening existing strictures on free speech will attract users or advertisers. This would more likely fan the flames of toxicity that have plagued other platforms, possibly decreasing the number of users participating in the platform. The relatively poor launch of Truth Social, the social media service backed by Trump, suggests there might be limited market appetite for this approach.
Moreover, large businesses have become increasingly wary of platforms that are lax in such standards. If Musk’s efforts fail to address these issues, or result in existing controls being rolled back, it could trigger a backlash toward Twitter and undermine his other efforts on profitability.
Ultimately, Twitter’s fate remains unclear — even the sale itself is not a certainty — but the plan that Musk has outlined thus far will likely not achieve the aims he believes it will.
Richard Shimooka is a senior fellow at the Macdonald-Laurier Institute.