Twitter, the popular social media platform, has experienced a significant decline in advertising revenue since it was acquired by owner Elon Musk for $44 billion in October last year. Musk, known for his outspoken nature, revealed the extent of the financial setback in a recent tweet responding to a user’s suggestion on financing for the platform.
According to Musk, Twitter’s advertising revenue has plummeted by approximately 50%, contributing to the company’s negative cash flow along with a heavy debt load. “We’re still negative cash flow due to ~50% drop in advertising revenue plus heavy debt load,” the billionaire tweeted on Saturday. He emphasized the need to achieve positive cash flow before pursuing other initiatives, although he provided no further details.
Insider Intelligence, a renowned market research firm, reported that Twitter’s projected revenue for 2023 is expected to be less than $3 billion, representing a one-third decline from the previous year.
Since Musk assumed ownership of Twitter, various changes have been implemented that have deterred both users and advertisers. Earlier this month, Musk announced limitations on the number of tweets that verified and non-verified users can access per day. Verified accounts, typically associated with prominent individuals or organizations, are now restricted to reading 10,000 tweets per day, while non-verified users are limited to 1,000 tweets. Additionally, new unverified accounts can only access 500 tweets. Furthermore, starting next month, the popular program TweetDeck, which enables users to monitor multiple accounts simultaneously, will be exclusively available to verified users.
These alterations have not been well-received by the Twitter community and advertising partners. Meanwhile, Meta, the parent company of Facebook, launched its own rival platform called Threads, attracting over 100 million users within its first five days. In comparison, the artificial intelligence app ChatGPT, developed by OpenAI, took two months to reach the same number of active users earlier this year. Reports suggest that Threads has now garnered approximately 150 million users, with India leading the adoption, benefiting from its connection to Instagram and its existing user base of over two billion individuals.
While Twitter currently boasts around 200 million regular users, the platform has faced numerous technical issues since Musk’s acquisition, compounded by the mass layoff of thousands of employees.
Legal battles have also arisen in relation to Meta’s CEO, Mark Zuckerberg, and his new platform. Concerns over privacy have arisen due to Meta’s request for users to grant permission to track their activities extensively across the internet. Consequently, the launch of Threads in Europe has been delayed due to new legislation restricting Meta’s ability to track and share data across its range of platforms. Notably, Threads accounts are connected to Instagram accounts, further raising privacy concerns. However, it is anticipated that the embargo on Threads in Europe will likely be lifted in due course.
Alexandre de Streel, an expert in European law, suggests that major tech companies will engage in discussions with the European Union to address compliance issues in the coming months. “I think it’s more a question of time to understand the scope of the legislation and have a dialogue with the commission,” he stated.
Musk, in response to Meta’s competitive intentions, has threatened legal action against the company, alleging theft of trade secrets and intellectual property. In a letter addressed to Mark Zuckerberg and published by the online news outlet Semafor, Musk’s lawyer accused Meta of recruiting numerous former Twitter employees who had access to sensitive trade secrets and confidential information. The strained relationship between the two individuals has intensified since Meta’s plans to directly compete with Twitter became apparent.
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