A bird out of hand: Elon Musk and Twitter

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Hello, and welcome to the Intelligence from the Economist. In our South London bureau, I'm Jason Palmer.

And in London, I'm John Fassman. Every weekday we provide a fresh perspective on the events shaping your world.

In the early days of the pandemic, people looked to all kinds of alternative therapies, in particular Chinese traditional medicine that lined up well with what the Chinese state has long wanted, a big export market. The numbers are in and it's working.

And in most video games, the aim is survival or victory. We look back on one game released 30 years ago that let users create art, music and animation, all with the help of a little barking puppy. But first, Twitter is taking on the world's richest man, Elon Musk, in a very public battle. The social Network is suing Mr. Musk in the hope of forcing him to buy the company at the price he agreed earlier this year. At first, Musk, Mr. Musk seemed enthusiastic about owning Twitter. In an interview at the TED conference in April, he called it the de facto town square and said it was important to freedom and democracy. He argued that it should be more transparent about its rules and more protective of free speech. My strong intuitive sense is that having a public platform that is maximally trusted and broad, broadly inclusive, is extremely important to the future of civilization. But you've described yourself. I don't care about the economics at all. Okay, now he's trying to pull out of the $44 billion deal, claiming that Twitter made inaccurate representations about its business. The company in turn, accuses Mr. Musk of breaching his contractual obligations. But is the drama over who owns it really just a distraction when it comes to Twitter's future?

The battle between Twitter and Elon Musk may play out over many months to come. But whoever wins in court, Twitter has some bigger problems to deal with.

Tom Wainwright is our technology and media editor.

So Twitter and Elon Musk did this deal back in April, and Elon Musk bid $54, $0.20 per share, which back then, actually, some people thought was a pretty good deal for him. Twitter's board at first wasn't interested and seemed to be holding out for more, but they went for it. And then in the end, just as soon as they'd done that deal, there was this crash in the tech stock markets. Now, Twitter shares are trading much lower this week. They've been trading in the kind of low $30. So a big, big discount to the 5420 that he promised to pay.

And so is that why he wants to pull out of the deal that he already agreed to?

Well, that's certainly the suspicion. He says that the reason he wants to pull out of the deal is because Twitter wasn't totally transparent on the number of spam accounts that are on the platform. Twitter says that's not the case. And in any case, Elon Musk himself did this deal without really doing any of the usual due diligence that you would do before committing to acquire a company this big. And he publicly that he has bad feeling about the way the economy is going. That plunge in stocks has cost Elon Musk in particular because his biggest firm, Tesla, has dropped a lot in value as well, which has cost him billions. I think there's also a feeling that, you know, somebody who already is in charge of quite a lot of big companies may be having second thoughts about whether he also wants to run another biggish company with some very, very controversial public policy issues to do with censorship and free speech and all of this stuff, which he has enjoyed talking about on Twitter and seems to have strong opinions on. But when you get down to the nitty gritty of how you actually regulate that stuff, it's complicated and maybe not as much fun as it might have looked. So I think those are all further reasons why he may be thinking again about this whole deal.

So he wants to back out of it. Do you think he'll be able to?

I think he would be very lucky to back out with no penalty. But the question is exactly how much he could end up paying. According to the terms of the contract, he can be sued for up to a billion dollars for backing out. Now, a billion dollars is a lot of money, but it's not that much when we're talking about a deal that's $44 billion, and it's not that much for the world's richest man. The worst consequence for Elon Musk is that the judge could order him to complete the sale at the agreed price. There's plenty of precedent for it, but it's never happened before with a deal quite this big. And ordering somebody to pay $44 billion for a company they don't want is tricky. And there's some question as well about what would happen if Musk were to simply ignore the court. If it comes down to it, what could actually happen, it's hard to imagine him going to jail over this. He could be fined over it, but the fine obviously wouldn't be as much. So there's a question about how would this work. And for that reason, I think many people suspect that one likely outcome of all this is going to be some kind of settlement out of court in which Musk might end up paying more than the billion dollars to walk away, or he may end up paying somewhat less than the $54 a share that he bid in order to buy the company.

So let's set aside what might happen in court. I'm curious about Twitter itself. Why hasn't it been able to become as profitable as other social media firms?

I think it's partly about scale. We think of it as being one of the social media giants and it's certainly one of the big names, but when you look at its sheer size, it's actually much smaller than the biggest players. Facebook has more than 2 billion users and Twitter has more like 200 million. So it's around about a tenth the size of Facebook in terms of users.

Why is that, Tom? What do other platforms have that Twitter doesn't?

One thing that is really noticeable about Twitter is that it hasn't changed as much as most other platforms. So if you look at Facebook, it's quite a different thing to what it was 10 or 15 years ago. Twitter, by contrast, is, you know, it's much the same. They've had a few opportunities. They acquired vine some years ago, which was a short video app, which it kind of had almost invented TikTok before TikTok was launched, and yet it just didn't really quite make it somehow. They've copied Snapchat's disappearing posts with this feature called Fleets, which didn't really work. Lately, though, they've been more innovative and they've come up with some somewhat more successful ideas. They've got this live audio platform called Spaces.

Let's be real here. Voice is the most powerful tool anybody.

Has, which seems to be copied off Clubhouse, which was that app which briefly was popular a year or so ago. And Spaces seems to be doing okay. And they're getting into long form stuff too. They bought this newsletter platform called Revu which is a bit like substack. It's like a subscription newsletter platform. And you can see how that's potentially quite a good fit for Twitter because there are lots of people who are followed on there for their pithy tweets and to whom you may want to subscribe for longer form stuff.

All of these sound like fun features, but revenue is the big question. Do you think it will manage to monetize these features when it's failed to do so in the past?

Well, so far they have found it hard. I mean, if you look at how things stand at the moment, this year, Twitter's share of the worldwide digital ad market is just under 1%, whereas meta, for instance, which is the company that owns Facebook and Instagram, has more than 20%. Even TikTok, which is only five years old, now has nearly 2%. So it's still a relative minnow, despite the fact that it's quite well known, obviously, and, you know, extremely influential. It may be because they don't have quite the same kind of data that Facebook does, for instance, so that kind of micro targeting is difficult. But either way, they must now be in a position where they're looking at the state of the economy and they're looking at the possible future trajectory of the ad market, which tends to follow that. And they might be looking at ways in which they can diversify their revenue a bit.

And what are those other sources? What are its options? What could it do?

Well, one option which Elon Musk was very enthusiastic about, was subscriptions. And Twitter's kind of dipped its toe in the water. It's got this product called Twitter Blue, which gives you fairly modest upgrades. You know, you get an undo tweet button and some more options about the user interface, that kind of thing, and it's only $3 a month. Elon Musk talked about perhaps an ad free product, but when you look at the maths, it would have to be a fair bit more expensive than Twitter Blue currently is. We just did some very, very basic kind of back of the envelope calculations. And Twitter's annual reports suggest that its users in America bring in probably a bit more than $6 a month each in ad revenue on average. And for a product that has always historically, until now been free, there's a question mark over how many people would be willing to pay $6 a month to have an ad free Twitter. They may find that the audience isn't enormous. And because of the nature of the business, they need an enormous audience because it's the users that Create the content.

So, Tom, you covered tech and media. What do you think Twitter's future is? Do you think it's in long term terminal decline?

No, I think that's too harsh. I mean, I certainly don't think terminal decline. I think it's just kind of treading water, though. And for a brand which is so well known and so central to the media ecosystem in recent years in particular, it's had a kind of amazing run with the Trump years and then the pandemic, now the Elon Musk saga. But despite that amazing influence and cultural salience, it just has always struggled to turn it into a business with equivalent clout. And the tragedy of the Musk thing is that it promised to potentially give the business a chance to do some of that. You know, if it were privately held by somebody who was willing for it to take big risks and make big changes, then that could have been a big opportunity. But instead, the Musk thing has just turned into this ridiculous waste of their time and their energy. So I fear that more treading water is in store. But let's hope that they can turn it around and turn it into something that makes money as well as making headlines.

All right, Tom, thanks so much for your time today.

Thank you.

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Since the very start of the COVID 19 pandemic, all kinds of alternative medicines have been touted as treatments, some more than a little bit dubious.

And there is no scientific evidence to prove the cow dung can be used as a treatment or immunity booster against the corona infection, which is prevailing.

The suggestions were as varied as they were outlandish. Vodka and saunas said Belarus is president. Maybe bleach injections said America's. And don't get me started about the kind of health advice that you'd have found on Facebook. But lots of people turn to ancient or at least familiar remedies, herbal and botanical, even in the absence of any data suggesting that they work. And a couple of years on the clearest evidence of good health that these alternative remedies bring is in the bottom lines of the companies that sell them.

Particularly makers of traditional Chinese medicine. Some of their values have doubled since the beginning of the pandemic. So one popular example is Lianhua Qingw, which is a herbal medicine made up of about a dozen herbs, and it's been used for flu and various other respiratory illnesses, including COVID 19.

Amy Hawkins is a news editor at.

The Economist Ealing Pharmaceuticals, which is the company which makes the Enhua Qingwen. Its market capitalization is around three times what it was before the start of the pandemic. Beijing Tongren Tang is another TCM traditional Chinese medicine company, and its value is now $11 billion, which is double what it was in early 20. And that's higher than both Pfizer and AstraZeneca, which are the main Western producers of COVID vaccines.

So why this boost in herbal remedies and TCM in particular?

Generally, with an economic downturn, particularly in poor countries, and inflation sending medicine prices really high, people are kind of driven towards cheaper and more easily available remedies, such as herbal medicines. And conventional medicines have become scarce and costly. But it's not just recently that this has happened in China. There's actually been a steady increase in the share of alternative treatment sales since 2012, and before the start of the pandemic, herbal medicines accounted for 40% of all medicine sales in China. The government has also been playing a significant role in championing this.

I do recall from the start of the pandemic that there had been a kind of almost state push from China on its traditional remedies.

Yes, definitely. And the government has promoted the benefits of particularly lianhua Tsingyuan for COVID 19 in places where other treatments and vaccines were less available. So, for example, earlier this year, mainland China sent around 1 million packets of the drug to Hong Kong as it grappled with its wave of COVID 19. And they've also been sending it further afield. Now, nearly 30 countries have approved the formulation for import, and some countries, such as Laos and Kuwait, have also approved it for the treatment of COVID Elsewhere, Belarus is set to build a traditional Chinese medicine factory in Minsk. And this is all despite the fact that regulators in America and Singapore have specifically warned against using Liang Hua Qingyuan for treating Covid.

Well, this is what came up when we spoke about it on the show last time, was that there are a lot of claims being made and little evidence to back them up.

They may well be good at treating the COVID symptoms, and there have been some studies suggesting that they're good for that. But other people have challenged those studies, saying that they don't actually treat the underlying cause of the virus.

So as valuations go up and investors get involved, isn't that risky putting money into remedies that may or may not work to solve what they claim?

This pushback isn't deterring investors at all. And one reason that these traditional medicine companies are doing so well is that conventional pharmaceutical companies such as AstraZeneca and so on have to invest much bigger shares of their revenues into research and development in order to identify the most cutting edge treatments. Traditional medicine companies can use herbal knowledge that's thousands of years old. So while E Ling and Beijing Chongren tan spend under 8% of their revenues on R and D, companies such as Pfizer and AstraZeneca spend up to 20%. So that's definitely an advantage in cornering the market.

Amy, thanks very much for your time.

Thanks for having me.

There aren't any quests, storylines or villains to be defeated.

William Warren is creative producer for the Intelligence.

When it was released in Japan 30 years ago today, Mario Paint became one of the first video games to get players to create something rather than to destroy it. The game inspired a generation of creative geeks, and they're still using it to make incredible art today. The Japanese video game company Nintendo created Mario Paint as a tool to get young people to create digital art, animation and music. It was first released on the Super Famicom, which will be known to people in the west as the Super Nintendo Entertainment System, or snes. And the game in its main mode will feel very familiar to anyone who's used Microsoft's ubiquitous App Store application paint. The drawing board mode offers players a very limited palette of colors and various tools which they can use to create whatever art they please. There are only 15 shades actually available, but many of the tools that use in art applications today were found in the game. So you can copy, you can rotate, you can flip an image, and you can use things like textured brushes. Now, all of this is pretty simplistic for today's standards, and even at the time it wasn't particularly revolutionary. But what the game lacked in sophistication, it more than made up for it in charm. Every stroke of the paintbrush is accompanied by a different bouncy sound effect. The cursor itself that you use to draw these artworks rotates through all the different colours of the rainbow. And if you make a mistake, rather than a very boring undo button, you have a very helpful little Puppy called the Undo Dog, who will bark and be on hand to help you correct mistakes. The thing is that despite this really limited technology, a talented player could create really detailed artworks. The Nintendo Power Player's Guide, which was a kind of strategy guide that you could purchase along with the game, showed users what they could aim for in it. It features really impressive recreations of masterworks like Salvador Dali's the Persistence of Memory or famous album artwork like John Lennon's Imagine, or. One of the things that really set Mario Paint apart from other games which, remember, came out three decades ago, was its inclusion of a Super NES mouse. This allowed for a much tighter artistic control than the directional pads typically used with video games of the time. Now, look, it doesn't sound particularly revolutionary to be able to use a mouse to play a video game, but for many young people, including myself, it was one of their first interactions with a mouse that we're so used to using today. Nintendo marketed Mario Paint to children as an educational tool, but an issue with that was that they were very much aware that many players would never have used a mouse before, so needed to be trained up in using it. The clever solution was to develop a little mini game called Gnat Attack, and you can use it to squish a load of flies that are buzzing around across the screen. This would actually help users hone their point and click coordination, something that really was required when you'd haven't used a mouse. What gives Mario Paint its lasting appeal, though, and why it's still used today, was its capacity to create animations and compose original music. Gamers could combine frames of 16 by 16 pixel drawings to create smooth moving animated characters, very similar to what is known as video game sprite. To accompany these animations, users had the option of producing songs by combining 15 quirky sounds. Players can use these sounds and put them on traditional classical musical notation and create entire songs within the game. A dedicated community of composers actually still exists, most of them using unofficial emulations of the game to produce cover versions of songs by artists really as diverse as bts, Daft punk. And the legendary rock band Queen. Mario Paint sold really well and led to a sequel, Mario Artist, which is a suite of three different games combined. The game enabled the creation of 3D computer graphics, which is a much fiddlier task than simply drawing a 2D image. And the game sold very poorly. But perhaps the true successor to Mario Paint is something that came much later in 2015, a game called Super Mario Maker. But the difference with Mario Maker is that instead of simply creating the art assets, the music, the animation for games. Nintendo's dream was to get players to create Mario games themselves. Anyone looking to experience Mario Paint today faces a lot of hurdles. The only way to legally play the game is to track down an original cartridge, a mouse, a Super Nintendo, and a compatible television, which are very hard to come by. But for enthusiasts, it's really worth the effort. Modern software is designed to be professional, clean and utilitarian. Developers want to make it very accessible, but often by doing it, they make a lot of applications feel the same and frankly, feel quite boring. Mario Paint is in many ways designed incredibly poorly. Who would think that a dog would undo your mistakes? But it shows what's possible when fun is the priority, and that's why people are still using it 30 years later.

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