Michael Nagle/Bloomberg
The View From Silicon Valley
It's hardly the apology tour Facebook (FB) Chief Executive Mark Zuckerberg undertook in the spring to clean up the Cambridge Analytica data-handling scandal, but Twitter (TWTR) CEO Jack Dorsey's brief media excursion this week had the same intent.
Dorsey, who has led turnaround efforts at Twitter and Square (SQ) the past 18 months, was in damage-control mode the past few days outlining steps Twitter is taking-and actions it is considering-to tamp down hate speech while skirting censorship.
He told the Washington Post that Twitter is mulling features that would reduce "echo chambers," including labeling bots, and redesigning its "Like" button and how it displays the number of a user's followers. "The most important thing that we can do is we look at the incentives that we're building into our product," Dorsey said. "Because they do express a point of view of what we want people to do-and I don't think they are correct anymore."
On NBC, Dorsey said far-right conspiracy theorist Alex Jones had been suspended for a week after Jones tweeted a link to a video calling for supporters to get their "battle rifles" ready against the media and others. "Any suspension, whether it be a permanent one or a temporary one, makes someone think about their actions and behaviors," Dorsey said.
Twitter and Dorsey took heat for belatedly taking action on Jones after Apple (AAPL), Spotify Technology (SPOT), Alphabet's (GOOGL) YouTube, and Facebook booted him from their services.
The question for investors is the impact these potential changes would have on the company's bottom-line and, ultimately, its stock price. This week, at least, they responded positively: Twitter shares are up about 2% since Dorsey explained it all.
That stands to reason, considering the strategy and optics of Twitter during its turnaround. As we reported in this week's cover on Dorsey, a component of the company's recent narrative has been a concerted effort by him to rid the microblogging platform of bad actors. While some traders fixate on Twitter's flat membership of 335 million monthly active users (MAUs), advertisers-critical to Twitter's revenue-see the wisdom.
"Pleased to see Twitter taking a big stand against the fake followers polluting the digital ecosystem. Great step forward, which strengthens the industry," Keith Weed, chief marketing officer at Unilever, the second-largest advertiser in the world, recently tweeted.
A key element of Twitter's-or any social media company's-well-being is reexamining the fundamental technologies that made them powerful and profitable. Facebook is pouring billions of dollars into shoring up safety and security.
Twitter has taken the most drastic action, suspending more than 70 million fake and suspicious accounts in May and June as part of a long-term plan laid out by Dorsey. The aggressive removal of unwanted accounts led to a decline in monthly users, something Twitter has acknowledged.
"As a result of our health work, decisions not to renew or move to paid SMS carrier relationships in certain markets, and our decision to allocate resources towards GDPR and health, MAU could decline on a sequential basis in Q3," Twitter said in its second-quarter shareholder letter. "Based on our current level of visibility, we expect the decline to be mid-single-digit millions of MAU."
The news sent Twitter shares reeling 20%, but it hasn't hurt the company's financials. Twitter's revenue rose 24% year over year, and revenue per user grew 20% from the same quarter a year earlier.
Dorsey's cleanup plan, as he briefly articulated this week, is working.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
