Recent news has been filled with reports of Tesla chief Elon Musk attempting to launch a hostile takeover on Twitter. According to Statista, the platform has been a favorite of many politicians, including former US President Donald Trump, and has around 77 million users in the US and around 24 million in India. A 140-character short-messaging service that also allows links to other media, it is one of several social media platforms that have become highly popular over the years.
Musk’s offering represents a 20% acquisition premium over Twitter’s current market value. In fact, Musk offered 54% of his shares earlier this year to grab a substantial portion of his equity. He now owns more than 9% of its stock, and his offer is to buy 100% and take it private. He himself is an avid user and has over 80 million followers on the platform. He claims to be a “free speech absolutist”. One of the plausible reasons for them to turn into a privately held firm away from the glare of the public market is to allow an unrestricted soap box to all visitors to the platform. There is speculation that he may allow Trump to return to the former US President’s favorite soap box Trump was banned for life some time ago.
Meanwhile, Twitter’s board last week unanimously adopted a ‘poison pill’ strategy through a ‘shareholder rights scheme’ that looks at the possibility of a single entity or individual gaining control of a company, regardless of open market accumulation. will reduce I’m sure this poison pill and the ongoing saga of Musk’s takeover attempt will consume a lot of newsprint this week, and so I’ll stop contributing to it for now.
Instead this column is a reflection on the future of social media platforms. Twitter is a relative small one—others like Facebook are much larger, with over 3 billion users worldwide. Facebook’s subsidiary Instagram has about one billion users worldwide. Facebook has already seen a different future for itself. It has attributed some of its recent difficulties to Apple’s new operating systems that disallow cross-site tracking and other methods of collecting user-specific information on Apple devices. The lack of this detailed information makes Facebook a less attractive medium for advertisers to single out prospects for specific business messages.
The new operating system controls by Apple aren’t the only concern of Facebook. The European Union has led the way in controlling the personal data of Eurozone residents, and now countries around the world, including India, have tighter restrictions on how user data is collected. Furthermore, Web 3.0 keeps social media platforms entirely in its crosshairs. As Web 3.0 gains momentum, further disruption can be expected to platforms that are at their core centralized stores of customer data.
To explain, it might be worth a short excursion to see what Web 3.0 is all about. The Web, as most of us know, began as Web 1.0, where pages presented mostly static information. Users were not given much opportunity to interact with what was presented, but could ‘surf’ the web for information, the availability of which increased as more and more people created websites on myriad topics.
This then evolved into Web 2.0, the current version, where websites became more interactive. This is up to the point where users can upload their content to multiple sites like YouTube, Instagram, Patreon, Substack, giving users the opportunity to get paid. The more ‘followers’ you have, the more ‘influencers’ you become, and the theory is that you have a captive audience to whom goods and services may be marketed by third parties. Hence the plethora of advertising material on sites like YouTube. The advertiser pays the platform and the platform influencer to give the influencer’s content a chance to reach the audience. There are even many tech firms that favor dynamic bidding for ad slots as the viewership of channels declines and flows.
Web 3.0 augments the current paradigm by using blockchain technology to move sites directly into the hands of the creator or influencer. This allows creators to fully embrace the relationship with their fans.
Just as people invest in property, they can buy a portion of their favorite creator’s content through contract terms that are codified on a ‘smart’ basis (read decentralized and searchable). The decentralized nature of the blockchain (bit.ly/3xAkkiM) allows such peer-to-peer contracts. Non-fungible tokens (NFTs) based on Web 3.0 concepts have already started to move into the art world.
The fact that Facebook is re-establishing itself as the virtual reality leader by renaming itself ‘Meta Platforms Inc.’ is no coincidence. The pinner of privacy regulation and peer-to-peer contracts is bound to dampen the impact of social media platforms in a few years.
Facebook is building virtual reality glasses named Nazare (note the Indianization of the name), but the project has been marred by difficult customized chip development efforts, and The Verge reports that the materials for a pair of these glasses are not available. Bill thousands of U.S. Dollar. It reminds me of the difficulties one of my previous employers, Xerox Corp. had with the commercial roll-out of highly successful technologies ahead of its time.
Only time will tell whether Meta will really be able to reinvent itself for Web 3.0 before Pinner is shut down.
Siddharth Pai is the founder of Siana Capital, a venture fund management company focused on deep science and technology in India