The Lex Newsletter: Twitter’s chaos monkey is still running the show 

Dear reader,

There was a time, not so long ago, when it felt as if every Elon Musk tweet prompted a news story. Journalists on the tech beat lived at the mercy of Musk’s musings. Whether it was the idea of taking Tesla private, buying Twitter, filling the streets with robotaxis, voting Republican or leaving San Francisco, his ideas were regarded as consequential.

He deserves some attention. He was the richest person in the world, after all; someone who had forced the car industry to go electric while simultaneously reigniting interest in space travel. Sometimes, his Twitter feed felt like a direct channel to the tech world’s id.

Not anymore. Having purchased the social media company that gave him so many fans, Musk’s following has grown but his brand has taken a hit. Look at his japes with Twitter’s sign. Painting out the “W” is a typically Musk-ian joke. But someone as chronically online as Musk should know that a “W” is online slang for a win. By removing the letter, he handed the internet an easy joke about his inability to win.

Musk’s latest grand plan is to use Twitter to create X, an all-encompassing “everything app” that includes payments, deliveries, news and messaging with friends — à la China’s WeChat.

Yet six months on from his purchase, Twitter is much the same. The changes seem unnecessary, just messing around. Twitter declared that verification “blue tick” check marks would be removed on April 1 unless users purchased subscriptions. Yet the only notable account that seems to have lost its verification label is The New York Times (55mn followers), an apparent Musk-driven decision. Confusingly, the NYT Opinion Twitter account still has a check mark.

Elsewhere, Twitter added a “state affiliated” label to the BBC and NPR Twitter accounts, the same one applied to state-owned Chinese news. It changed both to “government funded” after criticism. NPR (8.8mn followers) has not sent a tweet since. The odds of either organisation paying for check marks are presumably zero.

Musk seems unclear about the dynamic between social media platforms and their most popular accounts. While YouTube and TikTok share advertising revenue with the users who create free content, Twitter wants them to pay up. It is not hard to imagine how Musk might have reacted if someone else had purchased Twitter and then tried to charge him for his tweets. My bet is righteous indignation.

Twitter is unlikely to ever match advertising revenue with subscriptions unless it can offer more than a news feed. Revenue in 2021 was just over $5bn, with $4.5bn from advertising. It would need almost 47mn users paying $8 per month to hit that. Twitter is reported to have less than 300,000 paying accounts.

The company’s advertising revenue might have improved if left alone. Twitter could never compete with the information Facebook gathered on its users. But the recent privacy clampdown means it doesn’t have to. Plus click-through rates on adverts (the total number of clicks divided by the total number of impressions) used to be OK. In the first quarter of 2020, Twitter’s click-through rate was 0.86 per cent, according to AdStage. That’s not too far behind Facebook’s. Unfortunately, turnover in advertising staff plus confusion about Musk’s plans and concerns about moderation have put off advertisers.

Appointing a chief executive who has a good relationship with advertisers should be a priority. As a private company, Twitter doesn’t have to tell us whether user numbers are down or how many advertisers have jumped ship. But Musk’s $44bn purchase price for Twitter appears more insane by the day. Internal calculations put the value at $20bn. On Lex, we believe that the equity is now worthless.

When I sent an email to Twitter’s press team putting questions to the company I received the now infamous automated poop emoji in response. That tells you all you need to know.

Elsewhere in tech

The title of today’s newsletter comes from the book Chaos Monkeys, by tech entrepreneur Antonio García Martínez, which chronicles his experience setting up a start-up and selling it to Twitter. I also recommend Disrupted: My Misadventure in the Start-Up Bubble by Dan Lyons, who was one of the writers on the sitcom Silicon Valley.

An artificial intelligence-generated image of the Pope wearing a Balenciaga-like white puffy coat has triggered a collective freak out about how easy it is to be duped by fake images. I liked this New Yorker article on the proliferation of AI in pop culture.

Last year, journalist Matt Taibbi released the so-called Twitter Files, which claimed internal documents from a pre-Musk Twitter revealed censorship. Here’s a good outline of the questions being asked about the accuracy of those tweets.

Enjoy the rest of your week,

Elaine Moore
Deputy head of Lex