January 2, 2024 - 6:00pm

The rumours of Twitter/X’s death have been exaggerated, but they haven’t been fabricated. Mutual fund company Fidelity has been lowering its valuation of its X shares over the last year, to the point where it now estimates that the social media company is worth 70% less than the $44 billion Musk paid for it, of which Fidelity contributed over $300 million.

To be sure, that decline is overstated. X was never worth $44 billion, a fact Musk now admits. The real comparison should be against Twitter’s value had Musk never bought the company (and thus not changed the name). Since Twitter was almost never profitable even before his purchase, it’s hard to divide blame for Fidelity’s devaluation between Musk’s antics and X/Twitter’s fundamental lack of a business model.

It is, however, safe to say that Musk hasn’t been helping matters. An ongoing influx of obvious bots, more intrusive advertising-based content, ongoing sporadic outages, and baffling “For You” feed recommendations — alongside a slow attrition of users has gradually made X a worse experience without offering anything particularly new. Musk’s layoffs of 75% of the company’s staff since his acquisition is embarrassing to both sides, because while it has left X in a less than functional state, the decline seems nowhere near 6,500 people’s worth of difference. 

The decaying user experience is at the heart of the problem, not sideshows like Musk telling advertisers to go to hell or letting Alex Jones back on the platform. Whether one thinks Jones returning is a good or bad thing, it matters little to X’s bottom line, in part because its bottom line has never been promising, and even Musk’s caterwauling has only made it moderately less so. The past optimism around Twitter’s fortunes was in the hope of an acquisition by a giant like Google or Facebook, not a hypothetical independent success. With Musk having quashed that possibility without any other apparent plan to redeem it, X is a dead platform walking.

And yet X endures, like a zombie, with little sign of redemption or of final death. Would-be competitors like Bluesky and Threads haven’t built up traction, and the cause is ironically the unwillingness of many, including X’s loudest critics, to desert the platform that gives them a voice. This bizarre symbiosis is one of the most toxic manifestations of the network effect: a platform whose present value lies mostly in its appeal to the online technorati and their ever-diminishing clout. While a large-scale technical failure or catastrophic management decisions could still hasten X’s demise, it now looks more likely to fade away than to burn out.

David Auerbach is an American author and former Microsoft and Google software engineer.