NIFTY23,4060.33%
SENSEX74,3460.41%
BANKNIFTY54,1860.88%
NIFTY IT29,3845.57%
PHARMA24,0870.33%
AUTO26,0930.05%
FMCG48,1241.01%
METAL13,5350.17%
REALTY762.601.39%
ENERGY40,1970.02%
NIFTY23,4060.33%
SENSEX74,3460.41%
BANKNIFTY54,1860.88%
NIFTY IT29,3845.57%
PHARMA24,0870.33%
AUTO26,0930.05%
FMCG48,1241.01%
METAL13,5350.17%
REALTY762.601.39%
ENERGY40,1970.02%

The Struggle to Replace X

Since its takeover by the world's richest man, X, formerly Twitter, has continued to find new ways to deteriorate. This was before it began generating non-consensual AI porn, some featuring children, earlier this year. Despite all this, it still holds a significant role in global discourse. Many have disengaged from X, but still find themselves scrolling, even after efforts to migrate to one of its most-hyped rivals, Bluesky Social.

Bluesky's failure to match X's international reach is one of its key limitations. When global news breaks, such as the US and Israel starting a war with Iran, X still hosts the largest community of real-time voices. Bluesky is not enough for those professionally interested in coverage of the hard security aspects of the war, as a security and diplomacy professor recently noted. This limitation extends beyond crisis situations, as Bluesky is also less useful for casually tracking tech trends from Bengaluru to Tokyo that have nothing to do with US political melodrama.

Many argue that Bluesky's largest constraint is ideological, that it's become a liberal echo chamber. However, the biggest thing holding it back is not that it's a progressive bubble, but that it's an American one. According to Sensor Tower, almost half (47%) of Bluesky's daily active app users are from the US, compared with just 15% of X's. This is on top of a much smaller base, with X having 31 million US mobile app DAUs versus 2 million for the upstart.

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Chief Operating Officer Rose Wang argues that it's a misunderstanding to think of Bluesky as only a mobile app. What makes it different is its protocol tech, which lets people build different networks on top of it, like Blacksky, a social community created by people who were formerly active on Black Twitter. Wang notes that there are about 6,000 apps built on their ecosystem, and that Bluesky itself has 43 million global users, an impressive feat for a platform that just turned two and employs about 40 people.

PlatformDaily Active App Users (US)Daily Active App Users (Global)
X31 million
Bluesky2 million43 million

Wang notes that it took then-Twitter "three to four years" to reach that scale. Bluesky has been expanding abroad, slowly but steadily, often one breaking news moment at a time. The trillion-dollar question is how to turn those refugees into regulars.

For all of Bluesky's growing pains, there are reasons to root for it. Its ambition is decentralization: letting users build their own networks and exert more control over their feeds. This is the opposite of the algorithmically amplified speech served up on X, or the ad-driven engagement machine that powers platforms such as Facebook. Instead of trapping users inside a walled garden, it's built to support links and the open web.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

There are obvious ways for Bluesky to widen its geographic reach. On-platform translation is low-hanging fruit. AI-powered translation is already far better than it was even a few years ago. Another priority is winning over the more heavy-posting news influencers. Even in its prime, Twitter never matched other social networks in active users. Its outsize influence came from a concentration of journalists, politicians, and other agenda-setters arguing in public. Many of these "news influencers" still post more regularly on X, according to Pew data.

Bluesky needs to make a more forceful case that its decentralized architecture is better for driving traffic to Substacks, blogs, and publisher sites than X, where the algorithm demotes outside links. It doesn't help that several would-be Twitter successors emerged at once. There's President Donald Trump's mouthpiece Truth Social, and Meta Platforms Inc.'s Threads, which one internet culture reporter dubbed her least-favorite social network of all. Threads' international growth in daily active users is outpacing Bluesky, but it's unclear how many of these opens reflect genuine habit or are driven by clickbait-y posts populating sister app Instagram.

Users are now more splintered than ever, and overcoming the network effects Elon Musk bought was never going to be easy. It's probably why he paid out $44 billion in the first place, to secure the legacy advantage and promote his own posts. Still, social media is going through a broader reckoning. The engagement algorithms shaping online life have been blamed for dividing people, radicalizing them, making us lonelier, and even enabling atrocities. Regulators are increasingly uneasy about so much power in so few hands.

The user experience has deteriorated, too. Facebook feels useful mainly for selling an old dresser, plus an unwanted side of AI slop. Instagram and TikTok may be entertaining, but they're hardly reliable ecosystems for a pulse on current events. Perhaps it wouldn't be the worst outcome if more of us simply logged off and touched grass. Or maybe, as Wang hopes, the internet can still be rebuilt into something better, a place where people control their algorithms instead of being controlled by them.

The move-fast-and-break-things era is ending. The next social media winner will have to prove that scale and sustainability can coexist. The old model captured our attention. The next one will have to earn it.

Investor Takeaway

Investors should be cautious about the growing pains of Bluesky's American expansion.

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