Musk’s takeover means big changes for Twitter — and maybe the web

As the new owner, Musk could change policies that banned former President Trump and others who supported the January 6 insurgency from the platform. Although he didn’t address the issue directly, Musk said in an April 14 interview at the TED Talk that “if it’s a gray area, let the tweet exist.” (Trump may not want to return, however, telling Fox News on Monday that he will stick to his own Truth Social app.)

Although Twitter content is largely unregulated in the United States, any move by Musk to remove moderation controls and allow hate speech or other offensive pricing could run into problems in Europe. which imposed a greater restriction on social media last week. It could also alienate major advertisers who provide the bulk of the service’s revenue.

“We expect advertisers to be less willing to spend on Twitter if Elon Musk removes content moderation to promote free speech,” wrote analyst Michael Nathanson of MoffettNathanson. “In this scenario, we believe advertisers will turn to other platforms to build brand awareness.”

In recent tweets and interviews, Musk has also outlined a wide variety of potential feature changes. He supported adding a way for users to edit tweets after they’re posted, banning bots that spam users and allowing anyone to see the proprietary algorithms the service uses to classify and distribute posts.

But trying to ban bots while Twitter’s “open sourcing” algorithm would not work, warned Eva Galperin, director of cybersecurity at the Electronic Frontier Foundation. “You can’t have those two things at the same time and I think that accurately describes how incoherent and absurd his intentions are,” she said. tweetedsince spammers would use the information from the algorithm to improve their tactics.

Musk’s main goals also don’t seem to focus on making the service profitable. “That’s no way to make money,” he told the TED talk. “I don’t care about the economy at all.”

In any case, the management of Twitter has little chance of surviving the takeover. Twitter board chairman Bret Taylor told company employees that the board would be dissolved once the acquisition is complete. And current chief executive Parag Agrawal said he wouldn’t have much to say about what happens after that. “Once the deal is done, we don’t know which direction this company will go,” the New York Times said. reported said Agrawal.

Monday’s outcome seemed unlikely just a week ago, even though Musk had already bought more than 9% of Twitter shares. On April 15, the company’s board adopted a new share ownership policy known as the poison pill to thwart unwanted takeovers. And Twitter shares traded well below Musk’s April 14 offer price of $54.20 per share, reflecting investor doubts.

That all changed last Thursday when Musk said in a securities filing that he had accumulated enough loans and personal money to complete the takeover. This appeared to influence the company’s board, which said on Monday that Musk’s offer was “the best way forward for Twitter shareholders”.

One of the reasons Musk was able to buy the company is that, unlike other internet giants such as Facebook and Google, Twitter failed to harvest huge profits. Despite more than 200 million daily users, Twitter lost $221 million last year, and its stock price was barely above its 2013 IPO price of $26 before Musk revealed his interest.

Musk’s emphasis on free speech and potentially relaxing moderation of content on Twitter has sparked talk of switching to alternatives. The trend could be similar to the migration that happened after Twitter banned Trump, and many of his followers decamped to rival services including Parler, MeWe and Gettr.

These services have struggled to attract as many users and attention as Twitter. While Twitter’s mobile app has been installed 1.2 billion times, MeWe has just 13.3 million installs worldwide, Talk has 11.3 million and Gettr nearly 7 million, according to the report. market research company SensorTower.

But a new mass migration could open the door to a completely different ownership model for a social network.

Musk’s total control of Twitter, along with Mark Zuckerberg’s majority stake in Facebook, has some players in the tech industry looking for an alternative. In the movement known as web3, startups are using blockchain technology developed for cryptocurrencies to give service users more control over how those services are run.

Former Twitter CEO Jack Dorsey, worried about growing regulatory demands, was planning to decentralize control of the company’s platform in 2019. The growth of cryptocurrencies was already beginning to turn into a wave of startups that used blockchain technology to offer customers ownership, a say in management, and a financial stake in new services. But Dorsey’s effort, which would have allowed different groups and companies to create their own personalized Twitter feeds, never came to fruition, and he stepped down as CEO last year.

Now, some venture capitalists, online activists, and entrepreneurs are looking to build something similar to Dorsey’s decentralized platform without the help of Twitter.

“Basic internet services shouldn’t be owned by individuals or companies,” says Chris Dixon, a partner at venture capital firm Andreessen Horowitz. tweeted. “They should be owned by communities, like early Internet protocols were.”

Still, Twitter benefits from the power of network effects since it already has many users, pointed out Kent Bennett, a partner at Bessemer Venture Partners in Cambridge.

“I wouldn’t expect anything to replace Twitter unless it had obvious and significant benefits given that everyone is already on Twitter,” he said. And with Musk at the helm, Twitter could quickly match anything from an upstart rival, Bennett said. “I have to imagine they will be more nimble tomorrow than they were yesterday.”

Aaron Pressman can be contacted at [email protected] Follow him on Twitter @ampressman.

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