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The Twitter conundrum: Tipping the balance between influence and business

DESPITE Twitter being an influential platform, its business affairs are hardly in order. The social network is being used every day as a supplementary resource for major media reports thanks to US President Donald Trump’s tweets. However, its daily media mentions are hardly enough to soften the blow of dwindling ad revenue.

The social network’s losses in 2016 reached a reported US$457 million, despite reporting an annual revenue of US$2.5 billion – which is up 14 percent on the previous year. It managed to add two million new users, bringing its monthly active users to 319 million, but that number was still the lowest compared with its last three quarters. Twitter’s shares also fell 11 percent after the set of disappointing figures came out.

Another blow took place Monday when Bloomberg reported that Twitter’s Chinese equivalent, Weibo, has overtaken it in market value. The latter is now worth US$11.3 billion – about US$200 million more than Twitter.

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The company has had a very difficult final quarter of 2016 – it lost its head of China Kathy Chen, after just nine months; it had to lay off about 9 percent of its workforce, which adds up to about 350 employees; it killed off Vine and nobody wanted to buy it.

While Twitter is validated as an influential and useful platform, it is also a strange business case study, as it has had a lot of trouble bringing advertisers on board as its user count is down. Just like the ill-fated Vine, Twitter has been unable to win over users or find a way to monetize.

“While we may not be meeting everyone’s growth expectations, there’s one thing that continues to grow and outpace our peers: Twitter’s influence and impact,” said CEO Jack Dorsey. “It’s the reason we’re all here fighting so hard for the service and company we love. It’s been hard, it will continue to be hard and it’s all worth it.”

It’s going to be a steep uphill climb for Twitter, as 2016 wrapped up with both its COO and CTO jumping ship – which increased the workload for Dorsey. Although devising some form of exit strategy for Twitter should be his number one priority, Dorsey very recently defended his decision to continue running his digital payments startup Square as its CEO as well.

Whether Twitter’s woes have to do with unfocused leadership or a broken business model, one thing is for certain – the social network is being effectively used as a news source, promotions platform and soapbox and should be kept around as long as possible.