Donald Trump’s social media company is in deep trouble
Donald Trump has never hidden his objective in launching Truth Social: to disrupt the hegemony of the giants of Silicon Valley.
The former president didn’t take what seemed like a humiliation well: he was kicked off the main social media platforms that influence opinions and trends in public life.
A day after the events of January 6, 2021 – when his supporters stormed Congress in Washington – Facebook (META) Youtube (GOOGL) and Twitter (TWTR) the three main social networks in the United States, banned it
The property developer, which has millions of loyal supporters and fans, then promised to launch its own social network as a place for conservatives to express themselves freely and to continue building the Trump brand.
When the platform launched in February, Truth Social sparked a flurry of downloads on Apple (AAPL) iOS app. It rolled out to all US iOS users in May. But the euphoria seems to have died down.
Not on Google Play
Truth Social has yet to launch on Google’s Android operating system, which runs the vast majority of smartphones. That’s because Google says it violates its content moderation policy like physical threats and incitement to violence.
“On August 19, we notified Truth Social of several violations of standard policies,” Google told TheStreet in a statement. “Having effective systems for moderating user-generated content is a requirement of our Terms of Service for any app to go live on Google Play,” the company added.
For its part, Trump Media & Technology Group, founded by the former chairman and parent of Truth Social, said in a press release that “TMTG has continuously worked in good faith with Google to ensure that the Android Truth app Social complies with Google’s policies without compromising our promise to be a haven for free speech,
“As our users know, Truth Social builds a dynamic, family-friendly environment that works quickly to remove content that violates its Terms of Service – which independent observers say are among the most robust in the industry.”
“In contrast, TMTG notes that this four-year-old viral tweet threatening nuclear war against law-abiding citizens remains on Twitter for Android without consequence,” the company added.
Google did not immediately respond to a request for comment from TheStreet.
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Acquisition of the digital world (DWAC) the blank check company that is supposed to merge with TMTG, is also in a fragile financial situation.
The company reported a net loss of $6.2 million for the first half of 2022 due to general and administrative expenses, according to a Securities and Exchange Commission filing. This loss was five times greater than the previous year’s loss of $1.2 million.
The company is burning cash: It had $3 million at the end of the period, up from $24.3 million at the end of the first half of 2021. And in 2022 through the close of Wednesday’s trading , shares were down 53%.
DWAC does not currently generate any revenue. But what is more worrying is that the company has to raise fresh money.
“We believe we will need to raise additional funds in order to meet the expenses necessary to operate our business,” the company said.
“Further, if our estimate of the costs of identifying a target business, carrying out thorough due diligence and negotiating a business combination is less than the actual amount required to do so, we may not have sufficient funds to operate our business prior to our business combination.”
Basically, DWAC says it may not have enough cash to continue operating before it completes its merger with TMTG.
“In addition, we may need to obtain additional financing either to complete our business combination or because we were to be required to repurchase a significant number of our public shares upon completion of our business combination. in which case we may issue additional securities or incur debt in connection with such business combination.”
DWAC is also facing two SEC investigations aimed at whether the company improperly traded with Truth Social ahead of its 2021 IPO. The regulator issued subpoenas to the company and TMTG, according to the filing. the SEC.
The company said it is “cooperating with an SEC investigation, including responding to multiple SEC document requests and subpoenas to us and certain of our directors seeking various documents and information regarding, among other things, the meetings of our board of directors; communications with and evaluation of potential targets, including TMTG; communications relating to TMTG; agreements with and payments made to certain advisors.”
Finally, Truth Social owes $1.6 million to one of its suppliers, RightForge, an internet infrastructure company for conservatives, sources told Axios.
One of the sources told the outlet that if Truth Social fails to come up with the money to reimburse RightForge, the dispute could go to arbitration.