July 16, 2023

Clash of Digital Platforms - Twitter vs Meta: Billionaires Zuckerberg and Musk Duke it Out

Prabir Purkayastha

WE are beginning to see the new age of competition between digital platforms, which have, till now, kept a careful distance from each other. Increasingly, the digital space today is simply not big enough for the trillion-dollar platforms and their owners' equally big egos. The very public spat between Elon Musk and Mark Zuckerberg, with even challenges for a physical match-up, is closely matched by Twitter facing a real threat from Meta's newly launched Threads.

Twitter holds a dominant position on short-form public messaging, attracting all those who deal with news, the news junkies, or those who want to be news themselves. There have been challengers to Twitter, particularly after Musk's taking over, but none were a serious threat to Meta till Threads. It gathered over 100 million users within the first week of its launch, even though it did not have many of the features that Twitter users take for granted.

Elon Musk's very public takeover of Twitter followed a barrage of criticism of the platform, its opaque policies of blue ticks, who could say what, and getting enmeshed in the culture wars in the US. Of course, Trump's politics and Twitter's censoring of Trump was the lightning rod. It put the social media platform at the centre of the free speech debate in the US and to what extent social media platforms should or should not filter content on their platforms. His public criticism and his repeated claims he could run Twitter much better led to his taking over Twitter. He has since then taken a sledgehammer to its way of working and its staff. Twitter has sacked or lost 80 per cent of the 8,000 employees it had before the Musk takeover.

While many of the Twitter users have been unhappy with Musk's running of Twitter, for example, imposing limits on their number of tweets and paying for a blue tick, they had very few options. Mastodon, an open source version, does not have a critical mass of people, which the news junkies who drive Twitter need; similarly for Bluesky, though it has received some recent momentum.

The "virtue" of Meta's Threads is the easy sign-up to Threads using an Instagram account. You can also import your contacts and followers into Threads, making it simple for your followers to also see your Thread posts. The signing up is relatively seamless and, most importantly, gives you a ready-made community of those you follow and who follow you on Instagram.

Will Threads really emerge as a competitor to Twitter? Or will it simply be a part of the Instagram world, a simple add-on to Insta? The demography and the interests of the Twitter and Insta world are very different. Twitter engages with what is happening in the world; Insta on what is happening to me! Can the tools and, more importantly, the culture of one world compete with the other? If not, then Threads will merely be a text appendage to the visual world of Insta and not a challenge to Twitter. If it can be repurposed, and with Meta's big bucks and hiring of the talent that Musk fired on Twitter, can they successfully create a Twitterverse within the Metaverse that Zuckerberg wants to build?

So why am I writing this piece at all? I find Twitter vs Threads interesting for a completely different reason. Till now, the digital monopolies had carved out their monopolies which had some overlaps, particularly in technology and infrastructure, but not in the primary "product" they were selling to the people. For example, Google, Facebook and Twitter's primary business model are selling people as commodities – what Dallas Smythe coined as the audience commodity – to advertisers. About 85 per cent of Google's revenue comes from advertisements; Facebook's is even higher, in the range of 98 per cent. The business model of all three social media companies was getting advertisements and selling us, the audience, to the advertisers.

Musk's main criticism of Twitter was that it spent far more than what it earned and was not pulling in enough advertisements to support its 8,000-strong payroll. That is his wholesale sacking of Twitter staff, reducing to less than 1,500, never mind the creaky state of the Twitter infrastructure.

Amazon's business is similar to a digital Walmart; it is a two-sided monopoly; it is a monopoly buyer of commodities and a monopoly seller. It achieves scale in both and is able to beat down its competition due to its ability to buy cheap, as it buys in bulk, and sells below the price of its competitors, as it has the largest network of physical stores in the US. In Amazon's case, it is also a two-sided monopoly when it buys and has a monopoly of eyeballs of people buying on its digital platform.

Chinese players have built different social media platforms and tools than American companies have. But they have not been successful in each other's markets, competing with each other only in South East Asia. The only major social media that Chinese players have created for a worldwide market (except India, where it has been banned) is TikTok. Facebook's Reels and YouTube Shorts are attempts to compete with TikTok, but despite bans in countries like India and the threat of bans in the US, TikTok still commands a viewership, especially among young users.

We can take more instances of how digital monopolies have been or are being built; and why the digital infrastructure allows some of these companies to scale while others do not. That is where the quality of the digital infrastructure, or even dumb luck of hitting the right solution, matters. The successful ones will claim their genius, while sceptics like me will always believe that in technology, what wins is a combination: of technology and capital as a necessary condition, but finally, dame luck decides the winner. Remember the Betamax vs VHS competition of formats for our VCRs (video cassette recorders)?

Even before Meta's entry into Twitter's playground, competition between digital monopolies existed and is even intensifying today. But they have not been in end-products but in digital infrastructure and tools that both need. For example, Microsoft competes with Amazon on cloud services; so does Google, as all of them have a huge digital infrastructure that they can hire out to others. All the major players are also building AI tools as they are seen to be necessary infrastructure, equivalent to the hardware infrastructure of today. None of them can let another walk away with a monopoly of AI tools without weakening the base of their empires. But these competitions are in areas which are not their core businesses.

So why are they starting to compete with each other now? While AI and infrastructure competition can be thought of as the consequence of using similar tools and infrastructure, a competition of the type we are seeing with Threads vs Twitter is new. It is a direct assault on a player and platform that is seen to be weak or in trouble and, therefore, ripe for an assault. Musk's toxic social media presence is an added bonus, as it alienates a whole range of users. Listening to Musk's egomania and how he was going to change Twitter, perhaps in his own image, is not what they needed except for the die-hard Musk fans.

I am not going to get out my crystal ball and predict the future of the Threads vs Twitter battle. Threads has the advantage of a huge Insta user base that can easily migrate to Threads. But it also has its weakness. The older demography is not fond of migrating from one app to another. For the younger people on Insta, do they want to engage in the news using an Insta add-on? Are those who are unhappy not simply with the changes in Twitter policies but also its more fragile tech infrastructure looking for safer pastures like Meta's?

There is no question that big advertisers like Meta have already liked what they see in Threads. But what about its users? Social media platforms live and die by their ability to get live users to be on their platform: it is user engagement that decides their fate. Predicting what the users will do in the Twitter versus Threads match-up will need black art; or those with better crystal balls than mine!