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Twitter’s issues make it an easy target for Elon Musk and others : NPR

Confronted with Elon Musk’s hostile takeover bid, Twitter’s board and administration must present their plan to deal with long-standing issues.

John Raoux/AP


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John Raoux/AP


Confronted with Elon Musk’s hostile takeover bid, Twitter’s board and administration must present their plan to deal with long-standing issues.

John Raoux/AP

One other yr, one other rich government making an attempt to take over Twitter.

This time is completely different, in fact, as a result of the wealthy suitor is Elon Musk, the erratic tech celebrity who has the world’s largest fortune and legions of followers and foes.

However Musk’s effort to purchase Twitter and “unlock” its potential makes him the newest in a protracted line of people that have kicked the corporate’s tires since its 2006 launch, stirring up recent pleasure and hypothesis, solely to stroll away empty-handed.

“It looks like Twitter has been up on the market for some time. It is simply no person wished to go ahead due to the challenges,” says Bloomberg Intelligence expertise analyst Mandeep Singh.

Fb founder Mark Zuckerberg reportedly tried to purchase Twitter twice in its early years. Google, Apple, Disney and Salesforce reportedly thought-about bids again in 2016 however walked away. (Disney’s then-CEO, Bob Iger, later stated in reference to the platform, “The nastiness is extraordinary”).

In early 2020, the hedge fund Elliott Administration took a stake in Twitter and pushed to interchange then-CEO Jack Dorsey, blaming his lack of focus for the corporate’s sluggish progress and low share worth.

Now, it is Musk’s flip. The Tesla CEO final week launched a hostile takeover bid that has despatched the corporate’s board and administration into disaster mode. With Musk’s advance getting extra critical by the day, Twitter might be compelled to confront its long-standing issues like by no means earlier than.

Utilized by politicians and journalists, however failing to interrupt via extra extensively

Since Twitter went public in 2013, it has reported an annual revenue solely twice, in 2018 and 2019.

Analysts say this displays Twitter’s basic enterprise wrestle: getting individuals to make use of its service and getting advertisers to spend their cash there.

Fb and Google have grabbed the lion’s share of on-line advert {dollars} by letting manufacturers goal individuals primarily based on their pursuits and what they’re trying to find. Twitter, then again, hasn’t been capable of persuade many advertisers that it is value inserting themselves into the positioning’s fast-moving and infrequently acidic response to occasions of the day.

Twitter dominates the political discourse and shapes the information, due to its maintain amongst politicians, world leaders, celebrities and journalists. However its reputation is proscribed. Round 80% of U.S. adults do not use Twitter. Globally, it doesn’t rank among the many high 10 social networks by month-to-month customers. (Fb and YouTube are the preferred platforms.)

Twitter has 217 million month-to-month energetic customers — a fraction of the almost 3 billion who use Fb month-to-month and smaller even than Pinterest, at 431 million.

It additionally has did not seize customers’ consideration and preserve it for lengthy intervals of time. Whereas the common TikTok consumer spends 48 minutes on the short-video app and Fb customers spend 33 minutes on the positioning, Twitter customers spend about 10 minutes a day on the platform, in response to latest estimates by Angelo Zino, an analyst at CFRA Analysis.

“The engagement ranges aren’t there,” Zino says. “If they are not within the eyes and the ears of the consumer on the market, clearly advertisers aren’t going to place as a lot cash into that platform as they doubtlessly may.”

Final yr, Twitter introduced in $4.5 billion in promoting income, in contrast with $115 billion at Meta, the guardian group of Fb and Instagram, and $28.8 billion at YouTube.

Whereas Twitter has succeeded in attracting massive manufacturers round main information moments, it hasn’t lured the smaller advertisers that make up the spine of Fb’s advert enterprise, says Singh of Bloomberg Intelligence.

“[Facebook has] the breadth of advertisers, whereas Twitter could be very concentrated amongst massive manufacturers. And in order that’s why Twitter does nicely when you’ve got massive occasions just like the Olympics or an election” however struggles at different occasions, he says.

And whereas different social networks share related issues, Twitter’s long-running battle to curb harassment, abuse and spam — what Disney’s Iger known as the “nastiness” — might also be weighing on its progress prospects, some critics say.

“I do know lots of people who say, ‘I take advantage of Twitter as a result of I have to for my job or to advertise the work that I do, however I get on and I get off as quickly as I can,’ ” says Ellen Pao, the previous CEO of Reddit and a tech investor.

Can audio chats and subscriptions assist Twitter escape of its area of interest?

There’s recent urgency to deal with these points. After Elliott Administration began agitating for change two years in the past, Twitter reached an settlement with the hedge fund that included aggressive progress targets. By the top of 2023, it is aiming to achieve 315 million every day energetic customers — up from 192 million in 2020 — and to not less than double 2020’s income to $7.5 billion.

To succeed in these targets, Twitter is rolling out product updates, from stay audio chats to subscription providers for energy customers to the long-requested edit button.

This accelerated tempo is a giant change for the corporate, which famously spent years earlier than deciding to double the size of a tweet.

However regardless of all this work, Twitter is lagging. It has added customers however not at a tempo to achieve its 315 million goal by subsequent yr. And like different companies that depend upon digital advertisements, its income has been crimped by Apple’s latest privateness adjustments, which make it tougher to focus on smartphone house owners with advertisements.

That has left some observers questioning whether or not Twitter can ever achieve success as an advertising-dependent firm.

“There’s much more to this than simply bettering the product,” says Zino, the CFRA analyst. Twitter “is only a area of interest providing” which will by no means attain the dimensions of different social media corporations, he says.

Whereas Musk says his curiosity in Twitter isn’t about getting cash, he has floated the thought of leaning extra closely into subscriptions, together with eliminating advertisements for paying customers.

A brand new buzzword: “decentralized”

Others say extra sweeping adjustments are needed. Dorsey, Twitter’s former CEO, has advocated for a “decentralized” Twitter. The thought is, basically, to make Twitter extra like e mail: a communications service that different builders and firms can construct merchandise to entry. Suppose Google’s Gmail and Microsoft Outlook.

When Dorsey stepped down in November, he handed the reins to then-Chief Know-how Officer Parag Agrawal, who can also be in favor of decentralizing Twitter. The corporate is backing a challenge known as Bluesky that is working towards that aim.

This week, analyst Ben Thompson argued that Twitter needs to be cut up in two. One firm would run its core service. A separate one would construct apps and promoting. The core service supplier may additionally let different corporations construct their very own Twitter apps, as was widespread within the firm’s early days. Thompson says this might take stress off Twitter over the principles it units about what individuals can put up and will shift its enterprise mannequin away from relying on promoting.

All eyes at the moment are on Twitter’s board

However Musk’s entry into the image has thrown all the things about Twitter’s future into doubt.

“It is a distraction from the work,” Pao, the previous Reddit CEO, says. “A distraction from doing the work of working the corporate and constructing a product and making an attempt to take care of the entire hate and harassment that individuals expertise utilizing the product.”

In his first months as Twitter CEO, Agrawal, who is comparatively unknown exterior the corporate, has been juggling stress to satisfy the targets set by Elliott Administration and a new child at residence.

Now, he and the remainder of Twitter’s management should give you a plan to answer the corporate’s latest menace — somebody who additionally occurs to be one of many platform’s most influential customers.

The board’s choice to undertake a so-called poison tablet, which might make it harder and costly for Musk to attempt to purchase extra of the corporate, suggests it’s unlikely to simply accept the billionaire’s supply of $54.20 a share, not less than in its present type.

However the board must clarify why, provided that Twitter’s shares closed on Friday at $48.93.

“As a board member, you may’t deny that there’s a proposal that’s a lot greater than the place the inventory is at present buying and selling,” says Bloomberg’s Singh.

If Twitter rejects Musk’s supply, he says, it must give “an excellent motive and actually present the shareholders your plan when it comes to the way you assume the corporate might be higher off on a stand-alone foundation, which not one of the prior CEOs have been capable of do.”