Elon Musk will be miserable in the app economy

The takeover of Twitter by Elon Musk is imminent: he has three weeks to close his deal to buy the social media company for $44 billion. It’s a deal he wanted and didn’t make and (at least for now) reluctantly accept.

Musk probably isn’t interested in improving Twitter’s ad business or its follower business. It’s doubtful he even cares that much to back off content moderation Where eliminate spamhis two pet issues in the past six months.

Musk is never particularly interested in what he has or will soon have, but rather in something much more distant. Tesla doesn’t just make electric cars, it’s accelerating the global transition to sustainable energy. SpaceX, its rocket company, isn’t just about launching stuff into space, it’s about finding a way to get people to Mars and “make humanity multiplanetary.”

And Twitter?

“Buying Twitter is an accelerator to the creation of X, the app of everything,” Musk tweeted on Oct. 4.

What does it mean?

Oh yeah, X, the whole app. Sure.

Like my colleague Adario Strange recently pointed out, Musk has been using the X moniker as a stand-in for his business endeavors since at least 1999, when he used the X.com domain to launch an online bank that would later be renamed PayPal. Then there’s SpaceX, of course, and the Tesla Model X, and one of Musk’s kids is called X Æ A-12.

Now X is Musk’s shorthand for a WeChat-like super-app, the Tencent-owned app that’s ubiquitous in China for personal conversations, business communications, shopping, social media, payments and more. “You basically live on WeChat in China because it’s so helpful and useful for your daily life,” Musk told Twitter employees during a press conference in June. town hall meeting weeks before announcing that he no longer wanted to own Twitter.

“There is no WeChat movement outside of China,” Musk said at the time. “And I think there’s a real opportunity to create that.”

In all cases, Musk, who dreams of self-driving electric cars, commercial space travel, neural implants, super-fast train travel and, absurdly large tunnels is an odd fit for the application saving. He would be quite unhappy there.

The app economy is different in China

It’s not that mobile apps are bad business. App analytics firm Sensor Tower estimates app spending will exceed $270 billion by 2025. That’s more than Apple and Google each take a whopping 30% cut in app subscription fees, though that cut has been the focus of antitrust control and several trials developers.

Then there’s the likely regulatory battle Musk would face trying to create a super-app.

“The more flexible regulatory environment in China at the time gave internet companies like Tencent and Alibaba more leeway to expand to a wide range of businesses. WeChat took advantage of this and became a super app” , said Xiaofeng Wang, principal analyst at Forrester.. “It would be much harder now given the stricter anti-monopoly regulations in China and it would certainly be harder for Twitter or future X to do this in the United States.”

WeChat too was created for a society where trust in social media runs deeper than in most Western countries. According at Forrester 2022 Survey Data58% of Chinese consumers trust the content that brands post on social media, compared to only 20% of consumers in the United States.

Does the WeChat model make sense to Musk?

In the meantime, it’s unclear if US mobile users even want a super app, says Jasmine Enberg, influencer marketing and social commerce analyst at Insider Intelligence. “In the United States, we’re used to using different apps for different activities, and old habits are hard to break.” We open Venmo to pay our friends, Spotify to listen to music, TikTok to watch short videos, and Slack to communicate with co-workers – and we’re mostly okay with that.

WeChat has mini-programs or apps in the app. It’s a path Twitter could follow under Musk’s ownership, but right now it’s not too appealing. Twitter has less than 250 million monetizable daily active users (mDAU), far less than the 2.9 billion on Meta’s apps or the 1 billion and more on ByteDance’s TikTok.

“It’s going to be an uphill battle for Musk, and Twitter isn’t going to turn into Platform X overnight,” Enberg said. “People in the United States are going to need a powerful incentive to shift from their current behavior to using a catch-all app for all their digital activities. And even if they’re willing to do that, nothing doesn’t guarantee they’ll want to do it on Twitter. Would it have been easier for Musk to build his app from scratch? Maybe.”

If so, Musk will have spent $44 billion, plus a lot of bank and lawyer fees for an app that does little more than connect and ignite its users, 280 characters at a time.

About Sandra A. Powell

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