The combination of Elon Musk’s latest antisemitic rhetoric and evidence that X’s advertisers are finding their content next to hate speech could do irreparable harm to the platform formerly known as Twitter, analysts told TheWrap.
The consequences could be dire. As brand advertisers flee, and the White House denounces Musk and hoofs it to competitor Threads, the window could be closing quickly for Musk to stem the damage.
“It seems like he is hell-bent on destroying the platform that he paid $44 billion for,” Lou Paskalis, founder and CEO of marketing consultancy AJL Advisory, told TheWrap. Paskalis this weekend advised X’s CEO Linda Yaccarino to quit before her own reputation is irretrievably damaged, and he wasn’t the only marketing veteran to do so.
“His tweets just make it impossible for any advertising leader to rationalize to their management team why they should advertise on Twitter,” Paskalis said. “This is an extinction event for advertising revenue.”
But on Monday, the billionaire dug in his heels once again, filing suit against Media Matters, the liberal watchdog media outlet that published an exposé on Thursday claiming X was not adhering to agreed-upon brand safety measures for advertisers’ content. The report, which accused X of placing ads for brands next to pro-Hitler and white nationalist accounts, triggered the advertiser exodus, which included IBM, Apple, Disney and Warner Bros. Discovery.
In its lawsuit, X alleged that Media Matters “exploited” the platform to find advertisements, including doing “excessive scrolling” and curating a feed with specifically “fringe” content on X. The company argued that Media Matters intended to generate a misleading perception of the social media platform. The lawsuit does not include a specific amount in damages X is seeking but it asks for “actual and consequential damages,” and for the removal of the Media Matters article.
Late Monday, Media Matters responded to the X suit. “This is a frivolous lawsuit meant to bully X’s critics into silence,” Angelo Carusone, its president, said in a statement. “Media Matters stands behind its reporting and looks forward to winning in court.”
But the Media Matters report followed another study, released last Tuesday, from nonprofit media watchdog Center for Countering Digital Hate, which showed that X had failed to remove 98% of 200 tweets that it flagged to the social media platform after the Oct. 7 Hamas attack on Israel. The tweets included antisemitic, Islamophobic, and anti-Palestinian content inspired by the Israel-Hamas conflict. The posts have garnered over 24 million views, the study found. Additionally, 43 out of the 101 accounts in the sample group of tweets are paid verified accounts, which are algorithmically boosted, allowing for more post views.
On Thursday, IBM was the first major company to pull its advertising. In a statement, a spokesperson for the company said that “IBM has zero tolerance for hate speech and discrimination and we have immediately suspended all advertising on X while we investigate this entirely unacceptable situation.” The next day, other major advertisers followed suit, suspending all ads on the platform, including Disney, Warner Bros Discovery, Paramount, Sony and Lionsgate.
Yaccarino has tried to quell concerns among the staff and advertisers that the platform is proliferating harmful content. On Sunday night, she sent a memo to employees claiming that “no other platform” is working as hard as X to “protect free speech,” which “naturally invites criticism from those who do not share our beliefs.”
Analysts disagreed with Yaccarino’s sentiment that the advertising suspensions are temporary. “Elon has made it impossible for Linda Yaccarino to succeed,” said Paskalis.
Before last week’s exodus, X’s ad revenues were already on track to fall 54.4% year-over-year in worldwide ad spending from 2022 to 2023, according to data provided to TechCrunch. The value of X has plummeted to less than half its value since Musk paid $44 billion to buy Twitter in October of 2022. The company internally pegged its value at $19 billion as of last month.
Competitors ‘Sprouting Up’
As Musk wages war on the news industry, he risks hurting X’s cultural relevancy, analysts told TheWrap. And competitors have been sprouting up from every direction, including Meta’s new endeavor Threads, which launched in July and already has nearly 100 million monthly active users, according to Meta CEO Mark Zuckerberg.
Since Musk took control of X, the platform has seen fewer adult users going to the platform for news content — according to data from Pew Research Center, 12% of U.S. adults say they go to the platform for news. Out of all the major social media sites, X is now fifth in news consumption behind Facebook, YouTube, Instagram and TikTok. The study also found that the percentage of X’s own users that regularly go to the platform for news had fallen by 6% to 53% since 2020.
“It is only a matter of time before there is a mass defection toward platforms that take misinformation and disinformation measures seriously and utilize formats which are more conducive to trust, credibility, and authenticity,” James Mawhinney, CEO and founder of Media.com, said in a statement to TheWrap.
“With trust and authenticity being so fundamental to a proper functioning society we are currently heading toward dangerous territory unless strict measures are put in place to help curb the risks associated with misinformation and fake profiles,” Mawhinney said.
Paskalis, however, doesn’t see this as a content moderation issue on X. “The issue is Elon Musk moderation,” he said.
More problematic, Paskalis said, is that X’s revenue model is still struggling. Musk has “certainly proven that subscriptions don’t work,” while “going out of his way to tell advertisers that he’s not concerned about their concerns,” Paskalis said.
X is a private company so reliable data on the company’s performance has been difficult to get. The company said in September it had 245 million daily active users, down 5% from the number Musk shared in November 2022, but higher than the 237.8 million number then-Twitter disclosed for Q2 of 2022, The Wall Street Journal reported. An analysis by research firm Sensor Tower, the Journal reported, showed that X’s daily active users via mobile apps dropped by 16% in September compared to the month Musk took over.
The split second court opens on Monday, X Corp will be filing a thermonuclear lawsuit against Media Matters and ALL those who colluded in this fraudulent attack on our company pic.twitter.com/55vl7PspaQ
— Elon Musk (@elonmusk) November 18, 2023
If you know me, you know I'm committed to truth and fairness. Here's the truth. Not a single authentic user on X saw IBM’s, Comcast’s, or Oracle’s ads next to the content in Media Matters’ article. Only 2 users saw Apple’s ad next to the content, at least one of which was Media…
— Linda Yaccarino (@lindayaX) November 20, 2023
We’re live on Threads, folks. pic.twitter.com/it1PIgPSIi
— President Biden (@POTUS) November 20, 2023
Even as the outrage has grown, the platform, with its legacy reputation as a generation-changing global town square when it was still known as Twitter, has proven sticky with many users.
On Monday, the current White House administration including President Joe Biden, Vice President Kamala Harris, and their respective spouses, all launched accounts on Threads, with Biden cheekily posting a promotional video for his new Threads account on X.
The move came after the Biden administration condemned Musk’s antisemitic remarks on X earlier this week, which perpetuated a white-nationalist conspiracy theory that the American Jewish community was flooding the country with minority immigrants.
“It is unacceptable to repeat the hideous lie behind the most fatal act of Anti Semitism in American history at any time,” wrote a White House spokesperson referencing the conspiracy theory that inspired the Tree of Life synagogue shooting. “Let alone one month after the deadliest day for the Jewish people since the Holocaust.”
But some prominent legacy Twitter users are finding it difficult to leave the platform entirely.
It is only a matter of time before there is a mass defection toward platforms that take misinformation and disinformation measures seriously and utilize formats which are more conducive to trust, credibility, and authenticity.
James Mawhinney, CEO and founder of Media.com
When news broke of OpenAI CEO Sam Altman’s ouster on Friday, many in the tech industry immediately turned to X as a source of updated information, including tech reporter Kara Swisher who posted regular updates to the platform. “It was easier for AI news at speed (for now),” said Swisher, who has formally left Twitter/X but posted more than 20 times on X since the Altman news broke.
“But Elon’s still acting as heinous as ever,” she added, “so gotta blow this toxic pop stand…it’s degenerated into a toxic stew of grievance and it is largely useless as a social media site.”
Also only did this on Twitter cuz it was easier for AI news at speed (for now). But Elon’s still acting as heinous as ever and now getting props from Ben Shapiro, so gotta blow this toxic pop stand. You can see whatever I follow with on Threads or @PivotPod.
— Kara Swisher (@karaswisher) November 18, 2023
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