Donald Trump’s Social-Media Company Is in Big 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 did not take well to what appeared to be a humiliation: He was ejected from the major social-media platforms that influence opinions and trends in public life.
One day after the events of Jan. 6, 2021 — when his supporters stormed the Congress in Washington — Facebook (META) , YouTube (GOOGL) and Twitter (TWTR) , the three main social networks in the U.S., banned him
The real estate developer, who has millions of loyal supporters and fans, then promised to launch his own social network as a place of free expression for conservatives and to continue to build the Trump brand.
When the platform launched in February, Truth Social drew flurry of downloads on Apple’s (AAPL) iOS app. It was rolled out to all U.S. iOS users in May. But the euphoria seems to have died down.
Not on Google Play
Truth Social has not yet been launched 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 Aug. 19 we notified Truth Social of several violations of standard policies,” Google told the BBC. “Having effective systems for moderating user-generated content is a condition 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 president and the parent of Truth Social, said in a news release that “TMTG has continuously worked in good faith with Google to ensure that the Truth Social Android App complies with Google’s policies without compromising our promise to be a haven for free speech,
“As our users know, Truth Social is building a vibrant, family-friendly environment that works expeditiously to remove content that violates its Terms of Service – which independent observers have noted are among the most robust in the industry.”
“By contrast TMTG notes that this viral, four-year-old tweet threatening nuclear war on law-abiding citizens remains up on Twitter for Android without consequence,” the company added.
Google didn’t immediately respond to a request for comment from TheStreet.
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Digital World Acquisition (DWAC) , the blank-check company that is supposed to merge with TMTG, is also in a fragile financial situation.
The firm reported a net loss of $6.2 million for the 2022 first half due to general and administrative costs, according to a Securities and Exchange Commission filing. This loss was five times the year-earlier loss of $1.2 million.
The company is burning cash: It had $3 million on hand at the end of the period compared with $24.3 million at the end of first-half 2021. And in 2022 through the close of Wednesday trading, the shares were down 53%.
DWAC does not currently generate any revenue. But what is more worrying is that the firm must raise fresh money.
“We believe we will need to raise additional funds in order to meet the expenditures required for operating our business,” the firm said.
“Additionally, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our business combination.”
Basically, DWAC says it may not have enough cash to continue operating before it closes its merger with TMTG.
“Moreover, we may need to obtain additional financing either to complete our business combination or because we become obligated to redeem a significant number of our public shares upon consummation 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 looking at whether the company improperly negotiated with Truth Social before its IPO in 2021. The regulator issued subpoenas to the company and to TMTG, according to the SEC filing.
The firm said it’s “cooperating with an SEC investigation, including responding to several document requests and subpoenas from the SEC to us and certain of our directors seeking various documents and information regarding, among other things, meetings of our Board of Directors; communications with and the 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 vendors, RightForge, an internet infrastructure company for conservatives, sources told Axios.
One of the sources told the news outlet that if Truth Social fails to come up with the cash to pay back RightForge, the dispute could move to arbitration.