Musk vs. Zuckerberg, Round One

The Sun Valley conference took place this week. Convened by the investment bank Allen & Company, the annual event brings together the most important executives from Silicon Valley, major media and entertainment companies and political leaders at a resort in Idaho. Known as the billionaire’s summer camp, it offers four days of conferences and the chance to play some golf with the most powerful people in the world. The combined fortunes of those who attended last year exceeded one billion dollars. On July 12, a message did the rounds within this exclusive club that it was all in favor of the cage fight between Mark Zuckerberg and Elon Musk that the latter had challenged Zuckerberg to on Twitter.

The endorsement didn’t come from just anyone. It was voiced by far-right tycoon Peter Thiel during a talk with Marc Andreessen, the man who heads one of Silicon Valley’s largest venture capital funds. Andreessen made his fortune as an early investor in the Netscape Navigator browser and Facebook, where he has a seat on the board of directors. According to journalist Dylan Byers, the executive claimed that the alleged contest between Zuckerberg and Musk would mean bringing back the way humans fought in the past.

As yet, there is no date or location for the face-off, nor are there any indications that it will take place beyond the green light given by the pair, although there have been hints. Last week, Israel Adesanya, a professional fighter in the UFC mixed martial arts league, posted a photo on Instagram of himself posing with Zuckerberg and martial arts champion Alexander Volkanovski. All three men are showing off their ripped torsos. “It’s an honor to train with you,” commented Zuckerberg, the 39-year-old entrepreneur.

But the world doesn’t have to wait for Musk and Zuckerberg to engage in headlocks. The real war has already begun. The launch of Threads, a Twitter clone designed by Meta engineers, has ramped up the rivalry between the Palo Alto giants. It took Threads just five days to reach 100 million users, a milestone for any platform with the sign-ups representing “mostly organic demand and we haven’t even turned on many promotions yet,” Zuckerberg posted on Threads. Meanwhile, Musk threatened to sue his rival for trade secret theft.

Zuckerberg’s interest in a Twitter-style platform is not new. In October 2008, the entrepreneur tried to buy Twitter, as Nick Bilton explains in his book Hatching Twitter. At that time, the Facebook CEO met with Ev Williams and Biz Stone, two co-founders of the microblogging platform, which had 11 million users at that time. The figure of $500 million was on the table. In a bid to apply more pressure, Zuckerberg hinted in emails that his team could sooner or later develop a similar platform. The Twitter board rejected the deal, in part because of a perceived clash in the work culture of the different firms.

Among the new Threads users is @elonmuskjet, an account run by college student Jack Sweeney that posts the Tesla owner’s private jet movements. The account originated on Twitter in 2020, but was banned in December, less than two months after Musk closed his $44 billion acquisition of the platform – this despite the entrepreneur previously saying he would not suspend such accounts as a sign of his commitment to free speech.

Meta has not updated its number of users, but on July 14, the head of Threads confirmed they were still on track. According to Adam Mosseri, the head of Instagram who is heavily involved in the new social app, “growth, retention and engagement are all way ahead of where I expected us to be at this point.” The progress has, however, been called into question by independent companies. Sensor Tower and Similarweb, firms that analyze internet traffic, claim that the rate of new user arrivals has dropped by 25%. The average browsing time has also dropped from 20 minutes to 10.

Economic analysts in the US have decreed this “the summer of Zuck.” The entrepreneur seems to have slowed down his metaverse venture, a virtual reality that was met with an avalanche of criticism. He also made cuts within the company, a move made by all the major companies in the sector over the past 18 months. Since November, some 21,000 people have been laid off from Zuckerberg’s empire. Wall Street has taken the downsizing well. Meta’s shares have tripled since October, climbing above $300 per share. They are the second-best performers in 2023, second only to the microprocessor maker NVIDIA.

Meanwhile, the social media landscape has not been easy for Musk. Prior to the Threads launch, he and his immediate team were focused on increasing advertising revenues on Twitter, which have fallen by 60% against the first five months of 2022. The goal of Linda Yaccarino, the CEO chosen by Musk to head the company, is to reach $3 billion, a figure well below the $5.1 billion made in advertising under the previous management.

Following the launch of Threads, Musk posted a graph claiming that the use of his social network has increased by 3.5% per week. He has also raised his profile as an entrepreneur by announcing a new company dedicated to artificial intelligence that will compete with OpenAI, which created ChatGPT. In a talk on July 14, Musk and the firm’s team, xAI, did not specify what products they will offer or when they will be available.

But none of this has been enough to erase the chaos that has beset Twitter in recent weeks from the collective consciousness. The most radical right-wing users have returned, the doors have been opened to the controversial host fired by Fox News, Tucker Carlson, and the number of posts available to those who do not pay for the service has been limited.

In the midst of the chaos, Musk has opened another front in his battle for survival, deciding to take the law firm that made him close the operation to buy Twitter to court in San Francisco. X Corp, the company that owns Twitter, is suing Wachtell Lipton Rosen & Katz, one of the most reputable firms in the world for mergers and acquisitions, for “unjust enrichment.” According to the lawsuit, Wachtell Lipton Rosen & Katz billed $90 million for the case. But besides charging for their services on an hourly basis, the firm was asking for a $200,000 retainer, plus a percentage of the outcome of the transaction. Lawyers charge at least 1% for transactions under $250 million and 0.1% for deals over $25 billion. If the lawsuit goes forward, Mark Zuckerberg won’t be the only heavyweight to be wrangling with Musk.

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