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How much chaos can a company endure before it breaks beyond repair? Sometimes it feels like Elon Musk has been testing this question to the point of destruction since he paid $44 billion for Twitter — since renamed X — a year ago this week.
The good news is that a social media company with strong network effects can apparently survive quite a bit. If you believe the new CEO Linda Yaccarino, X has at least fought its way back to near break-even.
The not-so-good news, however, is that Musk’s shock treatment has seriously affected his trophy buying. Many users say polarization has worsened and critics claim hate speech has increased. Many advertisers have fled and X is a much smaller company than it was a year ago. And Musk hasn’t solved the deep-rooted problems that have long made Twitter synonymous with unfulfilled potential, let alone offered a coherent explanation for what he wants to do with X.
Musk thrives on chaos, but even by his standards the turmoil in the first few months after he took over was frightening. As advertisers fled, the billionaire imposed several rounds of brutal job cuts and warned that bankruptcy was possible. As large numbers of engineers were laid off or quit, many in the tech world predicted that it was only a matter of time before the network collapsed. And when Musk restricted content moderation, predictions of audience churn were widespread.
A year later, the network has not collapsed. Many of Musk’s critics — particularly among journalists — are still addicted to the service, even as they hold their noses and tweet their disdain.
Nevertheless, the damage inflicted on the company was enormous. According to Sensor Tower, nearly half of the top 100 advertisers prior to Musk’s acquisition have now abandoned the platform entirely. The top five advertisers in the month before he took over the company – including Amazon, Mondelez and Unilever – cut their spending by an average of two-thirds. The appointment of a CEO with deep ties to the media and advertising world has so far had no significant impact on the return of advertisers.
“It was and remains a disaster,” said Brian Wieser, a US advertising industry analyst. It’s not just that advertisers are balking at the fear of their brands appearing next to hateful content: Musk himself poisoned the well by publicly attacking advertisers who backed away in the first days of his takeover, Wieser says , making them unlikely to risk returning.
Twitter’s workforce cuts at least allowed Musk to keep the company afloat. The number of employees is said to have fallen by more than 80 percent to 1,500. While Musk has made a virtue of limiting features like content moderation to promote what he calls greater freedom of expression, the cuts are having a profound impact on everything that happens on the platform. In Wieser’s words: “They are no longer focused on being a large company.”
At least Twitter’s audience has remained largely intact, even if it is showing signs of weakening. According to reported data from Apptopia, the number of people using the company’s app daily has dropped 13 percent since Musk took over.
X has withstood direct attacks from rivals who sought to exploit its disarray. Meta made a splash with Threads, an X clone tied to its Instagram app. However, according to GWS Magnify, its daily audience is only about 7 percent of Twitter’s.
Bluesky, a social network run by Twitter co-founder and former CEO Jack Dorsey, has doubled its audience in the last three months. At just an estimated 2 percent of the X audience, it’s still tiny, according to GWS. But signs that journalists and other influencers have started posting more actively on Bluesky suggest the threat may be greater than current viewership figures suggest.
If Musk did it,
At the same time, its promise to revitalize the company’s product development hasn’t resulted in the kind of significant changes that could attract a much larger audience or significantly increase engagement. Many complain that the barrage of minor adjustments have only marred the experience. He has yet to reveal whether Musk has a vision for turning X into an “everything app” that can meet many more of its users’ digital needs.