Jack Dorsey-backed Bluesky gains steam against Elon Musk’s Twitter

Elon Musk’s Twitter is facing new competition from a rival called Bluesky, a so-called decentralized communications app that is backed by Twitter co-founder and twice-former CEO, Jack Dorsey.

Musk’s Twitter makeover has sparked new interest in decentralized social networks. Unlike Twitter under Musk, or Facebook under CEO and controlling shareholder Mark Zuckerberg, decentralized social media platforms have no single owner or leader and are not beholden to commercial or financial interests.

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Advocates say that decentralized projects are less likely to collect and sell users’ data and less susceptible to censorship.

Bluesky has exploded in popularity over the past few months, according to data provided to CNBC by market intelligence firm Sensor Tower, although it still lags far behind Twitter in total download volume.

The social messaging app had 628,000 mobile downloads in April, representing a 606% rise from March when it became available on Android in addition to iOS. Meanwhile, Twitter had 14.9 million app downloads in April, which is a 2% increase from the 14.6 million downloads it accumulated in March.

The number of Twitter mobile app downloads actually declined 18% in February to 14.05 million from 17.2 million in January. Bluesky officially debuted on iOS in February, generating 11,000 downloads in that month.

Bluesky appears to be gaining more attention than decentralized messaging app Mastodon, which attracted a lot of interest in November as a possible alternative to Twitter. In April, for instance, Mastodon only had 90,000 downloads, the Sensor Tower data showed.

Since Musk bought Twitter for $44 billion last year, he has fundamentally changed what Jack Dorsey’s company built, adding new subscription-only features, allowing controversial users back on to the platform, and making deep staffing cuts.

The social media app has also suffered a number of service outages, which happened to coincide with reports that Musk closed a major data center in Sacramento and was downsizing another Atlanta data center facility in an effort to cut costs.

Bluesky, which is currently invitation-only, underscores how Dorsey is now actively looking to disrupt what he helped create. Dorsey, who remains the CEO of payments platform Block (formerly called Square), is going head-to-head with Musk with two Twitter alternatives.

Bluesky was originally incubated within Twitter back in 2019 when Dorsey was still CEO. The app runs on a decentralized networking technology called the AT Protocol. In theory, the protocol could power future social apps, enabling people to maintain their identities across multiple apps.

In February 2022, members of the Bluesky project created the Bluesky Public Benefit LLC, with Jay Graber as CEO and Dorsey as one of the founding board members. The company announced on Twitter in April 2022 that it received $13 million in funding “to ensure we have the freedom and independence to get started on R&D.”

Then, last December, Dorsey donated 14 bitcoin, around $245,000 at the time, to a decentralized social media project called Nostr, that lets users own their online identity. Damus is an app built on top of this network, and it’s been live on the app store for months. It has also integrated the bitcoin Lightning Network, meaning that it lets users exchange bitcoin directly over the network without needing another app.

Many of Block’s senior leadership team is using the platform, as is the bitcoin-friendly Sen. Cynthia Lummis, R-Wyo.

Other decentralized social projects that have been getting more attention include Mastodon, as well as Lens and Farcaster, which are both Twitter substitutes built on blockchains.

A lot of these platforms have no algorithms to recommend particular content — a sore point for some Twitter users who complain they’re seeing less relevant content in the “For You” tab of Twitter since Musk took over. They don’t sell ads, and don’t collect and sell user data, which are the classic ways that social networks make money.

The only drawback is scale.

Meta boasts nearly 3 billion active users of its platforms, including Facebook and Instagram, and Twitter had more than 200 million as of its last earnings report as a public company. That means it’s easy for new users to find their friends, contacts in their areas of interest, and other useful or interesting people to connect with. Bluesky has about 50,000 users, according to its website.

It is also unclear how these platforms will generate money.

It is possible that Bluesky, for example, could turn to subscriptions to monetize operations, but the team hasn’t given many hints. Bluesky has been mostly sharing updates and some details of its underlying technology infrastructure as opposed to any financial plans, according to recent blog posts.

The other drawback is the user experience. The front-end apps built atop these decentralized platforms are often clunky, not professional-looking or easy to use. As of now, Bluesky’s user interface appears to be less confusing for newbies to engage with, but it’s still being tested and developed, so it’s unclear how the broader public will respond to its design.

So why make the move from a centralized platform with a nice user experience to a decentralized platform that’s hard to use? Facebook whistleblower Frances Haugen said in a panel at ETHDenver that it all comes down to self governance.

“We’ve kind of come to accept that we are subjects of a king, like Mark [Zuckerberg], or Elon [Musk], and we can either follow their rules or leave,” Haugen said. “And there’s an interesting opportunity for people to be citizens of their platforms, having an ability to vote, but also having responsibilities that come with that.” 

She also made the point that the problem with social media today largely comes down to incentives and control. 

Right now, social media platforms are ad supported, which means they make their money by keeping users on them for as long as possible. Decentralized platforms have no such incentive, and can give the people who make their livelihoods on these platforms the ability to influence the rules that govern them and how their content is distributed.