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Zuckerberg vs Musk: the biggest threat to Twitter in the midst of the crisis after the sale

Date: June 19, 2024 Time: 12:27:14

Zuckerberg put 500 million dollars on the table. It was 2008 and the founder of Facebook wanted to buy Twitter. He tried to cajole Jack Dorsey, but Dorsey’s departure from the company as CEO meant that the offer never came to fruition. Now, fifteen years later, it is up to him to execute with all the consequences the threat that he always put on the table to the founders of the companies with which he negotiated a purchase: cloning. Now, he has done it with Threads picking out Twitter’s most delicate moment after Elon Musk’s landing: with advertisers still dragging their feet to return, the pressure of a gigantic debt and the payment and subscription model not taking off. Unlike other copies, Meta has the user base and infrastructure. But the barriers to exiting the Tesla founder’s social network remain high.

The creator of Facebook has always negotiated aggressively. If someone got up from the table without a sales agreement, what was often called ‘destroy mode’ was usually triggered. That translated into the construction of clones of the services of those ‘rebel’ companies to drown them. The threat flew over the conversations with Instagram, which he ended up accepting in 2012. Also those of Snapchat, which said no to 3,000 million dollars. The consequence: Facebook launched ‘Stories’ in 2016 and hit its competitor. Also those who maintained with the old Musica.ly, today TikTok, in that 2016. He ended up launching ‘Reels’ to unseat him (without success).

The case of Twitter was more complicated. He tried to sign Dorsey as revenge in that year 2008, as revealed by the journalist Nick Bilton in his book. And introduced some variations in the social network. But it could never become the ‘public conversation square’ that was the platform that Musk controls today. The sale to the founder of Tesla awoke that ‘thirst for revenge’. The layoffs and all the shock experienced after the transactions were the breeding ground. In March of this year, the specialized media Money Control dropped the bombshell: Meta worked on a competitor codenamed ‘P92’ that went beyond that Notes ‘app’ that she launched in December. It was the seed at a very delicate moment, with the first payment of interest on the debt foreclosed on the horn and no CEO yet hired.

After months of work, he launches it in a week in which Twitter users rose up in arms against a new attempt by Musk to promote the paid subscription of 11 euros per month – and to cut costs related to computing in the cloud-. Coincidence or not, tweeters had raised a cry in the sky for the latest decision: cut the number of publications that a free client can view and include Tweetdeck, a tool to continue improving what happens on the platform, in that subscription. Many looked for alternatives. And the ones that had already been shown in those days -Mastodon, Bluesky…- did not finish convincing. The head of Instagram himself, Adam Mosseri, admitted in an interview with The Verge what is obvious: Threads is thrown at the “volatility” and “unpredictability” of his rival under Musk’s mandate. “Twitter was a pioneer, but given everything that’s going on, we thought there was an opportunity to build something open.” Mosseri is one of Zuckerberg’s ‘lieutenants’.

In that ‘volatility’ that they talk about in Meta is the subscription strategy. It has always flown over this proposal on Twitter, when it was a listed company, to try to reduce dependence on advertising. But the reception from the user base has not been especially good. In April it was estimated that barely 640,000 had joined. In May 2022, the last data available before Musk’s purchase and his going public, the social network had almost 230 million monthly assets. The fact that there is a free alternative linked to Instagram -with more than 2,000 million users- is, at the very least, a relevant threat.

Less income and more debt

In the commercial field, Twitter arrives at this hard fight even with homework to do. Musk hired Linda Yaccarino, a veteran NBC Universal executive, to try to rescue the advertising business. But those limits to free users and the situation have not helped the return of companies and their ads. There is no public data, since the company is not listed. But there are analysis firms like Pathmatics that pointed out in March that more than half of the In December, according to The Wall Street Journal, revenue fell 40%. In June, its owner publicly defended that many had returned. However, internal data revealed by The New York Times spoke of falls of 59% between April and May 2023. In this field, Meta’s machinery is much more oiled and the synergies between platforms are there.

As if this were not enough, the bills on the table of the new CEO and Musk himself -and the debt- do not stop pressing. The latter chose not to pay, for example, payments to Google for its cloud service – which had to be taken care of by the CEO – and others such as the rental of some of its headquarters. The company did pay the second interest payment on its $12.5 billion of liabilities in May worth about $300 million. But financial difficulties are pressing. The seven banks that contributed the money, led by Morgan Stanley, were ‘blocked’ by not being able to sell this liability to external investors. This economic situation does not allow him to be in an ideal situation for a ‘melee’ with a giant like Meta.

Musk has revolted and threatened with a first lawsuit for an alleged theft of intellectual property, because according to him Meta has hired Twitter employees who would have breached its confidentiality clauses. Meta has denied it. But there is also something that may be more worrying for Musk and his team. There are several complaints filed in the US courts for examples of Twitter that allege not having received the compensation that corresponded to them by contract or the ‘bonuses’ corresponding to the year 2022. This would mean that, in addition, these employees did not have that duty of silence.

Difficulties for Goal

Even with everything, Meta is not going to have anything easy. With companies as established as Twitter, the barriers to exit for users are often quite high. It is not easy to change places of conversation when you accumulate years -with users, impact and others- in one of them. There have been numerous attempts to try to displace the bird social network in the market. But it has not been possible. The latest have been Mastodon, Bluesky (backed by the co-founder of Twitter himself, Jack Dorsey) or one called Spill. Many have ended up in the same place: a first ‘boom’ that comes to nothing precisely because the majority of tweeters do not move.

It is true that the start has been brilliant. In less than 24 hours, Threads has achieved more than 70 million registrations. This still represents a minority part of the more than 2,000 million Instagram users – the account would be linked to the latter. One of the keys will reside in getting many of those to end up staying by really being a weighty substitute for Twitter, without turning it into a new Facebook. Zuckerberg admits that this is all a clone. And a few days ago he dusted off his own Twitter account, which he had not entered for years, to ‘troll’ Musk himself with an image that referred to that copy.

Musk’s hope is that those exit barriers are high enough. Especially when Mosseri (Instagram) himself saw last Friday that Threads is not going to become a site dedicated to “politics” or “hard news” which is precisely two of Twitter’s strengths. The executive already suffered in the past to launch Facebook’s ‘News Feed’ and what he implied in terms of misinformation and regulatory problems. He believes that increased scrutiny and negativity is not worth the “increased engagement or revenue” from users. He has referred to content from communities such as sports, music, fashion or entertainment. “The goal is not to replace Twitter…not all of Twitter.” A whole battle begins for the attention of the user who, at least a priori, takes his first steps with contenders in very different situations.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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