Even for the Wild West world of social media it’s been a strange period. It’s safe to say that what goes on, on the platforms, encompasses pretty much everything from harmless family pics and amusing memes onto the weird and wonderful right down to the depths of trolling and then the downright despicable such as cyber bullying, racism and extremism. But it’s not content that’s been raising headlines in recent weeks, it’s the companies and individuals that own the platforms.
This starts with the takeover of Twitter by the world’s richest man Elon Musk, who increasingly appears to be a modern day reincarnation of Willy Wonka with his complicated private life, including 10 kids with 4 or 5 different partners, and his somewhat eccentric behaviour such as taking a sink into Twitter’s offices to announce that he’d taken over the company. Apparently it was a joke about letting it all ‘sink in’? Nice one Elon.
The whole deal to buy Twitter seems typically bizarre. It started back in March when Musk bought up a significant stake to become the biggest shareholder which triggered an offer to join the board on the proviso he would buy no more than 14.9% of the company’s stock. Initially everything seemed amicable with Twitter CEO Parag Agrawal tweeting that “it became clear to us that he would bring great value to our Board.” But this quickly turned sour with Musk becoming increasingly critical and ultimately to lose his patience: “This is a waste of time. Will make an offer to take Twitter private.”
The board initially tried to repel his hostile takeover bid, but by the end of April Musk reached a deal to buy Twitter for $44 billion and take the company private driven by his belief that Twitter was not living up to its potential as a platform for free speech. The deal was followed by a prolonged period of back and forth, ever more vitriolic, arguing mostly about a lack of information. So far so much like an episode of Succession.
Then in July Musk suddenly announced he was to abandon his offer because the company had failed to provide enough information about the number of fake accounts. Twitter then sued Musk to force him to complete the deal. Musk counter-sued Twitter and even more vitriolic accusations of skulduggery flew back and forth before Musk eventually decided to go through with his original proposal to buy Twitter after all. A deal for $44 billion was completed on October 28th.
It was only after his hilarious sink prank that Musk seemed to realise that Twitter was losing money, lots of it. In 2021 Twitter posted a net loss of $221 million, although this is a considerable improvement on the $1.1 billion loss it reported in 2020. Musk’s immediate solution has been to sack the entire board and half the workforce, by email, overnight, and to start charging users a subscription fee for ‘blue tick’ verification's. (Although today’s news is that they’re trying to get some of those workers back as the cull was so sudden and evidently ill-planned, that they fired some people they actually need.)
Danny Fortson, writing in the The Sunday Times on November 6th, thinks it’s all a massive gamble:
“In the end, Twitter may simply prove a broken platform that even Musk can’t fix. Yet I won’t fault him for trying something different, even if his plan is deeply flawed and brutally executed. Twitter has been a basket case for 16 years; turning it into a partial subscription business could align the company’s incentives with those of its users, and thus yield a better product. If it doesn’t work, Twitter will die, and be the subject of business school case studies chronicling how the world’s richest man lost $44 billion on an obsession.”
Meanwhile, there’s trouble brewing over in camp Facebook. A fall in advertising sales caused a decline of more than 4% in revenues, its second quarterly decline in a row, with profits falling 52%. On the back of this news, shares in Meta plunged a further 24.5% to $97.94, the lowest price since 2016. Analysts fear the company’s growth may have peaked after years of large gains, since the start of the year, Meta shares are down by more than 61%. The company also warned that the fourth quarter could be more of the same.
Meta boss Mark Zuckerberg (who, like Musk, also reminds you of another fictional character - the robot David in Ridley Scott’s film Prometheus?) initially said that the firm would reduce its hiring “steadily” over the next year, in response to the downturn and the company’s plans to shift investment into new areas. But this has accelerated over the weekend with reports that Meta is planning to let thousands of employees go this week, which would be the first wide-ranging layoffs in the social media platform’s history. Meta staff are presumably hoping it’s handled a bit more compassionately than Twitter’s brutal cull.
And again like Musk, Zuckerberg is also taking a massive business gamble with this 'shift into new areas' which is a huge investment in the metaverse - a virtual reality world in which people wear immersive headsets to interact with each other and create a shared space. To be fair, the potential does seem massive with metaverse monthly users hitting 400 million globally in 2022, of which 230 million are on Roblox, Minecraft has 165 million and Fortnite with 85 million monthly active users. Zuckerberg has gone 'all in' even changing Facebook's name to Meta.
So far however, Meta’s metaverse hasn’t really caught on in the same way. The company initially hoped to build a community of 500,000 monthly active users by the end of 2022. It reportedly revised this to 280,000 in recent weeks, with current monthly users standing at less than 200,000. But Zuckerberg clearly believes the predictions that 25% of people will spend an hour or more in the metaverse each day by 2026 and that many of these users are younger, which is an obvious attraction for Zucerkberg given Facebook’s decline. A recent Pew Research survey found that 95% of teens use YouTube and 67% are on TikTok, while usage since 2018 of Facebook, Instagram, Snapchat and Twitter has fallen away. Some of this social media reversal is down to the economy with a slowdown in online ad spending. Some has undoubtedly been caused by Apple’s iOS privacy update which included its anti-tracking ‘opt-out’ prompt last year, starving the online ad machines of the content upon which they relied.
“But a big part is also an exasperation with the core experience. Somewhere amid the scandals, privacy breaches and propaganda campaigns, the harassment and bullying, people began to sour on the model that has dominated since Friendster launched the social media era two decades ago...The shift is noteworthy because YouTube and TikTok are, mostly, passive experiences. There is less risk involved in watching an endless scroll of video clips than joining a debate on Twitter.”
Danny Fortson.