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With or without Elon Musk, it's time for Twitter to reshuffle

Elon musk Twitter was one of the biggest acquisitions An out in corporate history. Now it has the potential to be one of the ugliest disputes. On July 12, Twitter sued Musk in Delaware court to back out of a $44 billion deal after the world’s richest man — and holder of Twitter’s sixth-most-followed account — passed meme to fight.

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debate could go on for months. But no matter who wins in court, Twitter has bigger issues to consider. Although it is one of the most followed social networks in the world, it has been working hard to turn that influence into a successful business. Whoever eventually owns the app will urge their manager to make the change.

When the deal was struck in April, Mr. Musk’s bid of $54.20 per share looked cheap — including Twitter’s board, which at first They are not interested. Once the deal was struck, the tech market collapsed. Shares of Twitter traded below $33 on July 11 and fell another 11% as investors lost hope that a deal would happen (the stock has since rebounded). Musk claimed he quit because Twitter had more spam accounts than it told him. Many have found simple cases of buyer remorse.

So Twitter may have the upper hand in court. If the judge supports it, Musk will face a $1 billion breakup fee under the contract. He probably thought it was a victory. A judge can order a sale at an agreed price; in 2001, the same Delaware court ordered Tyson Foods (a company that operates real rather than digital birds) to complete a lawsuit against a beef packer ibp acquisition. Still, the deal is worth less than one-tenth of what Twitter bought. If the capricious Musk just ignored the order to complete the acquisition, no one knows what would have happened. Disputes could be settled out of court, with Musk paying a higher breakup fee or buying the company for less than he agreed to.

No matter how the saga ends, Twitter’s bosses will face the same conundrum they’ve been arguing over for years: how to combine the Influential products become more profitable products (see chart). Part of the problem is the failure to attract new users — not the kind of bots Musk has slammed. While Facebook’s daily active users have soared to 1.9 billion just two years after Twitter’s inception, Twitter has reached 230 million and is growing slowly. Upstarts, especially TikTok, have surpassed it.

Behind the stagnation of users is the stagnation of products. While Facebook and other social apps have grown, Twitter today is similar to the experience it was when it launched in 2006. It had a chance to innovate when it acquired Vine, an app that popularized short videos four years before any TikTokers showed off their dance moves, but let it wither. It tried to replicate the disappearing posts from Snapchat and Instagram with “Fleets,” but the idea failed and was killed last year.

Twitter has been more daring lately, with some success. “Spaces” proved to be a live audio feature that was popular enough to largely kill Clubhouse, the app that inspired it. It’s designed features to retain star creators, such as tipping and paid-to-follow accounts. It acquired Substack-like paid messaging platform Revue last year, and in June launched Notes, a way to write tweets up to 2,500 words.

Monetizing these and other innovations may be more difficult. Over the years, Twitter’s revenue growth has been more disappointing than its user growth. Research firm eMarketer estimates it will account for around 0.9% of global digital ad spending this year. Facebook and its sister company Instagram will get 21.5%; even TikTok, which is only five years old, will get 1.9%.

Weak advertising market is keeping social media companies scrambling to diversify revenue; nearly 90% of Twitter comes from advertising. Twitter Blue, a subscription option introduced last year, offers few perks, including a $2.99-a-month “Undo Tweet” button. Mr. Musk, who had wanted to push subscriptions, tweeted in April that Twitter Blue should be ad-free. However, to match the current model, an ad-free Twitter would have to cost well over $2.99. According to Twitter’s account, the average US user brings in more than $6 per month in ad revenue. Unlike other subscription businesses that can eschew mass audiences in favor of small, high-income subscriptions, Twitter needs a lot of users to produce its popular content.

Privately owned by a famous adventurer For a while it seemed possible to achieve the kind of restructuring that Twitter needs. Instead, the Musk incident looks like another distraction from the mission at hand. ■

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Wake up, Democrats!

This article appeared in the print edition of Commercial section, titled “Blocked and Reported”

Wake up, Democrats!

Wake up, Democrats!Wake up, Democrats!Wake up, Democrats!From July 16, 2022 Discover this section of the story and more in the content list Explore Version



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