Elon Musk wrote within hours of buying Twitter that he “didn’t do it because it would be easy”.
That statement has proven to be one of the few certainties about his ownership of the influential social media platform, which has tipped the business into a state of constant flux, with advertisers slashing spending, user numbers down, regulators circling and the staff at less than 50% of what it used to be.
From dumping a world-renowned brand to attempting to overhaul the company’s business model, Musk has changed Twitter more in the past year than any other executive in the 16 years prior.
Rebranding Twitter
Musk acquired Twitter on 27 October 2022. The biggest single change in a tumultuous 12 months was rebranding Twitter as X, a long-mooted move for an entrepreneur who has harboured ambitions to create an “everything app” that handles messaging, social networking, audio, video, payments and online shopping.
Shortly before he completed the $44bn (£36bn) takeover, Musk signalled what was coming when he described the deal as an “accelerant to creating X, the everything app”.
Nonetheless, the sudden dumping of the Twitter brand in July this year took the tech world by surprise. Compared with Facebook and Instagram’s multibillion-person combined user base, Twitter was a modest platform with 238 million daily users – but it was influential and well-known.
According to X’s new chief executive, Linda Yaccarino, speaking at a conference last month, the social network now has between 200 million and 250 million users, although she indicated later during her appearance that the number is 225 million – which would indicate a decline. Visits to X dropped 10% on the prior month to 5.8bn in September, according to data firm Similarweb.
Bruce Daisley, the former head of Twitter’s European operations, said the rebranding move had damaged a business that was in “brand heaven”.
“There was plenty wrong with the product, but the brand was in the top tier of companies in the world,” he said. “Names as diverse as Barack Obama, Kim Kardashian, The Rock and Greta Thunberg would all use the name and help promote the platform. Musk destroyed all of that.”
Changing the social media business model
If the rebranding of Twitter signalled a shift in the company’s business model, there was a need for change anyway due to the pressure on its main revenue stream.
Advertising accounted for nearly 90% of Twitter’s $5.1bn in annual revenue in 2021. That total has slumped due to an advertiser exodus triggered by fears over moderation standards on the platform and general concerns about Musk’s leadership. In a post last month, Musk said US advertising revenue had fallen 60%, a situation which he blamed on pressure from the Anti-Defamation League, which campaigns against antisemitism and bigotry. With quarterly debt payments of $300m and a fall in the main source of cash to pay it, the company needs to find money elsewhere – if it can.
It is against this backdrop that Musk has sought to overhaul the platform’s subscription product, formerly known as Twitter Blue but now branded as X premium. The X rebrand has carried promises of turning the business into an “everything app” modelled on Tencent’s WeChat, dominant in China, that carries out a multitude of tasks from messaging to payments and food deliveries.
But even before completing the takeover – a tortuous process in itself – Musk had signalled that he aimed to reduce the platform’s reliance on advertising via a subscription drive, which he also hoped would reduce the number of automated accounts vexing the social network.
To this end, he oversaw a botched relaunch of the Blue product in November, which resulted in a slew of impersonator accounts operated by pranksters who took up the offer of a verified account checkmark – and all the chaos that could cause if, for instance, you’re not really George W Bush – for $8 a month.
Since then, the subscription service has relaunched again with perks, including the verified checkmark and greater prominence on the platform for your posts. According to one estimate from Travis Brown, a software developer who tracked Twitter Blue sign-ups, the number of subscriptions had reached more than 600,000 by April this year, or more than $5m a month in extra revenue which is not enough to cover a multibillion-dollar advertising slump.
Last week Musk went a step further, following up on hints that he was going to charge to access the site by rolling out a $1 annual charge to new users in New Zealand and the Philippines. The policy was dubbed “Not a Bot” by X, following the logic that spammers won’t want to pay up for every troll account they launch.
Musk also indicated that two new subscription tiers will be coming: one with “higher cost” that features no ads; and another “lower cost” option with all the extra features, but no reductions in ads.
Bruce Daisley, the former head of Twitter’s European operations, says that trying to diversify away from advertising is “strategically a good call” but it has been badly handled.
“With the changes he has made, not least bringing in paid verification, he has served to reduce the quality of the platform. When you include the capricious decision-making, advertisers have said: ‘We don’t want to be part of that.’”
Diminishing moderation
One of Musk’s first acts as owner of Twitter was firing approximately 50% of the platform’s 7,500 staff.
Evan Hansen, then a director of curation at the platform, was among the thousands of people axed abruptly by an owner who had claimed before the takeover that the platform had a “very far-left” bias.
“He believed that our team was biased … that the entire moderation team was actively promoting liberal conversations and being partial with conservative ones,” says Hansen, who had had a long career as a respected tech journalist before joining Twitter in 2016.
Hansen says his team would “nourish a variety of viewpoints” via features such as Twitter Moments or ensure that readers “experienced perspectives that they would otherwise not encounter”. That service included demoting toxic trending subjects or putting a representative tweet in hashtag timelines to explain why certain subjects were trending.
Referring to the social network now, Hansen says: “Our work is completely gone.”
Musk has reinstated previously banned users such as Donald Trump and the misogynist influencer Andrew Tate, while also arbitrarily banning tech journalists who crossed his path. In September, Musk posted on his X account that he had disbanded X’s election integrity team ahead of more than 70 elections around the globe in the coming year. Musk and Yaccarino are pushing X’s crowd-sourced fact-checking feature, Community Notes, as a key element of its moderation systems. But doubts have been raised over its ability to cope with a deluge of misinformation related to the Israel-Hamas war.
The social network’s approach to content moderation, and general concerns about Musk’s leadership, have hurt the business by warding off advertisers. Farhad Divecha, owner and managing director of the London-based digital marketing agency AccuraCast, says X’s standing among advertisers has plummeted. Since that initial wave of firings, X’s workforce was reduced further to about 1,500, Musk said in April.
“The past 12 months have seen Twitter go from a solid third or fourth option – after Google, Meta and occasionally LinkedIn – for digital advertising to the bottom of the pile,” he said. “Changes to brand safety, opening up the network to extremists under the guise of free speech, requiring advertisers to pay for verification, and firing a lot of the staff have sent signals that the platform doesn’t care about brand safety or advertisers.”
X’s handling of hateful or misleading content has come under further scrutiny in the wake of the Hamas attack on Israel. Thierry Breton, the EU commissioner responsible for the bloc’s Digital Services Act, has written to Musk alleging that the platform is “being used to disseminate illegal content and disinformation in the EU”.
Meta (the owner of Facebook and Instagram) and TikTok have also been warned about Israel-Hamas coverage on their platforms, but X’s issues threaten to compound its problems with advertisers.
CEOs on parade
Musk fired Twitter’s chief executive, Parag Agrawal, as soon as the billionaire completed the deal and took over running the platform. Tumult ensued.
In a nod to the damage done to the cornerstone of X’s business model, in May Musk appointed a renowned advertising industry executive as CEO. Yaccarino, then head of global advertising at media and entertainment conglomerate NBCUniversal, is highly respected within her field.
She has moved to repair the company’s relationship with advertisers by reinstating a “client council” for marketing and ad agency executives but admitted she has found the job hard.
“It’s hard. It’s hard on me. It’s hard on my family, my children, my parents,” she told the Financial Times.
Yaccarino told a conference in September that X would be profitable next year (the platform is historically loss-making), that engagement from users was up “dramatically” and that advertisers were coming back, despite indicating that daily users numbers had dropped to around 225 million. Banks expect to take a $2bn hit, according to The Wall Street Journal.
Musk remains heavily involved in running X, with an executive role focused on product design, new technology and tweeting a lot. Yaccarino needs to ensure that advertisers are around to fund Musk’s planned transformation. She also has regulatory pressures to deal with. The US Department of Justice is investigating whether the “chaotic environment” at the platform under Musk violated a government order requiring an overhaul of its data security and privacy practices, while the US Securities and Exchange Commission is investigating the Tesla CEO’s actions ahead of the deal.
“It’s a new day at X,” Yaccarino said in September. Some users, advertisers and former employees, however, are nostalgic for the old days.
