Like most social media platforms, Twitter heavily relies on advertisers to generate revenue; however, unlike other social media platforms, Twitter has lost a significant number of advertisers ever since Elon Musk took over. With Apple suspending most of its ad-spending on the platform, Elon Musk must be worried.
Since Musk took over, Twitter has lost nearly 50 of its top 100 advertisers. Up until a week ago, about a third of Twitter’s top 100 advertisers had not advertised on the platform for over two weeks.
While the looming recession and economic churn that certain tech companies like Amazon, Meta, Google, and Microsoft are facing, maybe a reason why brands are reducing their ad spends and marketing budgets across social media platforms, the fact that Twitter has become so volatile, particularly concerns for brands and people who manage their brand’s ad-spending on Twitter.
The reason why Musk is singling out Apple is manifold. First, on average, Apple spends about $100 million every year quickly on Twitter alone. In the first quarter of this year, Apple spent $48 million in ads on the platform, as per a report by The Washington Post. Seeing one of the biggest advertisers pull out of Twitter will undoubtedly cause other advertisers to pull out as well. Or, they might be able to leverage Apple’s decision to quit to get a better deal.
The other reason Musk is calling out Apple is the commission Apple charges for each transaction that goes through the App Store. Apple and Google charge a fee for enabling transactions through their respective app stores. Apple, in particular, has a practice of capturing 30 percent on each transaction if the app generates revenue of $1 million. When you consider Musk’s plan to monetize various aspects of Twitter, that 30 percent commission indeed adds up; although this isn’t something new, Musk called it a “secret” Apple tax, showing his disdain for the practice.
Finally, there is the fact that Apple has threatened to pull Twitter off of its App Store. Apple has a set of regulations that app developers must follow to be listed on Apple’s App Store. Musk’s recent actions regarding content moderation on Twitter and the reinstatement of accounts previously banned for hate speech violate several terms and conditions that Apple has for apps on its App Store.
While advertisers and brands have been cautious of Musk’s idea of how Twitter should function, they were warming up to the picture. However, seeing Apple, possibly the biggest tech company in the world, pulling out of Twitter and then banning the app from the App Store will undoubtedly jolt up brands contemplating resuming their ad spending on the platform.