Twitter’s top advertisers are in wait-and-see mode after Elon Musk’s $44 billion purchase of the platform finally went through late last week. But if the past 72 hours are prologue, they’re not going to be idle much longer.
In true Musk form, the new Twitter owner spent the weekend sowing all kinds of chaos at the social media company, creating the type of uncertainty that gives advertisers pause.
Fresh off firing four top Twitter executives Friday, Musk brought in an array of libertarian-minded allies to begin immediately overhauling the company, few of whom have experience in the social media industry. Multiple media outlets also reported that Musk is preparing drastic layoffs—accounts varied on the scope of the job cuts—that likely would reduce the number of people working on content moderation.
In addition, The Verge reported that Twitter is “currently planning” to start charging users $20 per month if they want to keep their blue verification check mark, a move that fits with Musk’s tweet Sunday that Twitter’s “whole verification process is being revamped right now.”
To top if off, Musk sent a tweet to his 112 million followers linking to a website promoting an unfounded conspiracy theory alleging that Nancy Pelosi’s husband was attacked last week by a sex worker he solicited. Law enforcement authorities have charged a 42-year-old man with multiple felonies, including attempted murder, and said there’s no evidence to support claims that the two men knew each other. Musk subsequently deleted the tweet, though he did not issue any correction or apology.
Headed into the weekend, Twitter advertisers were already deciphering mixed signals on Musk’s plans for content moderation, a key issue impacting their marketing plans.
At times, Musk has described himself as a free speech absolutist who wants to see less censorship on Twitter—a stance that could lead to even more conspiracy theories, hate speech, and other unseemly content coursing through the platform. Naturally, advertisers generally don’t want to see their brands promoted next to such unmoderated sludge.
Yet on Thursday, Musk tweeted a public message to advertisers, declaring that he wants to create “the most respected advertising platform in the world.” He acknowledged that Twitter cannot become a “free-for-all hellscape, where anything can be said with no consequences!”
“The paradox of Elon Musk owning an advertising platform is that a man who accepts no rules or limits on his own behavior will need to welcome some moderation on his platform if he wants it to be a welcoming space for users and advertisers,” Tom Morton, global chief strategy officer at digital marketing firm R/GA, told Digiday on Friday.
At least publicly, Twitter’s advertisers have withheld judgment so far on Musk’s ownership. Only General Motors, a chief rival of Musk-led Tesla, has announced it’s pausing ad spending on Twitter so far.
But privately, brand executives are watching Musk closely to see where he takes Twitter, as the Wall Street Journal and the New York Times, among others, reported in recent days. And nothing that happened this weekend will leave advertisers encouraged.
While Musk hasn’t announced specific job cuts yet, it’s hard to envision how significantly fewer people working on Twitter would improve content moderation in the short term.
Assuming Musk moves forward with charging for check marks, he’s also sowing the seeds for more disinformation. The check marks, which are currently free, help differentiate between authentic high-profile users and ill-intentioned impersonators and parodists.
By spreading an evidence-free conspiracy theory about Pelosi’s husband, Musk engaged in precisely the kind of behavior that will make advertisers question his judgment. He fed into the far-right maelstrom alleging a vast cover-up, which led to the hashtag “#Pelosigaylover” trending across the site Monday morning. (If further evidence emerges to prove a grand conspiracy, I’ll happily eat my words.)
Here, it’s worth noting that Musk doesn’t have much room for error. As marketing industry veteran Bob Hoffman wrote Sunday in his newsletter, The Ad Contrarian, Twitter’s platform isn’t nearly as vital to advertisers as TikTok, Facebook, and Instagram—all of which have significantly greater reach and cachet with high-value demographics.
“This is Twitter’s vulnerability,” Hoffman wrote. “When over 90% of your income comes from advertisers, and no advertiser believes they ‘have to be’ there, you have a problem.”
In the long run, Musk might sculpt Twitter into a leaner, meaner company that finally jump-starts user growth after years of stagnancy, turning it into a platform where advertisers “have to be.”
At the moment, though, Twitter’s financial fortunes remain at the mercy of Madison Avenue—and advertisers can’t be happy with what they’re seeing.
Want to send thoughts or suggestions to Data Sheet? Drop me a line here.
Doom for scrollers An unknown number of Instagram users had trouble accessing their accounts Monday morning, the latest outage to hit a major social media platform, Bloomberg reported. Reports of Instagram issues spiked on Downdetector shortly before 9 a.m. Eastern Standard Time, peaked at about 10 a.m., and tapered off after noon. Instagram officials said they were looking into the problem, though they didn’t specify a cause or extent of the issue.
Prisoners no more Federal officials planned Monday to convene a summit of about 35 countries, European Union policymakers, and numerous private-sector tech companies to discuss strategies for combating ransomware attacks, the Associated Press reported. The meeting follows a growing number of high-profile ransomware ambushes targeting hospitals, school districts, and other vital institutions. FBI director Christopher Wray and U.S. national security adviser Jake Sullivan were expected to attend.
Going zany in Zhengzhou Fed-up workers at a massive Foxconn factory in central China have fled the facility to escape strict lockdowns instituted to stop a public outbreak of COVID, Reuters reported. It wasn’t immediately clear how many employees ran from the iPhone maker’s complex, but one employee told Reuters there were “so many people on the road” away from the factory. About 200,000 workers have been kept on-site since mid-October in an effort to keep production humming and contain COVID cases at the facility.
Tu cozy with China? The cofounder and CEO of a California-based self-driving truck company, TuSimple Holdings, was fired Sunday amid an investigation into allegations of improper business dealings with a Chinese firm, the Wall Street Journal reported. TuSimple officials said in a regulatory filing that an internal inquiry found company executives gave confidential information to a trucking startup funded by Chinese investors before seeking approval for a business agreement. The Journal also reported the FBI, Securities and Exchange Commission, and Committee on Foreign Investment in the U.S. are investigating the matter, citing sources familiar with the probe.
FOOD FOR THOUGHT
Too many TikTok docs Years after WebMD made some laymen into internal medicine experts, TikTok is having the same effect on young people and mental health. The New York Times reported Saturday that some mental health providers are growing frustrated with the app’s influence over clients, some of whom are convinced they have specific disorders based on videos they’ve watched on TikTok. While mental health experts said digital sources have helped reduce the stigma associated with treatment, they also worry that TikTok is giving teenagers and young adults incomplete or bad information about their condition and treatment needs.
From the article:
A number of mental health providers say that they are seeing an uptick in teenagers and young adults who are diagnosing themselves with mental illnesses—including rare disorders—after learning more about the conditions online.
In some cases, this information can lead them toward getting the help they need, but it can also result in people incorrectly labeling themselves, avoiding a professional assessment, and embracing ineffective or inappropriate treatments.
IN CASE YOU MISSED IT
While chasing the metaverse, Mark Zuckerberg’s personal fortune has dropped by over $100 billion, by Chris Morris
Coinbase is facing a major test. So is its CEO, Brian Armstrong, by Anne Sraders
Executive compensation at 73% of S&P 500 companies is now tied to ESG performance, survey finds, by Alan Murray and David Meyer
Over-the-counter sales may usher in a boom time for A.I.-based hearing aids, by Kevin Kelleher
Horror master Stephen King slams Elon Musk’s plan to charge for Twitter verification: ‘$20 a month to keep my blue check? F*** that,’ by Christiaan Hetzner
Musk has owned Twitter under a week and big names are already leaving the platform, complaining about a hate surge, and calling for tighter regulation, by Steve Mollman
The plunging stock market is taking a bite out of California’s wealthy—and the Golden State’s ability to pay for things, by Adam Beam and the Associated Press
BEFORE YOU GO
Who’s got next? If TikTok is toxic, Facebook is flailing, and Twitter is about to tank under Elon, then surely somebody can come up with a fresh social media platform. A small but growing number of venture capitalists sure hope so—and they’re searching for ideas to invest in despite the down market, Insider reported Monday. As multiple platforms come under fire for poor privacy and content moderation practices, some venture funds believe the time has arrived for the next big idea in social media. “For the first time in a long time, Facebook, Instagram, Twitter, they’re weak, and they’re just losing that edge and that relevance,” Ann Bordetsky, a partner at venture fund New Enterprise Associates, told Insider. VCs aren’t putting their money where their mouth is quite yet, so we’ll see if the chatter is mere talk.
This is the web version of Data Sheet, a daily newsletter on the business of tech. Sign up to get it delivered free to your inbox.