General Motors is pausing its advertising on Twitter now that the social media platform is owned by Tesla CEO Elon Musk, the company said in a statement Friday.
The nation’s largest automaker said that it is making the change while it evaluates “Twitter’s new direction.” It said it will still utilize the platform to interact with customers but will not pay for advertising.
“We are engaging with Twitter to understand the direction of the platform under their new ownership. As is normal course of business with a significant change in a media platform, we have temporarily paused our paid advertising,” the company said in an emailed statement.
Musk took control of Twitter Thursday evening, ending a six-month round of on-again-off-again negotiations and court wrangling about purchasing the social media platform. Ahead of closing the deal he was concerned enough about the potential loss of ad revenue to post a letter to advertisers Thursday to try to reassure them.
He said he doesn’t want the platform to become a “free-for-all-hellscape where anything can be said with no consequences,” despite his stated promise to rethink its content moderation policies and bolster “free speech.”
“Fundamentally, Twitter aspires to be the most respected advertising platform in the world that strengthens your brand and grows your enterprise … Let us build something extraordinary together,” he said in the letter.
Advertising made up 92% of Twitter’s revenue in the second quarter, and if advertisers are scared away from Twitter by its new ownership, it will be disastrous for the company, said Dan Ives, tech analyst for Wedbush Securities.
“It sends an ominous signal,” Ives said. “GM is the first, but it’s not going to be the only one. We have to wait and see if there’s a wave. On the day that Musk closes the deal, it’s not the news he wanted to hear.”
GM (GM) competes with Tesla (TSLA) in car sales and is making a major push to sell its own electric vehicles, though it trails far behind Tesla (TSLA) in terms of total US sales of electric vehicles. And electric vehicles make up only about 1% of GM (GM)’s US sales so far this year, although it has ambitious EV growth plans, saying it will stop selling petroleum-fueled vehicles by 2035.
It’s also not likely that Twitter will provide any financial support for Tesla, given that it is losing hundred of millions of dollars per quarter, while Tesla, even when it has what is considered a disappointing quarter, is profitable.
But Ives said it can’t be ruled out that part of GM’s motivation in pulling its advertising was as a shot across the bow at Musk.
“It shows how they view Tesla as a competitor in the EV space,” said Ives. But he said if advertisers do continue to pull their dollars from Twitter, it won’t just be automakers.
Twitter did not immediately respond to a request for comment on GM’s statement Friday evening.