Elon Musk's Intention To Make Twitter A Freedom Of Speech Forum Claimed To Make Advertisers Flee

Advertising is Twitter's main source of revenue. (photo: doc. pixabay)

JAKARTA - Advertisers may now be reluctant to spend money on Twitter again if Elon Musk goes ahead with plans to promote unlimited speech on the social media platform. This prediction is from analysts, after the world's conglomerate reached an agreement to buy the micro-blogging platform for 44 billion US dollars (IDR 636.6 trillion).

Although Musk, a self-proclaimed free-speech absolutist, has not provided details on how he plans to "boost and improve" Twitter, he has repeatedly called the micro-blogging platform not doing enough free speech and criticized its content moderation policies.

Advertising is Twitter's main source of revenue, and analysts worry that unrestrained free speech could turn into misinformation and hate speech. This could potentially lead advertisers to disengage from the service.

Although its power is only about a tenth of the size of much larger social media platforms like Facebook from Meta Platforms Inc, Twitter has been cited as having helped spawn the Arab Spring uprisings and is accused of playing a role in the storming of the US Capitol.

"We expect advertisers to be less willing to spend money on Twitter if Elon Musk removes content moderation to promote free speech," said MoffettNathanson analyst Michael Nathanson.

According to Nathanson, if Musk keeps his promise, then advertisers on Twitter could turn to platforms like Alphabet's Youtube, TikTok, or other channels to build brand awareness.

Musk, who has amassed more than 80 million followers since joining Twitter in 2009, has used the platform itself to make several announcements. Including the incident in 2018 when he made a tweet that wanted to make Tesla a private company that made him targeted by regulators in the US.

Twitter, which is 16 years old, and has more than 200 million users, reported $4.51 billion in advertising revenue for 2021. That amount accounts for about 89% of its overall sales.

"The challenge (for Twitter) is to maintain and build revenue given (Musk's) controversial opinion hopes to give more freedom to often displeasing advertisers," said Hargreaves Lansdown analyst Susannah Streeter.

Musk also hinted at a subscription-based business model. But it could move ad spend to smaller players like Pinterest and Snapchat, say analysts at MKM Partners.

"We believe there will be a significant ripple effect across the online advertising ecosystem as Twitter goes through this 'go private' process over the next few months," they said.

The deal has already been approved by Twitter's board and is unlikely to face regulatory hurdles, analysts say.

Twitter shares were also down 1.7% to $50.85 in morning trade, still far from Musk's offer of $54.20 per share.