Will Musk’s super-app be nothing more than an untamed WeChat?

03 Nov, 2022 - 00:11 0 Views
Will Musk’s super-app be nothing more than an untamed WeChat? Elon Musk at the 2022 Met Gala. Andrew Kelly/Reuters

eBusiness Weekly

Lisa Esterhuyzen

News24.com

When using a super-app (an app that consolidates functions of multiple mobile apps into a single app), what is more important: the type of content you view or the amount of content?

In the grand scheme of an everything-app, it does matter if you can trust its site’s governance to give you accurate information.

With the finalisation of the Twitter deal on Friday, 28 October, Elon Musk is one step closer to launching X, a super-app that is inspired by Tencent’s everything-app WeChat, a social media powerhouse from China offering a suite of services for users such as messaging, social networking, peer-to-peer payments and e-commerce shopping.

It is still unclear whether Musk plans to transform Twitter into X or use it as a starting point to build an entirely new platform, yet the billionaire has pegged Twitter’s long-term potential worth at $400 billion.

Twitter’s valuation rationale

Half of Twitter’s global revenue comes from its declining population of active users, who make up less than 10 percent of its users but post 90 percent of the platform’s content, according to Reuters. However, the true extent of active users is unclear due to the site being riddled with bots and fake accounts.

The decline in active users is evident in the company’s revenue for Q2 2022, which declined 1 percent year-over-year to $1.18 billion, missing industry expectations by 11 percent. In the same quarter, Twitter registered a net loss of $270 million, higher than all four quarters combined in 2021.

From a marketing perspective, the estimated social media engagement value created by Twitter is considerably less than that of Facebook. A tweet’s quantified value has been estimated at $8 per retweet, compared to Facebook valuing at approximately $14 per post share.

Without the hype from Musk’s takeover, “Shark Tank” investor, Kevin O’Leary estimated that Twitter stock would actually be worth somewhere between $12 and $15 a share, considerably less than the finalised offer of $54.20 a share. The finalised amount is also lower than the current share price.

Musk’s justification for going through with the premium-priced deal is based on plans to turn Twitter’s fortunes around. His plan encompasses easing or changing the platform’s content moderation policies and reshuffling its business, which includes launching subscription-based services and cutting current staff.

Bleak user numbers

According to Reuters, Twitter’s internal report titled “Where did the Tweeters go?” found that traditionally popular topics on the platform like news, sports, entertainment, and esports are in decline among English-speaking users.

In this report, Twitter also highlighted that it is losing a “devastating” number of active users to Instagram and TikTok, especially those interested in fashion or celebrities like the Kardashians. On the other hand, cryptocurrency and not-safe-for-work (NSFW) content have been the fastest growing topics of interest in the last two years.

Despite the latest user experience improvement to the app, such as an edit button rolled out to subscribers in the US, Canada, New Zealand and Australia after high demand, the impact on declining active user numbers has been limited. Total user numbers have reached 237.8 million, up 17 percent from the same period a year earlier. However, 5 percent of this increase is likely to be fake according to Twitter’s own estimates – around 12 million accounts.

Wild Wild West

Essentially, Musk is now in command of the often-polarising global platform, with plans of laxing its content moderation policies to a bare minimum, which could be the drastic measure needed to increase user engagement. There are concerns that Twitter could become a “Wild Wild West”.

For example, clearing the way for former US president Donald Trump to return to the platform, among other previously banned account holders, could bring hours of highly distracting content that would attract entertainment-seeking users to the platform. Trump now posts on his own, much smaller, platform Truth Social, with 4.18 million followers compared to the 88.8 million he had on Twitter. Yet he has vowed not to return to Twitter even after Musk takes over the reins.

Activists are concerned about Musk’s governance of the platform because they believe he may encourage more offensive and inaccurate content.

This kind of governance bolsters a low-involvement, high-distraction platform that will encourage people to post hedonistic content. It is, however, unattractive to marketers looking to strengthen their brands or to influencers who want to engage with their followers.

It seems absurd to try to forecast what an unpredictable leader like Musk — who enjoys trolling and putting out crazy ideas in public—will actually do to Twitter. He envisions the platform as a digital town square where people can debate their beliefs in a healthy and respectful manner. Musk, who described himself as a champion of free speech, will definitely be challenged by activists and regulatory bodies as he tries to make the platform a success.

It remains to be seen if he can indeed navigate this “digital town square” and whether he’ll turn it into a super-app or the “Wild Wild West”.

*Lisa Esterhuyzen is a lecturer in the Department of Business Management at Stellenbosch University. News24 encourages freedom of speech and the expression of diverse views. The views of columnists published on News24 are therefore their own and do not necessarily represent the views of News24. 

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