How Elon Musk's Plans For Twitter Could Prime Him For Confrontation With Apple, Google

Twitter under Elon Musk has begun a transformation, slowly gravitating toward a subscription-based business model. Potential beneficiaries of this transition could be Apple Inc. AAPL and Alphabet Inc. GOOGL GOOG, according to Bloomberg’s Mark Gurman.

What Happened: As Twitter plans to relaunch its Blue subscription plan — which offers verification to any paying client for $8 per month — on Nov. 29, Gurman anticipates that it will receive significant marketing support. He expects the plan to incorporate other features that many users will deem worthwhile, including Twitter’s “blue check” and the ability to appear higher in search results.

If the rollout goes without hiccups, it will likely rake in more revenue even for Apple and Google, apart from Twitter, given a majority of the users access the microblogging site on iPhones and Android devices, the columnist said in his weekly “Power On” newsletter.

Apple and Google charge a commission on subscriptions purchased on their platforms, with the former charging at a 30% rate, which is reduced to half after the first year, and the latter a flat 15% rate, Gurman noted.

How The Math Works? Twitter’s daily active users are approaching 250 million, and assuming 1% of its user base subscribes on iOS and Android, Apple and Google will earn $72 million and $36 million in revenue, respectively, in year one, Gurman said.

The revenue may be immaterial financially to either Apple or Google, but Musk could see this as a costly commission, Gurman said. The fees will likely put the billionaire at odds with both Apple and Google, he added.

Musk has long been a critic of Apple’s app store commission, calling it a “tax on the internet.” As recently as Friday, in reply to a tweet that quote-tweeted a story on Epic alleging that Google paid millions to Activision Blizzard, Inc. ATVI for not launching a rival app store, Musk said, “App store fees are obviously too high due to the iOS/Android duopoly.” “It is a hidden 30% tax on the internet,” he added.

If Musk can put the Twitter house in order, he will likely go on a warpath with the tech giants and even proceed toward offering Twitter Blue subscriptions through the web, Gurman said. Such a scenario could lead to a Fortnite-like battle, he said.

Another bigger issue that could irk Apple and Google could be content moderation, Gurman said. This has led to an increase in racism, antisemitic rhetoric and scams as well as impersonations on Twitter, he noted. If Twitter can’t get its content moderation set right, Apple and Google will likely step in as gatekeepers just as they did with Parler once, he added.

The road to Musk creating a successful subscription service “runs right through those two tech giants,” Gurman said. He, however, expects Apple and Google to give Twitter an unusual amount of leeway, given the social media platform's importance and brand strength. Also, upsetting Musk may not be in the best interest of the tech giants, added Gurman.

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