Twitter’s new owner Elon Musk is planning to make the microblogging site’s algorithm open source. That means the blueprint on how the platform plays up content and ads to users will be opened to the broader developer community.
Musk revealed his plan on making Twitter’s back-end rules open source two weeks ago. In a tweet, which seemed more like a lament, he said: “I acquired the world’s largest non-profit for $44B lol.” In response to that a user prodded him on whether he would make open the platform’s algorithm, he replied cautiously. He told his nearly 130 million plus followers to be prepared “to be disappointed at first” when the rules are made open source. But he promised them “it will rapidly improve.”
According to the timeline he shared, Twitter’s algorithm must now be open to developers. But that hasn’t happened yet. And Musk has not given any further update. So, it is unclear when developers can view the list of rules.
Tesla’s boss bought Twitter with a mix of equity and debt to cover the $44 billion acquisition price tag. The purchase had also cost him the world’s richest person title briefly. He has now reclaimed it, thanks to a rally in Tesla stocks, he is once again at the top, according to Bloomberg’s Billionaires Index. But he still has interest payments to make on the loans he took to purchase Twitter. So, does it make business sense for him to open-source Twitter algorithm? Or, per his own tweet, has he bought a non-profit firm for $44 billion?
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Twitter, compared to social media giant Facebook, has a small user base, is less profitable and not cash rich. Its platform has about few hundred million daily active users. But the platform’s selling point that attracted Musk was the relatively large number of users in absolute terms who are highly engaged on the platform. So, can open source Twitter make money for the world’s richest man?
The birth of open source movement
To get a glimpse of the path ahead, let’s look into a brief history of free and open source software (FOSS). Today, almost all desktop users run their software programmes on paid operating systems (OS). Microsoft’s Windows OS dominates the market with about 74% share, followed by Apple’s MacOS at 15%. With nearly 3% market share, Linux has the smallest market share.
But, unlike Windows or MacOS, Linux is not a proprietary OS. Developed by a Finnish Computer Scientist Linus Torvalds in 1991, Linux was made available for free downloading, which was a somewhat common practice back then to release source code among developers. This helped anyone with knowledge of computer programming to modify Linux to suit their own purposes. It also helped in refining the code.
Access to Linux source code enabled other developers to build on top of Torvalds’s work. By 1994, Linux’s first version was released, and it garnered a lot of interest from developer community. Around this time, there were several “free” software, including Linux, Project GNU, and several other OS and tools. There were also significant ideological differences among prominent computer scientists on whether software can be used for free or not. And those differences led to a new paradigm in giving and getting access to source codes: The open-source movement. It also brought along with it the idea of combining volunteer-built programmes with proprietary software.
Red Hat’s business model
Red Hat Inc. understood the economics of packaging something that is freely available. It took the lead in providing open-source software products to enterprise clients in the mid-1990s. This was a new way of building a software business two decades ago as Microsoft was already selling proprietary software to enterprise client.
The company’s business model was like how mineral water firms sold bottled water. The natural resource was anyway freely available. But to make it appealing, they filtered drinking water and showcased that it tasted better. But there was one addition to this packaging. It came with complementary applications, documentation, and other services.
Red Hat distributed Linux on CD-ROM that included installation software, and user manuals. The company also provided a level of technical support. Within a few years, adoption of Linux grew, and Red Hat was caught in the late 1990s IPO frenzy. When the company went public, its stock value soared.
The sky-high valuation was short-lived as the stock market crashed with the dotcom bust, raising the issue of whether open source was a viable business model. But the crash did not stop companies from adopting Linux. Also, there was an increased need for open-source software in the Internet infrastructure market.
Cloud welcome to open-source software
While individual PC users were inclined to buy proprietary software as they came with a large library of applications, enabling them to transfer files with other users easily, the server market was different. Enterprises used more than one platform to run a plethora of applications. This could not be handled by a single software provider. So, they preferred open source software that Red Hat offered.
Around the time when it went public, Red Hat wanted to create enterprise-class server OS. Nearly 15 years later, in 2014, it was serving the next generation datacentres, and laying the foundation for future of cloud computing. It was a profitable company, selling subscription and support. While it was nowhere near the big players like Microsoft, it carved out a niche for itself.
Some venture investors called for Red Hat to change its business model from the current open source one. They claimed that the Linux software provider would have a problem investing in innovation, and that it would be dependent on the open source community to come up with ideas. Instead, they pointed to a hybrid future where open source software could be used as a platform to build software as a service (SaaS) offerings. And this is the future we are currently in.
Five years later, in 2018, IBM acquired Red Hat for $34 billion to offer hybrid multi-cloud platform service based on open source technologies like Linux and Kubernetes.
Twitter’s move
Musk can use Red Hat’s example to build an entirely new open source business model. But to do that, he will have to dispassionately look at the existing business model which is built on selling ads and channelling content. Once the algorithm is opened to the developer community, it could get a new form and shape. This could result in a change in its core identity. But, at the end of the experiment, a new paradigm may emerge. Until then, it is going to be a long journey, and Musk will have to make interest payments.
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