Blog posts

Twitter takeover: what to expect

Published on 31/10/2022

What will be the immediate consequences, risks and opportunities?
The little bird has a new master. Or a new Chief Twit, as he calls himself. Elon Musk has officially carried out the acquisition of his favorite social media platform, after numerous attempts to back out of the deal.

At $44Bn, Musk confessed that he knew he overpaid for a company that only generates $5Bn a year in revenue and hasn't been able to make a profit (except in 2018 and 2019). But the acquisition of Twitter follows the same logic as Bezos' purchase of the Washington Post, or Dassault with Le Figaro in France. Business moguls strive for influence, even at financial loss, and there is arguably no online platform more influential than Twitter.

That being said, Musk hasn't been shy of criticizing Twitter’s evolution in the last few years, and has on numerous occasions shared his vision of where the platform would be going under his leadership. For brands and companies, there may be some changes to watch out for in the short to medium term.

What should happen soon

The most contentious point of the transaction, officially, was the prevalence of bots and fake accounts. This type of spammy account goes against Musk's vision of Twitter as a democratic platform for the free exchange of views. It is likely that more efforts will be undertaken to hamper automated activities on Twitter, and deleting fake accounts. Considering that at least 15% of Twitter accounts are fake, brands as well as other users with large followings should expect a loss of followers in the short term.

Musk has also announced the formation of a content moderation council , which may reassure those who worried that his advocacy of free speech meant that Twitter was going to become an extreme free-for-all similar to 4chan. This council will gather people from all sides to try and agree on what moderation should look like on the platform, and who should be banned or reinstated. As Elon Musk himself is a vocal critic of "wokeism", and it should be expected that moderation rules will start allowing for more "politically incorrect" content, similarly to Reddit and even TikTok.

Nevertheless, Elon Musk has been clear that the platform would abide by the "rules of the land" and conform to EU legislation.

It was also reported in The Verge father of X Æ A-12 intends to start charging up to $20 a month for the blue check mark signaling verified accounts on Twitter. Since “Twitter Blue” enables verified profiles privileged interactions, it is likely that most verified accounts will choose to pay the $240 annual fee to keep the “badge of honor”. There are approximately 300,000 verified accounts on Twitter, so this move could potentially mean $72m additional revenue.

Where will Musk take Twitter?

Last May, Musk presented his business plan to investors with a plan to quintuple Twitter's revenue by 2028. His plan included the addition of paid subscriptions, data licensing, and further diversification into online payments to reduce the company's reliance on advertising, which represents 90% of the company's income today.

Musk's current challenge is to reassure advertisers so they don't pull their investments, while at the same time making a move towards more free speech on the platform, which tend to come with threats to brand safety. Musk hates advertising as he once infamously tweeted, and it is unlikely that all of a sudden Twitter will become an advertiser's heaven like TikTok, Instagram or YouTube.

Nevertheless, it is possible that Musk will push Twitter in a direction which would attract a larger user base, for instance through the addition of innovative video features. This would enable brands to advertise in a way that is more engaging and to more people.

Beyond messaging, Musk now owns a platform used daily by 180m people on their smartphones, and installed on many more devices. The addition of new products and services, such as payment a la PayPal, or in-app experiences (think WeChat) could also draw more people to the platform and increase stickiness.

From Web 2.0 to web3?

Could Twitter enter the web3 era by turning into cryptocurrency? Dogecoin has been up 110% since the acquisition took place. The Shiba Inu cryptocurrency has long been one of Elon Musk's favorite crypto assets. Now that he has access to a massive user base, it would make sense to turn Dogecoin into a payment tool for Twitter services and thus increase the value of that currency, making him richer in the process. If Dogecoin could buy you Twitter NFTs, ads, and other assets at a lower price than dollars and euros, we could see a huge movement to buy that currency which started as a joke and might amount to much more in the end.

What should brands do

Twitter will remain the real time forum of the world. Brands who want to be part of the public debate, and who play by the Internet rules of engagement (aka don't be boring) will remain successful on Twitter.

Advertising will remain a tough sell. Free speech and brand safety don't work well together, and until we see new experiential features and a smarter algorithm (which can happen soon), it should remain a limited investment for brands.

The best predictor of future behavior is past behavior. Musk has a history of delivering on promises, albeit later than previously announced. Will Musk take Twitter to an unexpected, spectacular direction? Certainly. Will he quintuple the size of the company? Eventually. Will it take five years? Probably a lot more. But it will be fun to watch.

JIN New-York
Strategic Director
Related content
Trend book | Planet JinZ : The Gen Z deciphered
Trend book | Planet JinZ : The Gen Z deciphered
Read more