Date: 07/19/2023
Author: Mr. X
Elon Musk will not be able to restore free speech to Twitter. The golden age of the chaotic Internet that existed prior to 2015 is never coming back – not in the United States and not anywhere else. There are three reasons for this.
First, the surprise victory of Donald Trump in 2016 forced an instantaneous reversal among the great and the good about the value of free speech as such. The premise of Twitter and other social media prior to 2016 was that free speech would be a boon to anti-authoritarian movements, as the “Arab Spring” supposedly showed. However, the Arab Spring largely led to chaos and terrorism and movements like Trumpism and Brexit and horrified many in the tech industry and the media. The fact is, free speech as such is no longer supported among people with power.
Sure, there are exceptions, like Elon Musk. But that leads to the second problem – the weaponization of advertising. In the aftermath of 2016, political organizations realized, quite accurately, that politics and elections are largely a battle between opposing media organizations. (An “InfoWar,” if you will.) Media organizations, in the end, are just people scribbling on the back of advertisements, so the best way is to go after advertisements. Highly effective boycotts gutted conservative media organizations and ensured more active content moderation on social media.
This also brought Elon Musk to heel. Advertising brought in more than 90% of Twitter’s revenue last year – advertising is down about 60% since Elon Musk took over. Companies do not want to be on a social media platform where people say things that could get them in trouble. This is leading Musk to try to get people to sign up for verified accounts, creating a new revenue stream. Of course, this is a blow against the status of journalists and politicians, thus ensuring relentlessly negative media coverage and mockery of those who splurge for the $8.00 a month.
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Finally, there’s the role of the state. Whether exaggerated or not, Russia used social media to some extent in the 2016 media campaign. Maybe that made a difference, maybe it didn’t. However, it gives intelligence agencies in every Western country the excuse to get involved with content moderation on the grounds of preventing foreign interference and misinformation. Until recently, the United States government regularly met with various social media organizations to make specific requests for censorship. A federal judge issued an injunction against this, but it was recently lifted. The practice will likely resume.
And the fact is, there will be research to back this up. It is a simple calculation – you can identify with chilling precision the impact of one piece of “fake news” or online rumor. Providing information is, after all, always going to be a role of government. In cases of disease, national security, or anything else that is deemed a critical national interest, there needs to be a way to distinguish true information from false. Why wouldn’t the government have a role in managing information directly?
The answer of course is that in a free country, the government is not a Ministry of Truth telling people what they can and cannot see. However, for better or worse (probably worse), most people seem willing to make sure that they are “protected” from misinformation rather than allow error to spread online. One suspects they are simply eager to silence those they disagree with.
Still, does that mean Elon Musk’s campaign to try to skew things back towards free speech is doomed? Not necessarily. Mark Zuckerberg’s Threads, on paper, looked like it would succeed. It boasted (not surprisingly) major media support, was a safe space for corporate advertising, had a great base with Instagram, and was far more popular with world governments. And right off the bat, it looked ready to be the Twitter-killer, boasting about 100 million signups almost right away.
Yet the honeymoon has already worn off. Daily active users have fallen from 49 million on July 7 to just 23.6 million at the end of last week. Time on the app is down to just 6 minutes. Threads has had to impose rate limits because of skyrocketing spam. “Threads is missing many basic features and still needs to offer a compelling reason to switch from Twitter or start a new social media habit with Threads,” read a new study from SimilarWeb. Musk is already mocking it. “Lmaoo,” he tweeted, also calling the app a copycat. (He’s also suing.)
Still, Threads may benefit from being the world’s first truly astroturfed social media app. Elon Musk’s, well, tumultuous tenure at Twitter has shown that even he can only go so far. With TSLA falling after earnings yesterday because of declining margins, he will soon need to concentrate on his core business. Musk’s horse in the presidential race, Florida Governor Ron DeSantis, has faltered badly. Congressional Democrats and the White House are ready to gut him once they get the opportunity.
In contrast, Threads will enjoy a constant flow of revenue and support from media, government, and corporate America. It may take time for it to roll out features and the content will probably never be as good as Twitter. However, it will be a safe space for corporations. That is probably the best bet when it comes to revenue, especially as it can be paired with Instagram and Facebook. In contrast, Twitter really doesn’t have a path to profitability, as it is still bleeding cash even after gutting staff. Major advertisers are unlikely to return as long as there is even relatively less content moderation. Threads is boring, sterile, and corporate… but can bring in money. Twitter can’t.
Can Musk turn it around? He will need to go big or go home – somehow find a way to turn Twitter into a profitable space for creators, incorporate a payment system (X) that he’s spoken about for some time, and use it as the basis for the “universal app” he’s dreamed of. Yet it’s Musk against the world. Threads will never be as good as Twitter. Unfortunately, the new global economy doesn’t select for quality or things that are interesting. It selects for the things that can make money and retain advertisers. Most people don’t really want freedom – they want to be entertained. And of those who want freedom, even fewer really want to pay for it.
Mr. X is an investment analyst working in the Washington DC area who specializes in the intersection of business and public policy. After fifteen years working in politics, he writes on a classified basis for RogueInvesting.com to bring you news on what those with power are debating, planning, and doing
