The richest man in the world is leading the Twitter group into the abyss with wild maneuvers: sales are collapsing, advertisers are fleeing, porn business is taking over. Now Meta is also bringing a dangerous competitor onto the market. Elon Musk responds with arrogance, bird-killing and X-mania.
Elon Musk has shot the bird. Twitter’s legendary blue bird logo, known worldwide as „Larry,“ is being replaced by a plain „X.“ Twitter is to disappear along with the bird, and in the future the world will have to deal with „Corp X“. Musk had already changed the name of the holding company in March.
Fans of Musk are celebrating the move as a „cool move“ because Twitter will soon become a new „Everything App,“ a universal application modeled after China’s WeChat. WeChat not only functions as a social network, but also offers everything from online shopping and banking to video conferencing, games and photo-video sharing in one app. Musk is now planning something similar for Twitter. The letter „X“ stands for this open diversity, he said. Since Musk is celebrated by some like a pop star of tech capitalism, his „X“ is considered a signature of his innovative product show.
Musk was one of the co-founders of the online bank X.com in 1999, which went on to become the payment service Paypal. He later founded space specialist SpaceX, and Tesla, the electric car maker he leads, has a Model X in its lineup. Just this year, he founded a new company called xAI, which deals with artificial intelligence. One of Musk’s sons is actually named X Æ A-12, and the entrepreneur often simply calls him X. Musk says, „I like the letter X.“ The new X logo, he says, is his „art deco.“ So much for the glitzy side of the X revolution.
On the downside, Musk’s bird-killing is criticized as an act of intoxicating arrogance: „The ‚X‘ reveals the chaos and hubris of Musk’s system,“ headlines Die Welt. Marketing experts are appalled: one of the world’s most successful brands – „tweets“ and „twitter“ have even become global vocabulary – is being abolished on the vain whim of a billionaire. Musk, he says, is risking the brand value of the entire platform.
Huge mountain of debt
But Twitter’s brand killing may just follow its business decline. Under Musk, the group has fallen into an existential crisis. Musk himself said a few months ago that the corporation was „on the fast track to bankruptcy.“ The company would burn four million dollars a day. In fact, Twitter has made losses in ten of the last twelve years. Its debt is now in the tens of billions. The company has added nearly $13 billion in new debt to its balance sheet as a result of Musk’s acquisition alone, and now faces interest costs of more than a billion a year. And the trend is upward.
With Musk acting erratically, Twitter is stumbling into six threats at once.
First, advertising revenues, on which Twitter has so far lived to the tune of 90 percent, are collapsing dramatically. The „New York Times“ recently published internal data showing that advertising revenue in the spring was down 59 percent from the previous year. Revenues for the five weeks from April 1 to the first week of May were only $88 million, according to the report. In the first half of the year, advertising revenue reportedly plummeted by about half. Musk commented that advertisers in Europe and North America had put „extreme pressure“ on the company, resulting in „half of our advertising“ disappearing. „They’re trying to bankrupt Twitter,“ he whined.
Secondly, Twitter suffers enormous image damage with Musk. As Musk politicizes the platform and moves it to the right, more and more customers and users are deliberately withdrawing. By cutting back on content moderation and unblocking partly extremist users, he has triggered a rise in hate speech, anti-Semitism and conspiracy theories. As a result, a number of major customers have demonstratively abandoned the platform.
Third, Musk has made a clean sweep of staff. Thousands of employees have been fired using rude methods. Now the company no longer has 2,000 employees, compared with 7,500 before the takeover. But this is causing additional chaos in the group, because not only have some of the best executives now left Twitter in a hurry. Many programmers are also gone, whereupon the platform is struggling with ever greater technical problems.
Dangerous competition
Fourth, Twitter is facing increased competition. The meta company has launched a direct competitor app, Threads, on the market; Threads cracked the 100 million user mark in just five days. The chatbot ChatGPT had taken two months to reach 100 million users, and for Tiktok it was as long as nine months. Twitter itself had taken over five years to reach this number of users. If Meta actually succeeds in establishing a new short message service, Twitter is unlikely to survive.
Fifth, the short message service visibly has a porn problem. Twitter’s ad salespeople are concerned that advertisers could be scared away by a rise in pornography, as well as by more and more ads for online gambling and marijuana products. There are now weeks when Twitter’s biggest advertisers in the U.S. include dazzling providers of everything from fantasy sports betting to porn sites, erection aids to cannabis accessories.
Sixth, the slump in the core business is leading to a veritable balance sheet imbalance. New York financial analysts are warning loudly that Musk has paid far too much with the 44 billion and may have overstretched himself, because an increasing interest burden is rolling in on him. The over-indebted Twitter company will no longer be able to shoulder the burden on its own, and Musk will have to inject capital into a company that is becoming increasingly worthless. The investment fund giant Fidelity, which owns shares in Twitter, currently values Twitter at only 15 billion. Musk would thus have wiped out $29 billion in just one year. In a sense, Wall Street has already out-xed the company. Musk’s new logo can therefore also be seen as a punchline to Twitter’s ruin.