While Elon Musk has gained many supporters for his “free speech” approach, it’s certainly not helping to win more business for X.
And this could be another blow for the platform’s bottom-line performance.
With ad revenue still down by 50% on pre-Elon levels at the platform formerly known as Twitter, Musk has today pledged to reinstate the account of twice banned white supremacist Nick Fuentes, whom X itself actually banned for the second time early last year.
A well-known political activist, Fuentes has repeatedly pushed to “make America a Christian nation again”, which would include diluting the power of what he sees as “influential Jewish people”.
Fuentes was originally suspended from Twitter back in 2021 for non-specific violations of the platform’s rules. Fuentes had often skirted Twitter’s regulations, which included suggesting, via tweet, that state legislators who voted to certify the 2020 election results should face the death penalty for their actions. Fuentes also played a role in the Capitol Riots, and has long sought to provoke tensions related to religion and race.
Fuentes has also been banned from YouTube, PayPal and TikTok for violating their terms.
Yet, despite this, Musk and the X team reinstated Fuentes’ account in early 2023, as part of Elon’s broader push to give previously suspended users a second chance.
That lasted around 24 hours, with Fuentes immediately making various anti-Semitic remarks in a Spaces chat. Fuentes’ account was then banned again, this time by X’s team.
But now, Elon’s looking to give Fuentes yet another chance, with Musk explaining that:
“He will be reinstated, provided he does not violate the law, and let him be crushed by the comments and Community Notes. It is better to have anti whatever out in the open to be rebutted than grow simmering in the darkness.”
Musk’s hope is that Community Notes can serve as a critical moderation tool, enabling users to decide what’s acceptable and what’s not in the app, as opposed to platform management.
Which has some merit, but various researchers have also highlighted shortfalls in the Community Notes system, and its capacity to replace staffed moderation as scale.
Still, clearly Musk is maintaining his reliance on Community Notes to weed out problematic content, which he hopes will enable X to step back from policing users.
Musk further noted that:
“I cannot claim to be a defender of free speech, but then permanently ban someone who hasn’t violated the law, no matter how much I disagree with what they say. This will probably cause us to lose a lot of advertisers and makes me sad, but a principle is a principle.”
And he’s right, he has made a pledge to uphold the principles of free speech, which means that X should technically allow people of all opinions to share their views in the app. But at the same time, providing a platform for harmful, hateful rhetoric like this is also a choice, and giving Fuentes the opportunity to reach a broader audience will come with various consequences for the app.
Which will likely include, as Elon notes, impacts on ad revenue.
But again, if he’s going to stand on principle, then this is the sort of hit that he’ll have to take. Yet, at the same time, it’s difficult to see how X will remain a viable, ongoing concern if it can’t start making more money, and soon.
Right now, X is a cash negative enterprise, despite Elon’s drastic staff and infrastructure cuts, which have significantly reduced its overheads. Back in October, X CEO Linda Yaccarino said that it looked like X could possibly be cash flow positive “by the back half of 2024”, which also factored in the company’s massive debt load that it took on as part of Musk’s financing arrangement for the app.
But that projection was based on more advertisers coming back, and as Musk continues to make unpopular, risky decisions, which impact brand safety, that’s increasingly looking like it won’t be the case.
Though Musk, of course, is one of the richest people in the world, and he could just keep the platform running with his own money, if he really wanted to. Right?
Well, it’s not that simple, with most of Musk’s wealth tied up in Tesla, and his other companies, which limits his capacity to simply keep funding X indefinitely.
At some stage, X will need to make its own money, and become sustainable within itself.
Which makes decisions like reinstating controversial users more complex, because at some stage, realistically, it may be that X is simply costing more than it’s worth.
But at the same time, if Musk wants to stand on principles, as he says, he may feel compelled to do so. Though those principles seem pretty flexible at other times, and it’s not really clear why he suddenly feels that he needs to act in this instance.
In any event, it’s another consideration for potential ad partners, which could impact the future of the app.
