Elon Musk and Mark Zuckerberg’s social-media smackdown

In one corner is Mark Zuckerberg: 39 years old, five foot seven inches and, if his selfies are to be believed, a wizard at jiu-jitsu. In the other corner stands Elon Musk: 13 years older, six inches taller and considerably heavier, with a special move known as the walrus (“I just lie on top of my opponent & do nothing”). The two billionaires have agreed to a cage fight, with Mr Musk saying on June 29th that it might take place at the Roman Colosseum.

The bout may never happen. Neither the Italian government nor Mr Musk’s mother seems keen. But the new-media moguls are simultaneously limbering up for a more consequential fight. On July 6th Meta, Mr Zuckerberg’s firm, will add a new app to its suite of social-media platforms. Threads, a new text-based network, bears a remarkable resemblance to Twitter, the app that Mr Musk bought last October for $44bn. The rumble in Rome may be all talk. But an almighty social-media smackdown is about to begin.

Meta’s effort, Threads, has a better chance. For one thing, cloning rivals is what Meta does best. In 2016, as Snapchat’s disappearing posts known as “stories” became popular, Mr Zuckerberg unveiled Instagram Stories, an eerily similar product which helped to keep Instagram on top. Last year, as TikTok’s short videos became a threat, Meta rolled out Reels, a near-identical video format that lives within Instagram and Facebook. It too has been a hit: in April Mr Zuckerberg said Reels had helped to increase the time spent on Instagram by nearly a quarter.

Threads also has a head start in achieving scale. Unlike Reels, it will be an app in its own right. But it will let those with an Instagram account use their existing login details and follow all the same people with a single click. Some 87% of Twitter users already use Instagram, according to DataReportal, a research firm, so most now have a near-frictionless alternative to Twitter. Will they bother to switch? For some, it may be enough simply to have a network that is “sanely run”, as Meta’s chief product officer put it recently. Others will need a shove. By announcing a paywall just days before Threads’ launch, Mr Musk may have provided one.

Twitter’s business is tiny by Meta’s standards, with barely an eighth as many users as Facebook, the world’s largest social network. In 2021, the last year before Mr Musk took it private, Twitter’s revenue was $5.1bn, against Meta’s $116bn. And with those meagre earnings come big problems. Few platforms attract as many angry oddballs as Twitter. In recent years Meta has shied away from promoting news, which brings political controversy and seems not to delight users; in Canada it has said it will stop showing news altogether, in response to a law that would force it to pay publishers. News is a big part of what Twitter does.

There are two reasons why Mr Zuckerberg may think Threads is nevertheless worth the headache. One is advertising. Twitter has never made much money out of its users because it knows little about them. Between half and two-thirds of those who read tweets are not even logged in, estimates Simon Kemp of DataReportal. Many registered users are “lurkers”, who view others’ feeds but seldom engage. Meta, by contrast, already knows a lot about its users from its other apps, so can hit them with well-targeted ads in Threads from day one. And the brand-focused advertising that works best on Twitter would complement the direct-response ads that Facebook and Instagram specialise in. Threads “feels very complementary” to Meta’s current portfolio, says Mark Shmulik of Bernstein, a broker.

Meta’s other possible motive relates to large language models, which ingest text from the internet to produce human-like responses in artificial-intelligence (AI) apps like ChatGPT. This technology places a premium on big troves of text. Online forums such as Reddit are scrambling to monetise the billions of words that they hold. Mr Musk has said that Twitter’s new paywall is a response to “EXTREME levels of data scraping” by AI firms. In setting up a text-based network to complement the more visual feeds of Facebook and Instagram, Meta will have its own source of rich language data. “Threads has been conceived as much more than an advertising platform,” believes Mr Kemp. “Zuck is playing the AI content-feeding game.” Whether Meta licensed such data to others or used it in its own AI projects, it would be a new growth story to tell investors while they wait for the metaverse to materialise.

Threads faces formidable challenges. Launching a new social network is notoriously hard. Even with its 3.8bn existing users Meta has had its share of failures: Facebook Dating remains unloved and the company’s gaming and shopping initiatives have yet to take off. But as Twitter bleeds users and advertisers, and as Mr Musk’s management continues on its eccentric path, the opportunity is becoming bigger. Regardless of which billionaire prevails in the cage, Mr Zuckerberg may come away with the spoils. ■