Image source: Marketing Interactive
General Motors is pausing on Twitter advertising as rival Tesla CEO Elon Musk takes over the social media platform.
The car manufacturing company released a statement on Friday after Musk took over Twitter on Thursday.
Statement
General Motors said it is implementing the change while the company evaluates the situation on Twitter.
The country’s biggest automaker said that while it will continue to use the platform to interact with customers, it will not pay for advertising.
“We are engaging with Twitter to understand the direction of the platform under their new ownership,” General Motors said in a statement.
“As is normal course of business with a significant change in a media platform, we have temporarily paused our paid advertising.”
Elon Musk
The Tesla CEO and founder finally bought out Twitter on Thursday night after six months of on-and-off negotiations.
Before closing the deal, Elon Musk worried about the potential loss of ad revenue.
He then sent a letter to advertisers to reassure them on Thursday.
Musk says he doesn’t want Twitter to become a “free-for-all hellscape” where anything can be said without consequences.
However, he first promised to reconsider the platform’s content moderation policies and strengthen freedom of speech.
“Fundamentally, Twitter aspires to be the most respected advertising platform in the world that strengthens your brand and grows your enterprise,” Musk said in a letter.
“Let us build something extraordinary together.”
Read also: A letter from Elon Musk reveals plans of pushing through with acquiring Twitter
Advertising
The revenue of the social media platform comes mainly from advertising.
The ads generated 92% of Twitter’s revenue in the second quarter.
Dan Ives, a technology analyst at Wedbush Securities, said it would be a disaster for the company if advertisers were scared off by the new Twitter owner.
“It sends an ominous signal,” said Ives. “GM [General Motors] is the first, but it’s not going to be the only one.”
“We have to wait and see if there’s a wave. On the day that Musk closes the deal, it’s not the news he wanted to hear.”
Read also: CarMax reports used cars are becoming more unaffordable
Competition
General Motors competes with Tesla (Elon Musk’s company) for car sales.
The company is pushing hard to sell electric vehicles but currently lags behind Tesla in overall electric vehicle sales in the United States.
So far, in 2022, electric vehicles have only accounted for about 1% of General Motors sales in the United States.
Additionally, the company has ambitious growth plans for electric vehicles and shares plans to stop selling gasoline vehicles by 2035.
Twitter is unlikely to support Tesla financially, as the company loses hundreds of millions of dollars every quarter.
However, Tesla is still profitable, despite what the company considered a disappointing quarter.
Dan Ives says it cannot be ruled out that part of General Motors’ decision to post the announcement was a shot across the bow at Musk.
“It shows how they view Tesla as a competitor in the EV space,” he said.
Ives added that if advertisers do continue to pull revenue from Twitter, it won’t just be automakers.
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