Social networks are going through a challenging time. The Chinese platform TikTok was recently sued, as was Elon Musk with his Twitter, for cancelling the account of political activist Laura Loomer. These events have exposed various realities and confronted social networks with the question of how they will operate in the coming years.
Twitter recently merged with X Corp Solution, losing the company’s name. The move was made by CEO Elon Musk because of his plan to create a universal app for everything called X. The buyout of Twitter is meant to be just one step towards achieving an “app for everything” to create a comprehensive solution, including a payment platform in which Musk would leverage his experience from PayPal. Musk has previously registered three holding companies called X Holding I, II and III. He has also changed his headquarters from Delaware to Nevada. The Nevada Secretary of State announced that Musk registered these new companies on 9 March and applied to merge them on 15 March.
Downsizing
Like a number of other world-famous companies, Twitter has embarked on a modern-day trend of layoffs. At the time Musk took over as CEO, the company had 8,000 employees, but now the numbers speak of 1,500. Musk has expressed that although layoffs are not easy and are painful not only for the company’s management but also for the employees – they are bearing fruit. The positive impact of this move should soon be evident on Twitter. On the other hand, Netblocks said that Twitter has been experiencing service outages since the beginning of the year, with the sixth one recorded in the past week. This may be due to overwhelm, as a number of technicians responsible for preventing service outages were among the employees who left the company, according to information published by Reuters.
Twitter accounts are at zero
However, the drastic measures, including the layoffs, have resulted in Twiiter being able to lift itself out of a negative cash flow of 3 billion. The return of most advertisers to the social network has meant that in terms of revenue and expenses, the social network is currently stable, albeit at zero. It also has the highest number of users ever, which is good news for the network. Musk, who bought the company on October 22, 2022 for $44 billion, sees the decision as the right one and says Twitter is heading in a good direction.
Senate vs. TikTok
The social network TikTok, owned by ByteDance, has been accused of interfering with national security and collecting the personal data of 150 million US users. The Social Networking Regulation Act has the support of the White House and 26 US Senators. The Biden administration has called on Chinese owners to sell their stakes in the apps or they will be banned in the United States. They say the platform poses a danger, as countries such as Australia, New Zealand, the United Kingdom, India and Canada believe. The European Union has also banned the use of TikTok on business phones over fears of a cyber threat from the Chinese government.
Protection or infringement of civil liberties?
Critics say the bill is too broad and could infringe on civil liberties. It is questionable how the regulatory bill will play out; users want to keep TikTok because of its great popularity, but the government is addressing their security. ByteDance, which owns the social network, denies the spying allegations and says it has spent more than $1.5 billion on data security. A ban from the US market would be a severe blow to the platform given its high number of users.
Stock market value development
The value of Twitter’s shares, which are traded on the New York Stock Exchange, has increased by 170% over the last five years, so it seems that even scandals, lawsuits and pandemics are not able to have a strong negative impact on the development of its value. On the other hand, ByteDance, which has not yet been listed, was recently valued at approximately USD 220 billion, down from a peak valuation of USD 400 billion in 2021. The drop in valuation was due to a lack of investors interested in buying shares due to uncertainty over ByteDance’s potential IPO and the future of TikTok.
Olivia Lacen, principal analyst at Wonderinterest Trading Ltd.
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