Elon Musk's X faces an uncertain future
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Elon Musk has been focused on turning X into an "everything" app, that would feature products like payments. Photo: Allison Robbert/AFP via Getty Images
The abrupt resignation of X CEO Linda Yaccarino calls into question the fate of the world's largest and most politically relevant real-time social discourse platform.
Why it matters: Yaccarino was hired to rehabilitate X's ad business and bring stability to the company, but even she — one of the most experienced leaders in the ad industry — struggled to rein in Musk.
State of play: When Yaccarino was hired in 2023, it was clear she would face challenges trying to rally the ad industry around X, then Twitter.
- Musk made his disdain for the ad business clear, telling advertisers engaging in boycotts against his platform to "go f*** yourself" in late 2023.
- While the company did ship out a slew of new products, Musk's attention wasn't on building X's ad stack to compete against other internet giants.
- Rather, he was focused on turning X into an "everything" app that would feature products like payments that weren't inherently tied to boosting social discourse.
Reality check: While Musk's plan is to diversify X's revenue with these new products, third parties estimate X is still far from offsetting the company's advertising losses.
- In March, Musk's AI startup xAI acquired X in an all-stock deal. The new structure will likely help obfuscate X's financial challenges as a standalone company.
Our thought bubble: If Musk plans to use X data to help build Grok and expand xAI, that could spell trouble for X.
- Historically, companies that buy media firms or social platforms to boost other businesses have inadvertently weakened themselves because they lack an incentive to continue innovating on the products they bought.
Zoom out: During Yaccarino's two-year tenure, X has maintained its dominance as the top real-time, social discourse platform, but it's starting to face competition.
- While X is still by far the most dominant in terms of global daily web visits, Instagram's Threads is close to catching up in terms of mobile app users, according to data from Similarweb.
- That's unsurprising, given Threads' unique advantage of being connected with Meta's Instagram app, which has well over 1 billion global users.
Between the lines: For Yaccarino, an industry veteran who previously ran a more than $10 billion ad business, turning around X's ad business has been a challenging endeavor.
- In May, eMarketer predicted that X's ad revenue will grow this year — the first time in four years — but will still only be about half of what it was in 2021, the year before Musk's takeover.
The big picture: Although the conversation around brand safety has shifted in the second Trump era, advertisers and corporate partners still looked to Yaccarino to bring a sense of rationality to X's decision-making around things like content moderation.
- What became clear over the past few months is that Musk's priorities, especially around AI, were much more important than alleviating advertiser concerns.
- Most recently, Grok has drawn sharp criticism for promoting antisemitic tropes and offensive language. The company said Tuesday it is working to "quickly identify and update the model where training could be improved."
