By Matt Underwood French prosecutors are reportedly investigating allegations that Elon Musk may have encouraged the spread of deepfake content on X, formerly known as Twitter, with the suspected motive of artificially inflating the platform’s value. This development surfaces amidst ongoing discussions about the nature of user engagement on X and its impact on advertiser confidence and the platform’s overall valuation.
At the heart of the suspicion lies the argument that a surge in user traffic, even if driven by morally questionable content like deepfakes, could be presented to investors as organic growth. The notion is that if more people are accessing and interacting with the platform, regardless of the specific reason, it can be spun as increased engagement and a growing user base, thereby bolstering the platform’s perceived worth.
The central debate revolves around what constitutes “artificial” versus “organic” traffic in the context of X. Critics suggest that if a significant portion of X’s user base is primarily engaging with the platform for deepfake pornography, this engagement might not translate into the kind of value that traditional advertisers seek. While increased traffic undoubtedly signifies more users, the nature of that traffic becomes a crucial differentiator.
For advertisers, the ideal scenario involves a large, diverse user base actively participating in a wide range of activities, from social networking to news consumption. This broad engagement suggests a greater potential for reaching various consumer demographics. Conversely, a platform dominated by users solely seeking explicit content might attract a narrower range of advertisers, potentially leading to lower advertising revenue and, consequently, a lower platform valuation.
The “artificial” aspect, according to this line of reasoning, is further amplified if X knew this deepfake-driven traffic was unsustainable. The idea is that presenting a massive surge in active users, knowing that this surge is heavily reliant on content that could be removed or curbed, would be a form of misleading investors. Such a strategy, if true, would paint a rosy picture of engagement that could vanish overnight, leaving investors with an inflated sense of the platform’s stability and long-term appeal.
However, others argue that this distinction is overly pedantic and that any increase in traffic, regardless of its source, contributes to the platform’s overall utility and potential. They point to historical examples of social media platforms, such as MySpace, Facebook, and even Reddit, which initially gained traction through more risqué or niche content and later evolved into much larger, more diverse platforms. The argument is that people may initially be drawn to a platform for a specific, even controversial, reason, but can then go on to engage with a multitude of other features and content, ultimately increasing overall user stickiness and advertiser appeal.
The effectiveness of sexually explicit marketing as a driver of user acquisition is also brought up, with proponents suggesting that it’s a tried-and-tested method for generating initial traffic. They contend that if X’s value has indeed quadrupled, as some suggest, it indicates that advertisers have found the metrics compelling and have continued to invest, implying that the traffic, in some measurable way, is working. This perspective emphasizes that advertising metrics are generally quite trackable, and if advertisers were not seeing a return, they would have disengaged long ago.
Conversely, there’s a strong counter-argument that the metrics for X are far from transparent, particularly given its private status. Skeptics maintain that while some general valuation figures exist, the specifics of traffic conversion, average revenue per user (ARPU), and the true impact of different user segments remain opaque. The concern is that a significant portion of users drawn to deepfake content might not be valuable to the broad spectrum of advertisers X seeks to attract, potentially leading to lower CPMs (cost per mille, or cost per thousand impressions) and an inflated valuation based on questionable engagement.
This complex interplay between user behavior, advertising economics, and investor perception lies at the core of the French prosecutors’ suspected motive. The investigation, if it proceeds, will likely delve into how X has reported its user engagement and whether any deliberate actions were taken to inflate those figures, potentially through tacit approval or even encouragement of deepfake content, to enhance its financial standing.