MARKET NEWS

Why Are Elon Musk and Apple Fighting?

By: James Flippin · November 30, 2022 · Reading Time: 4 minutes

Elon vs. Apple

In one corner, we have the world’s richest man, Elon Musk. In the other corner, we have the world’s most valuable company, Apple (AAPL). And they are, indeed, ready to rumble.

Since taking over as CEO of Twitter, Elon has slashed the social media app’s workforce and declared it a hub for free speech. But companies are wary of the changes, especially those regarding content moderation, and many have pulled ads from the platform already.

Apple recently joined these ranks. This was not a trivial change – the iPhone maker’s ad buys reportedly accounted for 4% of Twitter’s total revenue in this year’s first quarter.

On top of that, Musk claimed that Apple is also threatening to remove Twitter from its App Store, and subsequently bashed the “secret 30% tax” — a standard commission on App Store sales the tech giant has charged for over two decades.

What’s Going On?

Twitter is still listed on the App Store. The so-called “Bird App” has yet to go full Flappy Bird. But there are at least two credible reasons why Apple might take steps to remove it.

First, Apple requires apps that have user-generated content (read: any social media company) to have content moderation systems in place. This is why Apple booted “free speech” app Parler from the store back in 2020. In other words, social media companies need to prove that they have control over the conversation, without letting it devolve into disinformation or hate speech. In the wake of Musk’s firing spree, Apple may be concerned that he’s damaged Twitter’s capacity to moderate its own platform.

Second, Musk plans to increase revenue through Twitter’s $8 premium subscription model. As an in-app purchase, Apple will inevitably want a cut of this revenue.

Power Struggle

Twitter is one of the world’s most popular social media apps. But it also needs Apple for its distribution network. A total split from Apple could impact Twitter’s bottom line massively.

On the other hand, Apple has been drawing criticism against its 30% tax from developers and customers for years, including from heavy hitters such as Spotify (SPOT) and Epic Games (TCEHY). The policy remains unchanged. However, Elon Musk is as wealthy and influential as they come. If forced to pay the tax, he will surely continue to drag the issue into the spotlight – until, perhaps, his opponent finally yields.

As with any story involving Elon Musk, expect this one to update just as rapidly as your Twitter feed.

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