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CNN Business
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General Motors is ending advertising on Twitter, the social media platform now owned by Tesla CEO Elon Musk, the company said in a statement Friday.
The country’s largest car manufacturer says it is bringing about the change. Reviewing “Twitter’s New Direction.” He said he still uses the platform to communicate with customers, but doesn’t pay for advertising.
We are communicating with Twitter to understand the direction of the platform under new ownership. As is normal business during a major change in the media platform, we have temporarily suspended our paid advertising, the company said in an emailed statement.
Musk took control of Twitter on Thursday evening, ending six months of on-again, off-again negotiations and court battles over whether to buy the social media platform. He was concerned about the potential loss of advertising revenue before closing the deal, posting a letter to reassure advertisers on Thursday.
The content moderator has pledged to rethink its policies and promote “freedom of speech,” but says he doesn’t want the platform to become a “free-for-all version of hell.”
“At its core, Twitter wants to be the world’s most respected advertising platform that strengthens your brand and grows your enterprise… Let’s build something extraordinary together,” he said in the letter.
Advertising, which accounted for 92 percent of Twitter’s revenue in the second quarter, and advertisers moving away from Twitter under its new ownership would be disastrous for the company, said Dan Ive, technology analyst at Wedbush Securities.
“It sends a terrible signal,” Ives said. “GM is the first, but it won’t be the only one. We’ll have to wait and see if there’s a wave. It wasn’t the news Musk wanted to hear the day he closed the deal.
GM ( GM ) competes with Tesla ( TSLA ) in car sales and is making a big push to sell its own electric vehicles, even though it trails Tesla ( TSLA ) in total US electric vehicle sales. Electric vehicles will make up only about 1% of GM’s U.S. sales this year, despite big EV growth plans, which it says will stop selling gasoline-powered vehicles by 2035.
Also, Twitter can’t provide any financial support to Tesla, which is losing hundreds of millions of dollars every quarter, while Tesla is profitable despite what is considered a disappointing quarter.
But Ives said that part of GM’s motivation to pull the ad can’t be ruled out as a shot at Musk.
“It shows how they see Tesla as a competitor in the EV space,” Ives said. But if advertisers continue to buy their dollars from Twitter, it’s not just automakers, he said.
Twitter did not immediately respond to a request for comment on GM’s statement Friday evening.
