Elite Business Magazine: Why Elon Musk's X is about power, not profit

When Elon Musk bought Twitter last year many threads of speculation emerged. There were some suggestions that the world's richest man had bought the longstanding social media channel on a whim. At around £40 billion or just under one-fifth of his estimated wealth, it certainly appears to be an expensive whim. Some suggested that the persistent negative commentary on the channel had bothered his narcissistic streak so much that the primary purpose of the purchase was to silence his critics.

There was also a thread of speculation that hinted at Musk having much grander plans. It is often forgotten that Musk's second big business success was the online bank, X.com. This was the starting point for what became PayPal and saw an eventual sale in 2002 to eBay for over £1 billion. This sale then helped fund the creation of the SpaceX company. And at Tesla, the company that Musk is probably best known for, its model X was first released in 2015. Musk's sixth surviving child (of 11) who was born in 2020 is also named X. If nothing else, the renaming of Twitter to X should have not come as much of a surprise. The name change does also hint that purchasing Twitter was at least partly personal for Musk.

Setting aside the big plans, almost immediately after purchasing the channel the business of owning a social media channel became a reality for Musk. Musk very publicly criticised the previous management as Twitter had not been profitable since 2019. The situation gave Musk impetus to push through a series of changes including staff sackings in the content moderation and other teams and attempts to monetise the 'blue tick' which had previously been used to indicate the verified account of a public figure. The creation of a paid subscription tier of service, the increasing rise of unchecked disinformation and the reinstatement of Donald Trump's account all attracted controversy.

Even attempts to tackle disinformation have been met with criticism. By introducing community notes to check individual messages for accuracy and to flag disinformation, including Musk's own messages, there is a case that the former paid staffers have now been replaced by a no-cost crowdsourced alternative. These are all controversies that have been closely tied to declining numbers. Revenue has dropped by about one-third since the purchase, active users hover around comparable figures for Snapchat, Reddit and Pinterest rather than Facebook or Instagram. The most recent analysis suggests that X is now worth around half of what Musk paid for it last year.

But owning X has also given Musk a prominent platform for his personal blend of libertarian and contrarian politics. With the purchase Musk is now the most followed person on the site giving him a direct channel to an audience of 161 million. Since July 2022 he has added 60 million new followers. But even this measure of influence and his rise to the number 1 position over the long-standing Barrack Obama is plagued with controversy. Investigation of these followers suggest that up to 50% are inactive - a notoriously difficult measure - with no followers and that means there is no amplification of Musk's messages. But reach and influence for Musk and of X generally does have value. X remains an important source for journalists and around a quarter of the messages of X are labelled as political. X and its content can play a role in influencing voters and the with the channel particularly popular with men in their 30s and 40s this could be a deciding factor in some electoral contests. While it might not justify the price tag, having more lawmakers who are favourably disposed towards the channel would certainly be to Musk's benefit.

But does Musk have a big plan for X in the longer-term? Given his experience with PayPal, his statements about X being a platform for users 'entire financial lives' and broader comments from the X's managing director, Linda Yaccarino, about the integration of different services, there is a clear message. The future of X is as a 'one-stop' ecosystem that links together different experiences, daily interactions including payments and forms of media including short-form video similar to TikTok. This might sound like the ambition of the Meta or Facebook environment, but a much better comparison is found in China with Tencent's WeChat service. A WeChat user can make payments, message, blog, video conference, play games, and share location, videos or images all within the single app. It is the seamless integration of PayPal, WhatsApp, TikTok, SMS, Zoom, WhatThreeWords, Steam and more.

That is a big plan. To achieve this ambition, it would be in the best interest of X to gain a degree of political support.