Donald Trump’s social network, Truth Social, is reportedly facing “financial challenges.” On the one hand, the number of users is growing extremely slowly, but it cannot afford to pay the hosting provider. In addition, there are doubts about Trump’s popularity from the shell company Digital World Acquisition Corp. (DWAC), which is set to acquire Trump Media & Technology Group — the company behind Truth Social — and take it public. Permanently guaranteed sources of income are also not in sight.
Financial problems and low user numbers
According to media reports, Donald Trump, who founded his own social network after being locked out of Twitter and Co. as a result of the attack on the Capitol, failed to make payments to his hosting provider, RightForge. RightForge is among Truth Social’s largest creditors, claiming that monthly contract payments have not been honored since March. Trump Media & Technology Group (TMTG) would owe “more than $1 million” to the web services infrastructure provider.
The fact that Trump hardly used his own social network himself after it was officially launched in February changed abruptly in June after a former White House employee described Trump’s misconduct in connection with the storming of the Capitol to the US Congress.
Trump has fewer than four million followers on Truth Social (his reach on Twitter has been estimated at more than 200 million) and the most active trending topics of the past few days (#DefundTheFBI) have had only a few thousand users responding. According to the DWAC, the social network needs millions of regular users for commercial success, reports the Washington Post. For comparison: Twitter is actively used by around 37 million people in the USA every day. Originally, TMTG and RightForge aimed to design the Truth Social platform for 75 million users.
Technical and legal problems
Irrespective of the number of users, which initially failed to materialize due to long waiting lists and technical problems, media reports indicate that potential advertising customers are not exactly queuing up. They feared the risk of losing customers. According to experts, TMTG could rather count on advertising income from arms manufacturers, but these would not invest to a large extent in “this area”.
In addition, the app is only available for iOS for the time being and not yet for Android. In addition to the lack of income, there are also legal problems. The US Patent Office recently rejected the application for the “Truth Social” trademark with reference to the risk of confusion with similarly named companies, reports the Washington Post further.
Takeover and planned IPO are to be postponed
The Digital World Acquisition Corp. (DWAC) is a Special Purpose Acquisition Company (SPAC) and serves as a shell company that initially collects money via an IPO and in a second step is to take over TMTG. According to a recently filed motion, DWAC intends to obtain shareholder approval to postpone the September 8 acquisition date until next year. The reason for this is the current investigation into Donald Trump.
The SPAC’s share price has fallen nearly 75 percent last week since its peak in March, according to the Washington Post. The DWAC warned that Trump’s unpopularity and further controversy hurting his credibility could further weigh on the company. The loss in the first half of the year is estimated at 6.5 million US dollars.
