Donald Trump’s Truth Social is facing a mammoth of crises ranging from financial troubles to legal tussles that could pose a serious threat to the growth of the social media company, which was created in response to the ban of the former US president from social media platforms.
In addition, the platform is also grappling with tech issues that their solution is not certain.
The Verge reported that the platform’s most immediate problem is the stalled merger between Trump Media and Technology Group and Digital World Acquisition Corporation, (special purpose acquisition company) SPAC, initially planned as a way to publicly trade shares in the new company without the diligence of an IPO.
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According to the report, the SPAC has been delayed, leaving the Digital World Acquisition Corp., which was projected to take ownership of Truth Social, in an awkward position.
This has led to a financial crisis for the company. Truth Social has lost more than $6 million in the first half of the year, while holding only $293 million in a trust that houses most of its assets, and it has not made any revenue, according to SEC filings.
Truth Social’s merger with SPAC was scheduled to hold on September 8, but it is unlikely going to be due to its poor financial status. The company said it will need more money as its operation is already being affected by financial setbacks, asking that the merger be extended beyond the deadline.
A pointer to Truth Social’s financial woes was noted in a report by Fox Business that the company stopped paying RightForge, a conservative internet infrastructure company, in March. The report added that Truth now owes the internet company at least $1.6 million in accrued payments.
But that’s not all. Outside the financial troubles, Truth Social app has not been approved for Google Play store, due to content moderation concerns from the tech giant. Although Truth Social CEO Devin Nunes in an Aug. 26 appearance on the right-wing media outlet, Real America’s Voice, claimed he doesn’t know why the approval is taking so long, a source told Axios that Truth Social is very aware of the issue and it relates to incitement and threats of physical violence found on the right-wing social media platform.
“On Aug. 19, we notified Truth Social of several violations of standard policies in their current app submission and reiterated that 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,” said Google in a statement to Axios.
This poses a threat to Truth Social’s potential user-growth. Although the app has recorded a growing number of downloads on the Apple Store, seeing a major increase averaging 13,400 downloads per day following the FBI’s raid on Trump’s Mar-a-Lago home, a large percent (44) of Americans use Android.
Truth Social’s iOS app, which was launched in February, received 107,500 downloads from Aug. 8 to Aug. 15, a number believed to have doubled if the app is available on AOS.
While Trump remains Truth Social’s biggest cheerleader, having a throng of supporters who had followed him from other social media platforms, his many legal cases may further compound the platform’s troubles.
An early investor sued Digital World Acquisition Corp (DWAC), Trump’s media company, on allegations that the company violated securities law. The lawsuit also alleges that it’s not entirely clear who is still on the company’s board, according to The Verge. There is an argument about whether Trump is still a member of the board.
The Verge noted that as part of its SEC filing this month, DWAC warned investors that the series of investigations into Trump, like those probing his businesses and his role in the deadly January 6th attack on the Capitol, could result in Truth becoming “less popular” if they damage Trump’s credibility.
However, Trump has been notably unconcerned about all these and Truth Social is hoping to strike a partnership deal with Rumble Ads. Rumble announced that it is launching its own advertising network and would welcome partnership. Truth Social has indicated interest, hoping to use the ad partnership to generate revenue.
It should be noted that DWAC (the SPAC) has until September 8, 2022 (March 8, 2023 if it elects extension) to close it’s initial target acquisition. If it is unable to close the acquisition timely it will cease all operations other than the liquidation of it’s assets.