Here’s what you need to know this week:
- Affairs of state: Elon Musk buys Twitter
- Apple is cleansing the App Store
- Microsoft plans to put ads in games
- Meta’s metaverse is not safe
- Google had an insecure year
- Amazon faces more union activity
- Tencent shares rallied slightly
Affairs of state: Musk’s Twitter revolution
🚀💫♥️ Yesss!!! ♥️💫🚀
Elon Musk’s reaction to buying Twitter this week for $44 billion was typical of the South African entrepreneur: personal, anti-corporate and ever so slightly unhinged.
The world’s richest man is now the owner of one of the most important digital town squares on the planet. More than 200 million people use Twitter to discuss everything from cats to matters “vital to the future of humanity” – as Musk put it in his first tweet after taking over.
This week Twitter was filled with takes on what Musk’s takeover will mean for the user experience. Generally speaking, right-leaning and libertarian figures backed him; while liberals expressed fears that trolls would take over the platform. What Musk will actually do is not yet known; but some important clues do exist.
Twitter isn’t one of our tech states. The US social media platform has a market cap fifty times smaller than Microsoft or Apple. But its takeover by Musk is so critical that we can’t ignore it: as it will undoubtedly have an impact on how other social media platforms – from Facebook to YouTube – behave in future.
So let’s get into it. Here are the main questions we think are raised by the Musk deal – and our best guess of what happens next:
Why did Musk buy Twitter?
Musk was asked this question directly – at a Ted talk this month. His answer was deliberately vague: people should know that they are able to speak freely on the platform within the bounds of the law, he said. Unless Twitter opened up its algorithm, you could never be sure that corporate interests weren’t manipulating free speech behind the scenes.
Ross Gerber, a friend of Musk’s, went further. “It’s a very important mouthpiece for Tesla and the message that his largest asset uses for advertising,” he told Radio 4. “The integrity of Twitter has a strategic importance for Elon Musk’s empire.”
What changes is he promising?
Musk issued a statement highlighting four key changes he wants to make: new features (like an edit button); making algorithms open source to increase trust; defeating spam bots; and authenticating all human users.
As a self-described “free speech absolutist”, Musk is also expected to relax Twitter’s moderation rules. At the same Ted talk, he said that Twitter “should match the laws of the country”. Last night, on Twitter, he expanded on that point, saying he was against censorship that goes far beyond the law. It’s worth noting that similar promises were made by Parler, the free-speech app, before it realised that people were using the site to post porn (which is protected by the First Amendment, along with spam).
Some of Musk’s reforms might be welcome: open sourcing Twitter’s algorithm is an interesting idea. But the biggest beneficiary could be third-party spammers -– exactly the sort Musk has separately promised to crack down on. As this blog points out, “open sourcing the algorithm will be most interesting to those looking to abuse and game the system to promote their own stuff”.
On Musk’s attitude towards moderation, there is more to unpack than this newsletter can cover in one edition. Suffice to say that his vague statements – like his preference for Tweets to stay up “when in doubt” – have been questioned by many experts in moderation who have spent years contemplating these thorny issues.
The stay up policy, for instance, comes into conflict with the realities of running a social networking business at scale. Thousands of moderators need specific rules that can be easily understood, not vague statements of ideology.
Last night, Musk publicly criticised Vijaya Gadde, the Twitter executive who allegedly censored stories about Hunter Biden’s laptop, saying that her decision was “incredibly inappropriate”. Moments later, Gadde’s Twitter mentions were filled with hate speech. As the FT’s Dave Lee asks, is this how he plans to run the company?
Is this a triumph for conservatives?
Conservatives are seeing it that way. Republican Jim Jordan tweeted “Free speech is making a comeback”. “I am hopeful that Elon Musk will help rein in Big Tech’s history of censoring users that have a different viewpoint,” Senator Marsha Blackburn of Tennessee said. President Donald Trump told Piers Morgan that Musk was a “good man”. Musk is expected to lift the permanent ban currently imposed on Trump, although Twitter executives would probably have had to lift it anyway if he became the Republican presidential candidate in 2024.
It’s too early to tell how Twitter will change on a structural basis under Musk, but it’s hard not to see liberal concerns as justified. There’s a real possibility that Musk will try and turn Twitter into a Truth Social / Gab / Parler free-for-all. Plus taking the company private will allow him to change its processes with less regulatory and political scrutiny.
Interestingly, Jack Dorsey – the former Twitter CEO – said he supported Musk because the Tesla founder could “take back” Twitter from Wall Street. “In principle, I don’t believe anyone should own or run Twitter,” he said, describing Musk as a “singular solution” to a problem of a company which “wants to be a public good”. Dorsey is essentially arguing for a benevolent dictatorship. If Twitter has to be owned by someone, he thinks, then it should be someone so rich they have little concern about its economic performance (as Musk professes to be).
But there’s an obvious danger of leaving one man in ultimate charge of determining what isn’t and is free speech. “Existential dread is the appropriate term,” Vivian Schiller, the former head of news partnerships at Twitter said, describing her reaction. “Between his behaviour as a Twitter troll and his comments about feeling that Twitter today isn’t a platform for free speech, those things combined worry me about what he imagines a free speech platform will look like.”
Katie Klonick, an academic and online speech expert, put it well when she said that the deal showed that “these private platforms that govern our public speech rights are really susceptible to the power of capitalism”.
Having said that, here’s a great piece from Tech Policy Press arguing that Europe’s Digital Services Act might tie Musk’s hands at Twitter.
What challenges will Twitter & Musk face?
Musk has said, recently, that he doesn’t care about the “economics” of Twitter at all. But the structure of the deal means he will face pressure to see a return on the investment, as more than two-thirds of the $46.5 billion financing package comes from his own assets – including, as Reuters points out, a risky $12.5 billion margin loan secured against his stock in Tesla.
As James Surowiecki, the financial writer, pointed out (on Twitter, naturally), Musk is taking on so much debt financing to acquire Twitter that the platform would have to pay $1.15-$1.3 billion a year in interest alone, which is more than it made before interest and taxes last year.
Advertisers will not welcome a more toxic Twitter, and hopes for revenue-generating subscriptions have not worked so far. Plus, Musk may be about to take control of Twitter as a recession hits the US economy, which could hurt the ad business even further.
Another major challenge will lie in the relationship between Musk’s other businesses and Twitter content. This week Jeff Bezos (yes, that one) asked whether China could lean on Tesla to quell criticism of Beijing on Twitter if Musk owned both. Bezos posted a tweet from a New York Times reporter that pointed out that China was the electric carmaker’s second largest market. “Did the Chinese government just gain a bit of leverage over the town square?” the world’s second richest man asked.
Perhaps the most honest comment on the Musk takeover so far has come from Parag Agrawal, Twitter’s chief executive. “Once the deal closes, we don’t know which direction the platform will go,” Agrawal said.
Apple: Outdated apps
Apple is cleansing the App Store of older games and other apps. As part of its App Store Improvement initiative, apps that haven’t been updated in more than two years will be removed from the Store after a 30 day notice period. One indie game developer said: “I feel sick. Apple just sent me an email saying they’re removing my free game… This is not cool. Console games from 2000 are still available for sale. This is an unfair barrier to indie devs.” The concern is that by forcing developers to update and submit their apps for review, smaller publishers – or individual developers who create apps as a hobby – will be disproportionately affected.
Microsoft: Advertising in-game
On mobile devices, games and advertising go hand in hand. But on consoles, advertising during the gaming experience is pretty much unheard of. Microsoft is looking to change that, by exploring a program that would let brands advertise in Xbox games. The tech state, according to reports by Insider, are developing a way for ad tech companies to create “in-game inventory” that players would see. This means: billboards on the skyscrapers of cities could show actual products; NPCs (non-player characters) might sport t-shirts or baseball caps with actual logos; or actual adverts might play through the radio in a car players drive to their next critical mission. Microsoft are said to be worried that inserting such ads into Xbox games might irritate players, so they are proceeding with caution.
Meta: Into the unsafe Metaverse
The metaverse simply isn’t safe. Since Facebook pivoted towards the metaverse – changing its corporate name to Meta in the process – it has been trying to boost usage of its main VR apps amongst both adults and children. The problem is the apps are rife with abuse, harassment and explicit content. An investigation by Channel 4 has found that Oculus Quest 2, Meta’s flagship VR product, is a gateway to a world of racial slurs and sexualised threats where children are barely protected at all. The investigation focused on VRChat and Rec Room, two of the more popular social apps. The Centre for Countering Digital Hate had previously found that users were exposed to instances of abuse every seven minutes.
Google: Record insecurity
2021 was a rough year for Google Chrome security. The Project Zero security team at Google have confirmed this week that last year saw a record number of “zero-day” hacks (jargon-bust: a “zero-day” hack involves the exploitation of a vulnerability that hasn’t yet been solved through a patch) against Google’s Chrome browser and its underlying Chromium technology. In total, Project Zero recorded 58 “in the wild” attacks (jargon-bust: an “in the wild” attack is a malicious software that is active on the devices of ordinary users) across all platforms including Android, Microsoft Exchange Server and Safari, over the course of the year. A report by Mandiant Threat Intelligence (which Google acquired in March for $5.4 billion) suggests that “suspected Chinese cyber espionage groups” are leading the wave of increased hacking.
Amazon: Union wave
Another Amazon facility is set to vote on unionisation. The tidal wave of workforce organisation continues at Amazon, with a second warehouse in New York beginning the polling process which will run until 29 April, with ballots being counted on 2 May. Christian Smalls, one of the founders of the Amazon Labour Union and former employee, has been front and centre at the polling site wearing a jacket with the words “Eat the Rich” on the back. His former facility voted in favour of unionisation in early April, starting a flurry of union efforts at other Amazon sites, and other major US workplaces like Starbucks and Apple. We’ll update you on the situation next week, and please do see last week’s edition of the Tech States Sensemaker for more on the battle over unionisation at Amazon.
Tencent: Share boost
China’s central bank has promised a reprieve from the relentless crackdown on technology companies. The People’s Bank of China said it would “steadily push forward and complete the rectification of large platform companies as quickly as possible, and facilitate the healthy development of platform economy”, essentially promising an end to stream of legislative changes that has knocked nearly 50 per cent of Tencent’s value in the past year. Shares in Tencent have recovered slightly since the announcement, and the Hang Seng Tech Index which tracks the performance of the sector jumped by 5.8 per cent on the news. Tencent will announce its financial results for Q1 on 18 May.
Thanks for reading,