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Musk wants to monetize Twitter, but not through app stores

While it’s difficult to say what Elon Musk’s vision for Twitter is, one thing is for sure, Musk wants to turn the microblogging platform into a profitable business.

However, the App Store fee from Apple and Google stands in the way. Musk tweeted, “Due to the iOS/Android duopoly, app store fees are obviously too high. It’s a hidden 30% tax on the internet.”

Shortly after Musk’s tweet, speculation about Twitter’s spat with the tech giants began circulating on social media. Meanwhile, Apple’s App Store manager Phil Schiller deleted his Twitter account – fueling speculation further.

Additionally, Musk has championed free speech on Twitter, which could potentially lead to a concomitant increase in “hate speech.” Bloomberg reported that the lack of strict moderation policies could result in Twitter being removed from the Apple Store.

Apple hasn’t hesitated in the past to remove apps from its Store that don’t meet its needs. Last year, Apple removed Parler from its app store after allegations that the app was used to incite violence during the US Capitol raid.

One of the key announcements Musk made after taking over Twitter was the monetization of the “blue tick.” Musk is scheduled to launch on November 29 and plans to generate at least half of Twitter’s revenue from the coveted Blue Tick subscription model. However, it seems unlikely that Twitter would pay 30% of every dollar earned to Apple and Google.

The app store duopoly

Surprisingly, Elon Musk isn’t the first notable figure to criticize Apple and Google’s duopolistic power in the app store market. Earlier, Mark Zuckerberg launched a devastating attack on the app store duopoly.

“The lack of choice and the high fees are stifling innovation, keeping people from building new things and slowing down the entire economy,” Zuckerberg said in his speech at the Facebook Connect 2021 event.

Musk also tagged the Justice Department’s Antitrust Division, which is reportedly investigating Apple over its app store rules that impede competition in the marketplace, in that tweet.

In fact, the UK’s Competition and Market Authority (CMA) has announced that it will launch an in-depth investigation into Google and Apple’s dominance of the web browser segment.

“Many UK companies and web developers tell us they feel they are being held back by restrictions set by Apple and Google,” Sarah Cardell, interim CEO of the CMA, said in a statement.

A battle has raged between developers and the app stores for several years as they feel the high taxes from Apple and Google.

In response, Apple and Google argue that they designed the operating systems, reviewed the apps, and managed security and kept malware out. For developers making less than $1 million per year, Google charges 15%. Likewise, these developers can earn 15% commission through the Apple App Store Small Business Program.

However, the tax levied still remains relatively high and its duopolistic weight hampers competition. In 2020, Epic Games, the company behind the popular Fortnite game, offered its customers the option to buy Fortnite currency directly from Epic to avoid the 30 percent tax. As a result, Apple removed Fornite from its App Store.

Last year, Tim Sweeney, CEO of Fortnite creators Epic Games, also attacked Apple and Google for their stranglehold on the mobile app market.

Epic Games argued that Apple requires all mobile apps to come through its App Store, but Epic Games and their customers should have alternatives.

Musk was already tweeting in support of “Epic” more than a year before the Twitter acquisition.

Can Musk bypass the app store duopoly?

Musk’s decision to hollow out Twitter’s infrastructure and lay off nearly 5,000 of his employees was part of his cost-cutting strategy. As things move, it’s obvious that Musk doesn’t want to pay the 30% and 15% tax to Apple and Google. So what are his options?

Musk can learn a lesson from Spotify. The streaming company has refused to pay Apple’s 30% tax and is offering its premium subscription online for $9.99. While a similar purchase through the App Store would cost the user $12.99.

Alternatively, according to Balaji Srinivasan, former CTO at Coinbase, Twitter could legitimize a new app store. He said, “Elon Musk has the distribution.”

China-based phone giants like Xiaomi, Oppo and Vivio have already done the same. Known as the Global Developer Service Alliance (GDSA), the platform will allow developers outside of China to bring their applications to millions of people worldwide. Samsung also has a parallel Galaxy Store on its phones.

“Xiaomi and other Chinese manufacturers have already shown a path to an Android-based parallel app store, so we know it’s possible. And Twitter’s Android client also needs love for its international growth,” said Srinivasan.

Also, app stores like Aptoide have been around for a very long time. Founded in 2011, the company has around 300 million users, 7 billion downloads and around 1 million users listed on its app.

“As a platform for user-generated content, in Aptoide everyone can have their own app store, while app developers can find an alternative distribution channel for their creations,” the company said.

Musk could try to make Twitter available in alternative app stores.

What about Web3?

Implementing a Web3 model and blockchain could fundamentally help Musk overcome the moderation challenge. Blockchain could also open the doors for Musk to introduce a frictionless method of paying for in-app items and avoiding the 30 percent app store tax.

“I think it will really help Twitter become a free speech platform because right now, speech is regulated by advertiser intent,” said Charles Hoskinson, founder of Cardano.

Many Web3 enthusiasts also believe that future app stores will be based on blockchain. Magic Square, a Web3 startup, is developing a decentralized marketplace where developers decide how much to pay for each user purchased.

Web3 could potentially be an attractive proposition for Elon Musk to solve the App Store mystery.

In addition, Jack Dorsey, who founded Twitter, launched a decentralized social media platform, BlueSky Social. With Bluesky, Dorsey is attempting to create a “decentralized protocol” for social media.

BluSky was incubated within Twitter and received $13 million from Twitter, and the original plan was to integrate BlueSky’s technology into Twitter. In fact, Musk called BlueSky a super interesting idea.

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