Instagram’s Threads threatens to destabilize Twitter, enticing users & potential ad spend

The rivalry between Musk and Meta leader Mark Zuckerberg has been heating up for a while. After talks of a literal cage fight between the two – instigated by Musk on, you guessed it, Twitter – died down last month, the launch of Threads is strategically timed. It comes mere days after Musk announced new limits to how many tweets users can consume per day based on their subscription level – rules that he appeared to quietly walk back following immediate user backlash. Plus, over the weekend, the billionaire restricted access to Twitter to signed-in users only, undercutting the long-held belief that Twitter is a kind of digital town square, accessible to all internet users.

These are just the latest developments in a chaotic saga of platform changes that have included stripping down content moderation rules, recalibrating content algorithms and rolling out a paid verification scheme that has made it more difficult to authenticate users’ identities.

The changes – paired with the departures of key executives, mass layoffs and a slate of other controversial decisions at Twitter – have rattled users. From March 2022 to March 2023, monthly active users on the platform dropped 15% on iOS and 14% on Android in the US, according to data from web analytics firm SimilarWeb.

Disgruntled users have sought alternatives; they’ve expressed interest in decentralized social platforms like Discord and Mastodon; have fled to Reddit (although Reddit itself is facing widespread user backlash at the moment over API pricing changes); and have signed up for the invite-only Bluesky, a Twitter-like app backed by Twitter founder Jack Dorsey.

Meanwhile, Twitter’s advertising business – its key revenue driver – has also been crippled. US ad revenue for the period between April 1 and the first week of May was down almost 60% year-over-year, according to reporting by The New York Times. Key spenders including General Motors, Volkswagen, Pfizer and Mondelez have pulled their investments.

As a result of the chaos, Twitter’s valuation has spiraled. Fidelity now estimates that the company is worth $15bn – a number that pales in comparison to the $44bn that Musk shelled out for the app.

Now, Threads is looking to capitalize on the moment.

However, Twitter is already snapping back. A lawyer representing the company, Alex Spiro, sent a letter to Zuckerberg Wednesday threatening to sue Meta, according to a new report from Semafor. In the letter, Spiro alleged that Meta poached ex-Twitter employees who “had and continue to have access to Twitter's trade secrets and other highly confidential information.” Spiro went on to say: “Twitter intends to strictly enforce its intellectual property rights, and demands that Meta take immediate steps to stop using any Twitter trade secrets or other highly confidential information.”

Threads vs Twitter in the cage

Despite the rising tension, experts believe Meta‘s plan could work. “I’m quite bullish on the potential for [Threads] to be a bit of a hit … the timing couldn't be better for Mark Zuckerberg and Instagram with this one,” says Matt Navarra, a leading industry analyst and social media consultant. “Twitter is doing its usual crazy things with Elon Musk sending Twitter into a spiral. A lot of people … are craving a viable, meaningful Twitter alternative. And up until now, we haven't had that – the existing alternatives are fairly small, and they don't have the scale, distribution and reach potential that Meta is going to have.”

In particular, Navarra suggests that Threads’ integration with Instagram will aid in its rapid adoption: “The connection to Instagram is going to make it far easier for people to quickly accumulate a following and to find creators and brands and friends that they want to connect with, because it will tie in your Instagram social graph. That's the differentiator.”

It’s an analysis shared by other leaders in the space. “Threads doesn’t need to attract all of Twitter’s power users … Meta only needs roughly one in four Instagram users to use Threads monthly to make it as big as Twitter,” Jasmine Enberg, a principal analyst at Insider Intelligence’s eMarketer specializing in social media, said in a statement shared with The Drum. “Meta already has the scale, resources, and execution strategy to make that happen. Threads is linked to Instagram, making it easy for users to port their usernames and followers to Threads. Meta has also been actively courting creators to the platform. If the company can attract even a handful of top Instagram creators from its wide user base, audiences will follow.”

Enberg, like Navarra, says that Meta appears to have struck while the iron is hot. “Twitter is severely wounded … users are desperate for an alternative, and Musk has given Zuckerberg an opening.” Although she acknowledges that Twitter’s most loyal devotees may not deflect, “many people are frustrated enough by the recent tweet rate limits implemented by Musk to give Threads a shot.”

Others point out that because Twitter is just one of Musk’s many priorities – as he still heads Tesla and SpaceX – he may not even have the bandwidth to effectively compete with Zuckerberg. “If Zuckerberg decides to truly take this on as part of a long-term Meta strategy, he will win,” says Joe Pulizzi, an entrepreneur, podcaster and author of various marketing books. “Twitter is a side project at best for Elon, and [the company has] lost their best programmers and there is currently no discernable strategy.”

And early signs indicate that Meta is already making good on its goals: Overnight, Threads gained some 30m signups. For perspective, the social audio app Clubhouse, which enjoyed a period of hype in early 2021 – with some branding it the next big platform – had around 10m users at its height.

In fact, in less than 24 hours post-launch, Threads has become the most rapidly-downloaded app ever, dethroning OpenAI's uber popular ChatGPT, according to The New York Times.

Will advertising dollars soon flood in?

So users are coming to feed. But how will Meta monetize its new platform?

Threads, as it stands, does not support advertising. Though a subscription model that requires users to pay for access to some or all content is possible, ads “are Meta’s bread and butter, making [that route] an obvious choice,” says Enberg.

However, Zuckerberg may focus first on building up a solid user base before introducing ads. “Meta’s priority here is going to be volume – getting as many people onboarded as quickly as possible to get traction, and to strike while while Twitter is wounded. The monetization and advertising piece will come further down the line,” Navarra says.

The launch of Threads has already piqued data privacy concerns for some; reports suggest that the platform may gather sensitive information about its users' location, health, finances and browsing histories. These risks “could have implications both for Threads’ rollout to consumers and its monetization strategy,” Enberg said. (Navarra, however, argues that “all of the other apps and social platforms have the same sorts of data collection and data usage activity as this app, and we're all still using those … [the privacy argument is] a red herring.”) Launched in many markets on Wednesday, Threads is not yet available in the EU, as regulators have flagged concerns about the app‘s data sharing practices.

Nevertheless, if Threads rolls out advertising capabilities in the near future, experts predict the platform will prove preferable to Twitter for many brands. Notably, Meta has more stringent content moderation policies in place than Twitter – making it a potentially more attractive space for marketing. In an apparent dig at Musk’s chaotic, free speech-obsessed reign over the blue bird app, Meta’s chief product officer Chris Cox previously described Threads as a “sanely run” platform.

“It will be a brand safe environment,” Navarra predicts. “I can’t see Meta suddenly going all freeform and saying, ‘You can do what you want, say what you want [without restriction].’”

But considering that Threads doesn’t yet have ad offerings – and that Twitter alienated many brands months ago – the impact of Threads’ launch on Twitter’s ads business isn’t likely to be immediate. “Advertisers who disagree with the direction of Twitter have already pulled back, and those that consider Twitter indispensable or well-aligned with its audience are still using the platform,” says Andrew LaFond, vice-president, executive director of media and connections at IPG-owned agency R/GA.

In LaFond’s assessment, Twitter’s advertising success in the near term hinges primarily on the leadership of ad industry veteran Linda Yaccarino, the platform’s newly-appointed CEO. For the time being, “even a strong launch for Threads probably won’t cause many advertisers to immediately make dramatic shifts in budget,” LaFond says. In the long view, he says, “Threads could peel away users, creators and ad dollars from Twitter, but by that time, Twitter may have evolved into something else entirely.”

Today, Meta will be laser-focused on “sustain[ing] and grow[ing] user engagement within the Meta ecosystem of apps,” LaFond says. “Getting Instagram users to read and post more within the ecosystem via Threads will keep advertisers investing in the Meta platform and will help defend the large share of digital advertising that Meta already commands.”

Mapping the real impact on Twitter

Of course, not everyone is confident in Meta’s potential to do serious damage to Twitter’s business. “With Twitter facing a number of issues, the most important being distrust from advertisers – although more recent issues have arisen – I expect Threads to add a little bit of buzz back into the social media dinosaur that is Meta. But even my gen Z daughter spends little or no time on Instagram these days, calling it an increasingly ‘boomer’ platform,” says Neal Schaffer, a social media marketing consultant and chief executive of social media agency PDCA Social.

Plus, he says, “most Twitter users that I know are on there because they hate Meta, so I don't see people leaving Twitter for Meta even with Threads. The people that wanted to leave Twitter have already left, so I believe the impact on Twitter's user base will be minimal.”

Even so, Schaffer admits that “should Threads begin to see some pickup, it will compete with Twitter for advertising dollars as Meta is the most established paid media platform outside of Google.”

When it comes to assessing the material impact on Twitter’s business, only time will tell. “I’ll be keen to see in the coming months how much of an effect it has,” says Navarra. “It'll take some time to see the downstream impact of how much less activity there is on Twitter, [but] this is genuinely the first rival to Twitter that is going to have a good run at doing some serious damage to its engagement and its overall usage.”

• Does Threads now pack more punch than Twitter?

For more, sign up for The Drum’s daily newsletter here.