Ever since Elon Musk acquired Twitter in October 2022, the platform has faced recurring troubles and controversies. The most potent challenge to the microblogging site is now coming from the growing success of Threads which was launched by Mark Zuckerberg-led Meta Platforms last week.
Threads surpassed 100 million users in five days and became the fastest app to reach that milestone. To put that in perspective, the popular generative AI app ChatGPT reached that milestone in around two months.
After Threads reached 70 million users, Zuckerburg said that the growth is “Way beyond our expectations.”
Twitter controversies might have contributed to Threads’ growth
The sharp growth in Threads subscriber base can be attributed to two reasons. Firstly, the app is linked to Instagram which is the fourth most popular social media network with over 2 billion users globally.
The user base acted as a captive target market for Meta Platforms and helped it hit the 100 million milestone within days. To put that in perspective, Twitter has around 250 million active users.
Also, the strong growth in Threads’ user base can be attributed to the growing disenchantment with Twitter, at least among a section of the users.
Musk took several decisions related to accounts restoration and suspension that did not go down well for many. For instance, while he restored Donald Trump’s Twitter account, he suspended the accounts of many journalists, and that too unannounced.
Musk subsequently restored the accounts of journalists but the damage was done by then. The platform has also faced multiple glitches since Musk acquired it and recently the billionaire imposed limits on the number of tweets that users can read.
Musk’s subscription pivot failed
When Musk acquired Twitter, he said that as a “free speech absolutist” he intends to promote free speech. However, under Musk, the platform has readily agreed to requests from countries like India and Turkey to block several accounts.
While Twitter’s ad revenues have plummeted, the company has started charging for account verification in order to diversify its revenue base. The company charges $8 monthly if the subscription is taken on the web and $11 monthly if the subscription is taken on Google and Apple app stores.
The pivot to a subscription-based business failed badly and Musk subsequently restored the blue ticks for all celebrities even if they had not paid for the service.
Twitter’s valuation has plummeted
Musk acquired Twitter for a mammoth valuation of $44 billion last year. The billionaire had backed out of the deal apparently over the higher valuation but eventually relented after Twitter sued him to fulfill his obligations.
During Tesla’s Q3 2022 earnings call, Musk acknowledged that he overpaid for the company.
Meanwhile, he has now slashed the company’s valuation by over half to $20 billion. He however said that the company’s valuation could rise to $250 billion eventually.
Other Twitter investors have also marked down the social media company’s valuation and last month Fidelity lowered the valuation for the third time to a mere $15 billion.
Even Twitter’s co-founder Jack Dorsey, who backed Musk’s acquisition and continued to remain an investor in the company, has criticized Musk’s handling of Twitter and said that he’s not the right leader to lead the company.
Dorsey has incidentally launched his own social media platform Bluesky. However, while there are several other platforms trying to compete with Twitter, Threads could be the biggest threat to the Elon Musk-owned company.
Twitter traffic has tanked since Threads was launched
Twitter’s traffic has fallen since Threads was launched and according to SimilarWeb, “In the first two full days that Threads was generally available, Thursday and Friday, web traffic to twitter.com was down 5% compared with the same days of the previous week. As a year-over-year comparison, it was down 11% compared with July 6 and 7, 2022.”
Zuckerburg-Musk slugfest
Commenting on Threads, Zuckerburg said, “The goal is to keep it friendly as it expands. I think it’s possible and will ultimately be the key to its success.” He added, “That’s one reason why Twitter never succeeded as much as I think it should have, and we want to do it differently.”
Meanwhile, the slugfest between Musk and Zuckerburg has intensified since the launch of Threads, and the former called Zuckerburg a “cuck.”
Twitter has also threatened to sue Meta and Alex Spiro, an attorney representing Twitter said “Twitter intends to strictly enforce its intellectual property rights, and demands that Meta take immediate steps to stop using any Twitter trade secrets or other highly confidential information.”
Spiro added, “Twitter reserves all rights, including, but not limited to, the right to seek both civil remedies and injunctive relief without further notice.”
Meta Platforms’ Communications Director Andy Stone however dismissed the accusations and said in a Threads post “No one on the Threads engineering team is a former Twitter employee — that’s just not a thing.”
Musk has been at war with multiple companies since he acquired Twitter
Ever since he acquired Twitter, Musk has been at war with several companies. Earlier this year, he raised an alarm that Apple was considering booting out Twitter from the app stores. However, the world’s richest rescinded his statement after meeting Apple CEO Tim Cook and said that Apple never considered removing the microblogging site.
More recently, Twitter sued Microsoft for unauthorized accessing Twitter API. Separately, several entities have sued Twitter for nonpayment of dues.
Many observers including The Stanford Internet Observatory (SIO) see Threads as a viable alternative to Twitter.
“If Threads keeps up a positive tone, it will be a big draw for advertisers – particularly because Twitter has developed a reputation for being a vitriolic arena where factions gather to dunk on their enemies,” said SIO’s research manager Renée DiResta last week.
Meanwhile, Meta Platforms is already among the top three S&P 500 gainers this year and as the company starts to monetize its sprawling Threads userbase, analysts expect more upside in the stock.
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