As social media giants like Twitter and Facebook grapple with content moderation issues, new platforms are monopolizing the online realm. The newsletter platform Substack and the recently launched audio-based social network Clubhouse are two of those newcomers that have seen their values soar. As a response, Twitter has tried to diversify its business in these past two months with three purchases. Twitter has a unique opportunity to strengthen its position, expand and become an all-encompassing platform. But competing with the new entrants is always a struggle. If Twitter does not step up, its advantage will be short-lived because Facebook is already trying to copy the newcomers.
Launched in 2006, the microblogging service rapidly grew to 100 million users by 2012. The app brought a revolution for daily communications. We could rapidly know what was going on everywhere in the world with live updates of users. It soon became instrumental in multiple protests worldwide, such as the United States Occupy Wall Street movement and the Egyptian Revolution in 2011. As it reached maturity, Twitter soon experimented with other forms of communications besides the written word. It acquired the video clip company Vine—the precursor of Tik Tok—in 2012 and the live streaming video app Periscope in 2015. However, Twitter failed to seize the potential of the purchases. Vine could have become the next Tik Tok, but it was shut down in 2017. Periscope is still alive, but Twitter has announced the app will close by March, as reported by TechCrunch.
Since its peak in 2013, Twitter’s growth had slowed down with a slight uptick in 2020. But last year also brought new challenges to the platform, many related to its content moderation limits. Over the summer, the tech giant eliminated thousands of accounts that violated its standards and ended up banning the former United States President Donald Trump from the app. Facebook was dealing with similar issues on its platforms plus two antitrust lawsuits from the US government, which accused the app of anti-competitive strategies. As a result, the new platforms had the time and space to grow.
On the one hand, Substack, founded in 2017, has become a reckoning force in the self-publishing world, as it allows writers to turn their readers into paying customers. In 2020, advertisers retreated given the economy’s slowdown, but subscription-based Substack doubled its user numbers, as reported by Business Insider. Its fan base had more time and money to invest in reading from home. The other market entrant is the audio-based social network Clubhouse. The app, launched in 2020, is an invitation-only platform where users can jump from chat to chat, listen, or pitch in. The audio cannot be recorded or shared, which has resulted in many problems related to content moderation, as reported by The Verge. Interest in the startup built last week, after a conversation on the app between Tesla CEO Elon Musk and the CEO of online brokerage Robinhood, Vlad Tenev. Reuters reports that invitations in China are “being sold on Alibaba’s second-hand market place Idle Fish, even though Clubhouse isn’t available in Apple’s app store in that country.” Interestingly, venture capital firm Andreessen Horowitz has stakes in both of them.
These ventures are stealing the spotlight from more traditional social media platforms like Twitter and Facebook and would have been bought off by now if the circumstances were different. But Facebook cannot afford to purchase another competitor, as it did with Instagram and WhatsApp. The antitrust lawsuits concern precisely those purchases, which are seen as monopolistic. Besides, both social media companies are walking a fine line between defending their content moderation standards and not losing users—Facebook is laxer than Twitter. However, Facebook can pursue another strategy: copying the threats, as it previously did with Snapchat. As reported by the New York Times, the tech giant is developing an app similar to Clubhouse.
In the meantime, Twitter must seek to to expand its footprint and become a platform of platforms. More importantly, it cannot remain in the fringes, it has to grow. In December of 2020, Twitter bought the social-screen sharing app Squad, which allows users to start video chats with up to six people and share what they see on their own screens. Simultaneously, the platform acquired the social podcasting app Breaker, in which users can comment on episodes and follow each other. Lastly, in January, Twitter bagged the Dutch newsletter startup Revue, competing directly with Substack. Revue gives writers the opportunity to monetize their content while taking a cut. Twitter hopes to capitalize on users with strong social media brands—who already thrive on Twitter—with the newsletter platform. They will be able to turn their followers into paying subscribers.
This buying spree will certainly diversify the tech company’s risk, which was too close to being defined as a news outlet with editorial judgment after banning figures such as Trump and moderating the app’s content. None of the new purchases produce content, they provide a place to share it. Let’s remember that Twitter is not liable for the content posted on it, thanks to the 230 section of the Communications Decency Act (CDA). “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider,” reads the 230 section.
The purchases will also transform the company into an all-encompassing platform. Users can stay for hours writing long-form content, sharing videos, or even socializing around podcasts. Twitter will become a platform of platforms with multiple formats—audio, video, and the written word. And it will start offering something new, something that Facebook has not been able to do yet—a way to monetize popularity. By introducing Revue on the Twitter platform, the tech giant will allow its top performers to capitalize on their brands. The users will no longer be the only business; they will also be able to benefit from it. Other tech giants like YouTube have been doing it for a while.
Finally, the purchases could help insulate Twitter from the competition, although it will be a tough fight given the newcomers’ popularity and Facebook’s enveloping strategy. Still, Twitter’s network effects—the fact that everyone is already on the platform—will certainly put the company in an advantaged position. If someone is already popular on Twitter, she/she might prefer to launch a newsletter through Revue than start from zero on Substack.
While the traditional tech companies have to grapple with their success, newcomers are taking over the online realm. First, it was Substack, monetizing on regular emails; then it was Tik Tok, competing with social media platform Instagram. Now it’s Clubhouse, which brings the social media experience to another level—it is all a talk show.
Facebook is trying to regain control of the Internet as it fends off lawsuits and it launches new apps. Google and Amazon are too comfortable with their kingdoms to worry about these small newcomers—mainly because their own platforms, YouTube and Twitch, are still trendy. But Twitter, an app which only lives in the social media realm, must diversify and grow to survive. For now, let’s see where the purchases take Twitter and if they are enough to retain its control over microblogging, and more importantly, over social media experiences. In 2021, all these new Davids will meet the struggling Goliaths.