eof Elon Musk taking under management on Twitter set a new standard for disruption. Without intending to, musk turned Twitter into a soap opera, casting himself as the lead. The central premise of the show seems to be “what crazy thing is the billionaire going to do next?”
Although it has around 240 million users, Twitter is small compared to Facebook, Instagram, YouTube, TikTok and Google. But Twitter punches above its weight.
Twitter derives its power and value from three communities that depend on it: politicians, celebrities and journalists. Politicians and celebrities love that Twitter allows them to broadcast directly to approximately 240 million people without any gatekeepers. Journalists love that Twitter allows them to build their personal brands while revealing a consensus about which stories are newsworthy and which aren’t. For the remaining 240 million users, Twitter provides the illusion of direct access to VIPs who would otherwise be unavailable. Trolls love Twitter because its algorithms give their content disproportionate weight in the conversation.
While it’s tempting to characterize Twitter as a public square, the company is a profit-seeking business with priorities and business practices that have often undermined democracy, public health, and public safety. This was true for many years before Musk took over.
We shouldn’t be surprised how quickly and easily Twitter collapsed; its flaws have been clear for years. Twitter requires thousands of hard-working people to keep the site running imperfectly. In his first two weeks of ownership, Musk fired many of these people and ignored best practices for working with internet platforms. It appears to be winging it, backed by a team of venture capitalists and Tesla engineers who are either ignorant, unwilling to challenge Musk, or both. How big a problem this is – and for whom – remains to be seen.
The backlash against Musk on Twitter has been almost as extreme as the new owner’s behavior. On the one hand you have the Schadenfreuders who revel in the idea that the richest man in the world has evaporated $44 billion in the most scandalous and public way imaginable. On the other side are the people who depend on Twitter — politicians, activists, celebrities and journalists — many of whom see Musk’s actions as a threat to democracy and public safety. They are not wrong. Musk’s ideas about free speech seem to apply mostly to him. He attacked Kathy Griffin and others who mocked him. He revealed sympathies for Vladimir Putin and the far right. According to a whistleblower, foreign agents worked at Twitter before Musk acquired the company. There is no reason to believe that Musk prioritizes the public interest.
Twitter’s original design was elegant in its simplicity: a 140-character blank space optimized for broadcasting messages. The company positioned its platform as a microblogging site, and the conversations that ensued captured the public imagination. Monetizing microblogging proved challenging, so the platform evolved gradually to its current model of unmediated broadcasting to a mass audience. Monetization improved, but never caught up to Twitter’s unique audience and cultural significance. As a result, many people, including Elon Musk, imagined they could do better.
Today the problems are very different. At the current rate and speed, Musk could break Twitter in ways that can’t be easily fixed. Absent aggressive regulatory intervention, which seems unlikely, there’s no way Musk will be forced to change course until the company declares bankruptcy.
Read more: Musk inherits Twitter’s India problem
Bankruptcy is a very real possibility. Musk justified Twitter’s layoffs by saying the company was losing $4 million a day. The headcount cuts will make a huge difference on the expense side of Twitter’s income statement, but Musk’s actions have alarmed some advertisers, which could offset the cost savings.
The debt Musk took on as part of the go-private transaction has an interest burden of roughly $1.3 billion a year. Servicing it requires Musk to generate cash flow well above historical levels. Peak EBITDA in recent years was $993 million in 2019, while the most recent quarter before the acquisition saw negative EBITDA, which makes me wonder what the lenders were thinking.
Twitter is facing an existential crisis. Bankruptcy would not normally be an occasion for a company of Twitter’s scale, but Musk’s approach to running Twitter creates a risk that goes beyond bankruptcy caused by an inappropriate capital structure. Musk may be tempted to monetize Twitter’s data in a way that would have been unthinkable for his predecessors, and remains so for users. The platform may not survive.
For the people who care most about Twitter — the politicians, activists, celebrities and journalists who practically live on the site — life without Twitter is hard to imagine, but they have to. Replacing or copying Twitter would be a lot harder than it looks. Journalists have flocked to an open source platform called Mastodon. Mastodon’s advantages include distributed management and federation. The platform is actually a federation of separate servers, each with its own rules. Disadvantages of Mastodon include a clunky interface, lack of scalability, and privacy issues. Politicians and celebrities have been slow to embrace Mastodon, recognizing that the platform was not designed for their use case: unmediated broadcasting to hundreds of millions of users.
Politicians and celebrities crave a Twitter that operates like it did before Musk, but with less hate speech, misinformation and conspiracy theories. The challenge there is that advertising business models like Twitter’s depend on attention, and hate speech, misinformation, and conspiracy theories are particularly effective at generating attention and profits. A “safe” ad-based Twitter would be much less profitable. And a subscription-based one is likely to be much smaller. Even if you assume that Twitter is not irreparably damaged, there is no evidence that Musk would sell at a price that would allow for a “safe” Twitter. Starting from scratch would be challenging for many reasons, but mainly because of the difficulty of building a mass audience for a safe product and finding the capital to fund it. People with money might reasonably conclude that the value of a “safe” Twitter does not justify the risk inherent in trying to create one.
That leaves us with two real risks that we didn’t imagine a few months ago: a life without the Twitter that so many have come to depend on, and an end game fraught with privacy and national security risks. So much for the idea that billionaires are always brilliant and wise.
More must-reads from TIME