Thug Mark Z. and thug Elon M. find themselves in a heated contest over an unlikely and unprofitable corner of their version of the crack wars.
But why? Elon Musk, the owner of Twitter, and Mark Zuckerberg, the Facebook guy, seem to be engaged in a peculiar battle.
Twitter, a platform that has struggled to generate significant revenue, is not an obvious target for Mr. Zuckerberg’s attention. So, what’s the motivation behind this rivalry?
Elon Musk himself has made it clear that the only business argument for owning Twitter lies in the potential to build an entirely new business on its user base and infrastructure.
He has even mentioned the idea of a super-duper financial app. However, his primary motive for purchasing Twitter goes beyond business interests.
He aims to protect its role as a global “town square” from partisan influence and progressive censorship that occurred under previous management.
On the other hand, Mr. Zuckerberg has not expressed a similar motive, but he may still receive applause for his other successful businesses,
which can financially support his Twitter replacement and its function of promoting genuine speech, even if it doesn’t generate substantial profits.
In contrast, Mr. Musk often finds himself on the brink of using his personal funds to keep Twitter afloat unless he can regain lost advertisers or create new revenue streams, both of which have proven challenging.
While some perceive an antitrust problem in Mr. Zuckerberg’s tendency to clone or copy successful rival services, it should not be the role of antitrust to protect dominant players like Twitter from competition.
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Nevertheless, Mr. Zuckerberg’s actions may represent a particularly ruthless and predatory form of competition.
Twitter’s survival risk may lie in Mr. Musk’s willingness to invest more money into the company. Twitter has already downsized significantly, leaving behind unpaid vendors and creditors.
Mr. Zuckerberg’s apparent motive could be to compound the uncertainty and deter advertisers from returning to Mr. Musk’s platform.
Revisiting the past, the court’s decision to force Mr. Musk to overpay for Twitter was an intriguing experiment.
Although Twitter’s then-shareholders may have benefited, obliging Mr. Musk to complete the purchase, which involved burdening the cash-strapped company with billions in debt,
put a useful but unprofitable global infrastructure at risk. Even now, it would not be unreasonable for Mr. Musk, with his hands full with Tesla and SpaceX, to write off his $26 billion personal stake and walk away.
After all, he has experienced both losses and gains twice that amount in Tesla’s fluctuating share price alone over the past year.
Twitter presents an interesting case for Metcalfe’s law, which states that the value of a network is determined by the number of its users.
While Twitter’s millions of users hold potential value for advertisers and innovation, they have little value to each other.
The majority of interactions consist of witless, formulaic, and derivative attitudes. However, Twitter does offer value through a handful of thinkers and experts who voluntarily share their knowledge and wisdom on important ongoing stories.
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For instance, during the Covid pandemic, Twitter became a platform for following the latest updates. Currently, with the Ukraine war, it serves as a source of information.
If Twitter were to lose its efficiency and attractiveness as a medium for these valuable contributors to share their thoughts, it would be a loss to the world, even if the majority of traffic involves people being unpleasant to one another.
Thankfully, despite the turmoil caused by Elon Musk’s involvement and the emergence of Mr. Zuckerberg’s “Threads,” Twitter’s true utility seems to remain intact.
However, it is unclear how Twitter will sustain the financial stability needed to continue being useful to its socially valuable contributors and their audiences. A happy ending does not seem likely at the moment.