Twitter (TWTR) seems to be facing a dilemma. On top of the problem that the company is unable to grow its subscriber base at an impressive pace, it recently emerged that many user accounts are fake—they are operated by automated programs called bots instead of real people.
Twitter is intended to be a platform for people to consume news, express opinions, or touch base with family, friends, and colleagues.
Are bots taking over Twitter?
Twitter has never pretended that its user base is purely human. CNBC reported that Twitter’s internal estimates indicate that up to 8.5% of its user accounts are run by bots.
According to researchers at the University of Southern California and the University of Indiana, there are significantly more bot accounts on Twitter than the company previously reported.
Researchers found out that up to 15% of Twitter’s user base is made up of accounts managed by bots rather than humans. This means that as many as 48 million out of Twitter’s 319 million user accounts at the end of 4Q16 were fake accounts.
Twitter added 2 million new subscribers in 4Q16 from the previous quarter, as shown in the chart above, although it’s unclear how many of those accounts are run by bots.
What’s the way forward?
Investors hope that Twitter’s management will address the issue of fake accounts at the conference call to discuss its 1Q17 results. Twitter’s CEO, Jack Dorsey, is taking heat over the bot accounts issue, with some calling for his ouster.
However, how can a company that is already struggling with weak subscriber and revenue growth purge 48 million accounts without inviting more problems?
Twitter’s efforts to grow its subscriber base are hampered by competition from Facebook (FB) and Snap (SNAP). Its efforts to attract advertisers are threatened by these companies, as well as Alphabet’s (GOOGL) Google and Yelp (YELP).