2 Years Under Musk: How Has X Been Faring?

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X published its first transparency report since 2021 last week, detailing efforts to deal with hateful content, purge spambots and quell ‘platform manipulation’ activity. Ethics, cybersecurity, and free speech all seem to be firmly on the company’s agenda – alongside attempts to seed confidence in a medium some advertisers find too toxic to touch.

The social media network has suffered a string of losses since Elon Musk’s high-profile takeover in October 2022, but amid the rubble, there are signs a new direction is taking hold.

Two years later, will that be enough? How is the re-branded X faring under Musk’s leadership, and what more can he do to convince users and marketers to come back?

Key Takeaways

  • Two years on, Elon Musk’s acquisition and re-branding of the former Twitter is generating controversy and concern.
  • Advertisers are cutting back on their spending, and investors are writing down their positions. Is the world’s first microblogging platform doomed to fail?
  • Not so fast. Musk’s vision for X is dramatically different than his predecessors and likely gels with a broader strategy tying together his many ventures.
  • As he waits to be minted as the world’s first bona fide trillionaire, X could yet emerge from its two-year transition as a case study in business transformation.

Embracing Transparency

How’s it going at X? In October 2022, Elon Musk made headlines with his $44 billion acquisition of the popular social network – paying well in excess of its valuation. Two years later, the company’s revenues have sunk by a whopping 84%, hammered by an exodus of big advertisers spooked by the microblogging platform’s controversial embrace of all-or-nothing free speech. Divisive figures like Alex Jones and former President Donald Trump have had their bans overturned and been allowed to tweet again, raising concerns about misinformation.

In a move some have likened to damage control, X has brought back the firm’s annual Transparency Report, last published prior to Musk’s takeover in 2021. Its updated format captures the progress X has made in addressing the criticism.

In the first half of this year, X suspended 5.3 million accounts, a veritable purge compared to the 1.3 million suspended in the second half of 2021 and the 1.6 million in the first half of 2022. Most – 2.8 million – were suspended for spreading content related to child sexual exploitation.

The company also took down 10.5 million posts, with close to half qualifying as “hateful” content, a category that journalists, regulators, and academics say has been allowed to run amok under Musk’s leadership.

In a move that surprised some free-speech advocates, the company also revealed that it had agreed to more than 70% of take-down requests from law enforcement, more than the former Twitter ever did.

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Advertiser & Regulator Criticism

Why would a staunch free speech absolutist like Musk bend over backwards to accommodate police and regulators?

One obvious answer is money. X is hemorrhaging advertising income.

In Q2 2024, the firm generated just $114 million in revenue – an utter collapse when compared to $660 million it raked in during the second quarter of 2022 ahead of Musk’s acquisition. Accounting for inflation, that’s an 84% decline.

The main reason revenues are cratering is an advertiser exodus spurred by perceptions that the platform’s new commitment to free speech has unleashed a torrent of unpleasant content and comments. Musk has added fuel to the fire with some of his public pronouncements (‘blackmailing’ advertisers can go f**k themselves’).

X has also launched an antitrust lawsuit against a major US ad industry group, accusing it of a conspiracy to harm the company financially.

Sea of Troubles

The result has been a spiraling decline in the social network’s fortunes.

Loss of Value

A July 2024 disclosure from Fidelity Investments said that it had written down its stake in X to about $4.19 million, based on a $9.4 billion estimate of X’s market value. That figure slashed Fidelity’s pre-Musk holding of $19.6 million by nearly 79%. The US investment firm had already revalued its stake in X twice before, marking down the value of its shares by 10.2% in January 2024, cutting another 5.7% in February. A September 2024 report in The Washington Post said Twitter investors had cumulatively lost billions since Musk’s takeover.

Twitter quaterly revenue
Twitter quarterly revenue. Source: Business of Apps

Loss of Customers

A host of major advertisers have abandoned the social network in recent months, with names like Microsoft, Procter and Gamble, Apple, Airbnb, Disney, and Coca-Cola all announcing they would cease or reduce spending on X. Many went public with their concerns about the platform as a marketing medium in November 2023 following Musk’s apparent endorsement of an anti-semitic tweet.

Loss of Reputation

Since then, things have gotten worse. A survey published in September by the Kantar Group found that marketing executives’ trust in X as an ad medium, already scraping the bottom at 22% post-acquisition, had fallen further to 12% in 2024. Kantar said 26% of marketers also said they planned to reduce their X advertising spend in 2025, “the biggest recorded pullback from any major global ad platform,” Kantar said.

Loss of Users

By some metrics, X is losing eyeballs. A March report from US market intelligence firm Sensor Tower said that daily active users of X’s mobile app in the U.S. had fallen by 18% from the year before. Globally, daily active users on the mobile app fell to 174 million, a 15% drop from 2023. An April 2023 analysis by the company said Twitter faced “significant headwinds that afflicted user growth, engagement, and monetization. Daily average users, user hours engaged per day, and US advertiser spend across six out of the top ten categories from Q122 all fell year-on-year.”

Note: X disputes these figures and has countered with in-house user metrics of its own.

Loss of Markets

X has also seen itself locked out of countries like Brazil, where it was recently banned for failing to comply with a court order compelling it to appoint a legal representative in the country.  Turkey imposed a temporary X advertising ban in February under a similar pretense. The EU, meanwhile, has recently made menacing noises about penalties if it’s found to be non-compliant with EU law regarding hate speech.

The prospects for a rapid turnaround look bleak. And yet …

Looking Past the Doubters

While the traditional business indicators paint a dreary picture, fans of the new Musk-era Twitter – and there are many – have reason for hope.

The first is acknowledging what often feels like knee-jerk negativity from mainstream media. Some journalists seem threatened by Musk’s assertiveness in interviews or triggered by his continual assertions that Twitter is (or can be) a more reliable source of truth than legacy media outlets.

Because while a few large advertisers may have trust issues with X as a promotional medium, an entire swathe of Americans has lost faith in the fourth estate entirely.

Americans' trust in media over years
Americans’ trust in media over years. Source: Gallup

Against that backdrop, X rebranding itself as a platform for citizen journalism must be uncomfortable for denizens of traditional newsrooms. Musk can even claim to have revitalized a declining editorial role that television, newspaper, and magazine journalism used to depend on – the fact checker. X’s Community Notes function allows would-be Woodwards and Bernsteins to sign up and refute, clarify, or add context to popular posts, creating an almost daily stream of high-profile gotchas and hilarious self-owns.

X community notes example
X community notes example. Source: X

Politically-biased state censorship is another battlefield where X has notched some notable wins. It scooped mainstream media outlets with the Twitter Files, a set of documents released Pentagon Papers-style that revealed the extent to which executives of the former Twitter were working with US government officials to stifle certain kinds of speech during COVID and the last US presidential election.

So re-establishing trust in X/Twitter seems very much a priority for Musk, even if he’s chosen to go about it in his own uniquely combative way.

He can also take comfort in the fact that, despite apparent declines in X’s popularity, engagement remains strong.

Building on a Loyal Base

Figures reported by the company in March indicate the platform has 250 million daily active users. That’s about the same figure Twitter reported in 2022. So, no growth, but no loss either.

X also hit a new milestone of 550 million monthly active users, while the average amount of time users spend on X each day has grown by more than 13% this year. Mobile app time is up 17%.

So X’s degraded user base could be more about churn than loss, meaning some users have left, some new ones have arrived, while others have upped their usage.

These are self-reported figures and that mixed interpretation could be spun multiple ways. But X/Twitter’s microblogging format is undeniably sticky. So much so that even some haters say it’s impossible to leave. Meta’s Threads competitor is still struggling to make a dent.

As for the rest, X’s reversal of fortune over the past 18 months is just as likely to be caused by an evolving media landscape, not missteps by a controversial owner.

Any business in a period of transition will shed customers and see revenues decline – at least in the short term. In X’s case that effect has been magnified by demographics. In January 2024, the platform’s user base was 60.9% male, while Instagram and LinkedIn have a more distributed gender balance. That would make them more attractive to advertisers looking to reach a diverse audience. It’s also true that visual platforms like TikTok are likely more aligned with current media consumption trends than text-first platforms like X.

That said, X’s most active users are between the ages of 25 and 34, the life stage when most people are starting families, starting companies, taking out loans and mortgages, and making big life decisions. That’s still solid gold for marketers.

Does Musk Even Care?

Despite the occasional dust-up with advertisers, journalists, regulators, politicians – even his financiers – it’s not clear how concerned Musk needs to be about Twitter’s downcast financials.

Already the world’s richest man, with his vast empire of companies, he’s on track to become the world’s first trillionaire. Ruffled investors will need to be soothed during times of financial duress, but that’s the case with any company. They are unlikely to abandon one of history’s most successful entrepreneurs.

There’s also the fascinating possibility that the changes at X are part of Musk’s grand scheme to colonize Mars. X tweet data is already being harvested to train Musk’s Grok generative AI tool. Could it be that Twitter/X is essentially a research project?

It would explain why Musk was willing to pay well above market value in 2022. He bought himself a ready-made neural network, one comprising 500 million souls, all sharing their likes, loves, hates, and opinions online, perpetually, in real-time.

The Bottom Line

What if X’s microblogging format could help model a future Martian communications system, one capable of connecting dispersed groups of colonists and disseminating information quickly across the vast reaches of space?

Claire Parfitt, a systems engineer with the European Space Agency, told ScienceNewsExplores in May that a good communications system will be vital for success. “People on Mars will need some way to get online,” she said. “We’re still in the early stages of working out what that means.”

At a minimum, experts agree that a working Mars colony would need a constellation of satellites in low orbit very much like Musk’s Starlink. SpaceX President Gwynne Shotwell told Time magazine in 2020 that “once we get people living on Mars, they will need the capability to communicate.’

It’s not hard to imagine X, or a future variant, playing a part in those plans.

FAQs

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References

  1. X Global Transparency Report H1 2024 (Transparency.x)
  2. Elon Musk Completes $44 Billion Deal to Own Twitter – The New York Times (Nytimes)
  3. As Twitter’s Revenue Collapses By 84%, Tesla Bulls Fear Elon Musk Will Liquidate More Tesla Stock, Bringing Its Value Down For Everyone (Finance.yahoo)
  4. Twitter bans President Trump’s account | CNN Business (Edition.cnn)
  5. X is committed to the open exchange of information (Transparency.x)
  6. Elon Musk’s X obeys more government requests than Twitter did (Qz)
  7. Elon Musk on X (X)
  8. Elon Musk may have to sell billions in Tesla stock to rescue X | Fortune (Fortune)
  9. Elon Musk to advertisers who are trying to ‘blackmail’ him: ‘Go f— yourself’ (Youtube)
  10. CNBC on X (X)
  11. Elon Musk’s X sues ad industry group over alleged advertising ‘boycott’ | CNN Business (Edition.cnn)
  12. ActionsXchange Compliance Window (Actionsxchangerepository.fidelity)
  13. Musk’s Twitter investors have lost billions in value (WashingtonPost)
  14. Apple and Disney join advertiser exodus from Elon Musk’s X (Ft)
  15. Elon Musk on X (X)
  16. More marketers to pull back on X (Twitter) ad spend than ever before (Kantar)
  17. Fewer people using Elon Musk’s X as it struggles to keep users (Nbcnews)
  18. Sensor Tower Social Media Scoop (Sensortower)
  19. Data on X (X)
  20. Brazil X: Court fines Musk website for site’s brief return (Bbc)
  21. EU Commissioner Breton reminds X owner Musk of EU digital rulebook compliance ahead of Trump debate – Euractiv (Euractiv)
  22. Elon Musk on X (X)
  23. Media Confidence in U.S. Matches 2016 Record Low (News.gallup)
  24. State of Journalism: The Lost Art of Fact Checking (Linkedin)
  25. About Community Notes on X (Help.x)
  26. Matt Taibbi on X (X)
  27. Pentagon Papers | Summary, Case, Vietnam War, & Facts | Britannica (Britannica)
  28. Elon Musk on X (X)
  29. Data on X (X)
  30. Elon Musk’s X sucks and I’m not leaving | Mashable (Mashable)
  31. Threads at one year: Plenty of features, but enough users? – Fast Company (Fastcompany)
  32. Global X/Twitter user distribution by gender 2024 | Statista (Statista)
  33. Elon Musk is on track to become the world’s first trillionaire very soon | CNN Business (Edition.cnn)
  34. What is Elon Musk really up to with Twitter, Neuralink, StarLink, and SpaceX? (Linkedin)
  35. Here’s how to build an internet on Mars (Snexplores)
  36. Mario Nawfal on X (X)
  37. How to build an internet on Mars (Sciencenews)
  38. The Future of Space Exploration | TIME100 Talks (YouTube)
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Mark De Wolf
Technology Journalist
Mark De Wolf
Technology Journalist

Mark is a freelance tech journalist covering software, cybersecurity, and SaaS. His work has appeared in Dow Jones, The Telegraph, SC Magazine, Strategy, InfoWorld, Redshift, and The Startup. He graduated from the Ryerson University School of Journalism with honors where he studied under senior reporters from The New York Times, BBC, and Toronto Star, and paid his way through uni as a jobbing advertising copywriter. In addition, Mark has been an external communications advisor for tech startups and scale-ups, supporting them from launch to successful exit. Success stories include SignRequest (acquired by Box), Zeigo (acquired by Schneider Electric), Prevero (acquired…