By now most people are aware of the Elon Musk/Twitter saga. After purchasing a 9.2% share of Twitter, he then proposed buying the company outright.
Twitter acted to prevent the takeover by using a poison pill approach. This would involve issuing shares at half price to existing shareholders if any investor would gain ownership of more than 15% of the outstanding shares.
Twitter’s temper tantrum (that’s what the poison pill offer was) publicized to the entire world Twitter’s desire to continue to censor free speech. It also exposed its extreme hostility to more than half of its potential customers worldwide, that is those who believe in free speech.
What is the real purpose of all of Elon Musk’s actions?
Blaine Pardoe reports:
With his bid to take Twitter private and restore free speech, he provided a stage for the mainstream media and the progressive pundits to expose themselves as not only being in favor of censorship, but demanding that there be more of it.
Musk’s stunning gambit rumbled through the halls of Twitter and the newsrooms of CNN and MSNBC. Their fear was palpable. After years of saying, “If you don’t like what we are doing to you, go build your own social media platform,” they suddenly were faced with someone calling their bluff.
Those on the left were apoplectic. While the left may pay lip service to the idea that free speech is fundamental to a functioning democracy, the left has always advocated for restrictions on speech that they did not like. They claim to be protecting people from hate speech. The only problem with this and with any other restrictions on speech is who makes such a determination. In Twitter’s case conservative speech was almost always on the receiving end of a hate speech censoring.
They have tried to redefine speech they don’t like as violence against a person or group. Therefore, such speech needs to be outlawed. However, groups and individuals on the left who advocate true violence are almost never censored. The mullahs of Iran who constantly chant “Death to America” are still active on the platform.
Racism is another tactic used to squelch free speech. The left uses it to try to cancel any idea that touches on race that undermines their ability to keep minorities on the plantation. We saw this over and over again when someone would stand up and point out problems and issues with the agendas of former President Obama.
Musk has exposed the left for the censorship-supporting tyrants that they are. He has allowed the media to show their disdain for the American people. The credibility of the media has taken another hit.
Did Musk stumble onto something else in how Twitter operates that has caused him to engage the way he has?
Some people with expertise in these kinds of web technology have a potential insight on all this. And that understanding could fundamentally alter the course of history in this country and around the world.
To most of us, the Web is a large black box that performs many very convenient actions that may not be well-understood. It is the world’s largest library allowing access to all kinds of information. It is also the world’s largest store allowing people to order items from all over the planet. Companies setup websites and apparently do so profitably. Exactly how does Twitter operate profitably? There are those who understand current technologies well who do not understand how that is possible.
Sundance over at CTH has considerable expertise.
What Elon Musk appears to be doing is perhaps the biggest story that few understand.
I share this perspective having spent thousands of hours in the past several years deep in the weeds of tech operating systems, communication platforms, and the issue of simultaneous users. What Twitter represents, and what Musk is attempting, is not what most would think.
In the big picture of tech platforms, Twitter, as an operating model, is a massive high-user commenting system.
Twitter is not a platform built around a website; Twitter is a platform for comments and discussion that operates in the sphere of social media. As a consequence, the technology and data processing required to operate the platform does not have an economy of scale.
Let me parse what Sundance is saying.
Most tech platforms are built around a website that provides something. That something may be news (think Fox News, CNN, etc), information (think Google, Bing, DuckDuckGo, YouTube, blogs, podcasts, etc.), products (think Amazon, eBay, Obamacare exchanges, etc.). Some platforms have paid subscribers. Some have advertising. Some charge their sellers a commission. Many have multiple revenue streams. This is how revenue is generated.
With these platforms the main expense is in the infrastructure and what is paid to produce the content. This is relatively fixed since there is not a need to engage with millions of users at the same time in real time. While large sites like Amazon need more processing power to handle their clientele, the expense line is not linear. They only need to be able to present screen views of what the user wants to see. There is an economy of scale here because the interactive part (say ordering something) which demands more processing power is a much smaller part of the operation.
This is especially true of content providers such as news sites, blogs and podcasts. While they may have areas where comments are allowed, in most cases, these are a very small part of the operation. In some cases, this may be handled by a third party. More page views of the content means more revenue without much additional expense.
This is not Twitter. Sundance notes:
Unlike websites and other social media, Twitter is unique in that it only represents a platform for user engagement and discussion. There is no content other than commentary, discussion and the sharing of information – such as linking to other information, pictures, graphics, videos url links etc.
…It is the global commenting system for users to share information and debate. It is, in some ways, like the public square of global discussion. However, the key point is that user engagement on the platform creates a massive amount of data demand.
Within the systems of technology for public (user engagement) commenting, there is no economy of scale. Each added user represents an increased cost to the operation of the platform, because each user engagement demands database performance to respond to the simultaneous users on the platform. The term “simultaneous users” is critical to understand because that drives the cost.
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When people, users, operate on a tech platform using the engagement features, writing comments, hitting likes, posting images, links, etc., the user is sending a data request to the platform’s servers. The servers must then respond allowing all simultaneous users to see the change triggered by the single user.
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If 100,000 simultaneous users are looking at the same thing, the database must deliver the response to 100,000 people. As a result, the number of simultaneous users on a user engagement platform drives massive performance costs. In the example above, a single action by one person requires the server to respond to 100,000 simultaneous users with the updated data.
As a consequence, when a commenting platform increases in users, the cost not only increases because of that one user, the cost increases because the servers need to respond to all the simultaneous users.
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The key to understanding the Twitter dynamic is to see the difference between, (a) running a website, where it doesn’t really matter how many people come to look at the content (low server costs), and (b) running a user engagement system, where the costs to accommodate the data processing -which increase exponentially with a higher number of simultaneous users- are extremely expensive. Twitter’s entire platform is based on the latter.
There is no economy of scale in any simultaneous user engagement system. Every added user costs exponentially more in data-processing demand, because every user needs a response, and every simultaneous user (follower) requires the same simultaneous response. A Twitter user with 100 followers (simultaneously logged in) that takes an action – costs less than a Twitter user with 100,000 followers (simultaneously logged in), that takes an action.
So how is Twitter able to operate profitably when more users mean exponentially more costs? Sundance has done back-of-the-envelope calculations that put Twitter’s operating costs around at least $1 billion per month minimum. In 2021, Twitter generated $5.1 billion in revenue, according to the Wall Street Journal. How does Twitter still exist?
What Musk may have uncovered is the argument that Twitter’s servers may well be owned by various governments — maybe the Saudis, maybe others in the Five Eyes network but almost certainly the U.S. government. In other words the backbone technology and infrastructure, the interconnected databases and servers for Twitter, are in the hands of government entities. And Twitter pays little or nothing for that usage.
More on the implications of this tomorrow.