Trump’s Social Media Company Starts With Strong Financing
Shares in a company that is spearheading former President Donald Trump’s planned social media platform surged for a second day Friday on investors’ hopes that it will compete head-to-head with Facebook and Twitter.
Trump said this week he is creating the Internet-based platform, called Truth Social, to “stand up to the tyranny of Big Tech.”
Twitter, Facebook and YouTube removed Trump from their platforms after the Jan. 6 insurrection at the U.S. Capitol. They blamed him for inciting the violence, partly through his postings on social media.
Twitter first started restricting Trump’s comments after the May 25, 2020 police killing of George Floyd, which prompted civil disruption nationwide. Trump tweeted a thinly veiled threat that said, “When the looting starts the shooting starts.”
Trump said Truth Social would start operating around the first quarter of 2022.
He is financing and launching Truth Social through a special purpose acquisition company, also known as a “blank check company.” It is a shell corporation listed on stock exchanges exclusively to acquire a company, thereby allowing it to pool funds and to avoid the lengthy procedures required for an initial public offering.
For the Truth Social acquisition, the special purpose acquisition company is Digital World Acquisition Corp. (NASDAQ: DWAC). Its stock value rose nearly 400% Thursday and 107% Friday.
As soon as Trump announced his plan for Truth Social, some skeptics predicted it would become a bully pulpit for the former president’s conservative political viewpoints.
“He wants to create a platform that rivals Twitter or Facebook, but that simply won’t happen,” wrote BBC North American Technology Reporter James Clayton. “By its very nature the platform is overtly politicized.”
He added, “Donald Trump clearly wants his megaphone back. He thinks this might be his ticket.”
CNN political commentator Chris Cillizza wrote that Truth Social represents too much of a special interest to succeed.
“Some people will consume whatever Trump does,” Cillizza wrote. “But that group isn’t large enough to launch a successful social network.”
However, Jason Miller, chief executive of conservative social media platform Gettr and a former Trump advisor, said Truth Social would cause Facebook and Twitter to “lose even more market share.”
Trump’s announcement of Truth Social follows harsh comments and threats in Congress against social media giants, particularly Facebook. In recent hearings, lawmakers have accused executives from Facebook and Twitter of favoring their corporate interests at the expense of their users.
The denunciations called for reforms of Section 230 of the Communications Decency Act, which shields Internet companies from liability for posts by third-party users. It also allows social media companies to moderate content.
Section 230 provides part of the legal basis for Trump to launch Truth Social as another social media company.
Ironically, he joined calls to reform Section 230 while he was president, in part because he accused the companies of moderating content in favor of liberal causes but against his own brand of politics.
Democrats also have criticized Section 230, saying it allowed social media to propagate hate speech and misinformation that hurt users without the companies enduring liability.
So far, no changes have been made to the law, largely because media companies say it could infringe on free speech and subject them to endless lawsuits.
Unlike other conservative social media, Trump is launching Truth Social with the financing that could give it broad reach as an Internet platform.
The early stock performance indicates its organizers are meeting their target financing of $875 million. Digital World officials said they expect to attain a $1.7 billion valuation if the company performs as expected.
Tom can be reached at [email protected].
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