According to a column by technology company expert Chuck Jones for Forbes, Donald Trump's highly publicized foray into social media "Truth Social" not only has major hurdles to clear when it launches but could be crippled if he runs afoul of the existing technology companies whose help he will need.
Reviewing the 22-page proposal published by Trump's Technology Media & Technology Group, Jones spotted multiple red flags that should alarm investors who have been driving up the fledgling company's valuation.
As the journalist notes, Trump wants his technology company to be on par with the big companies, but he is about to find out he will have to play by their rules.
Pointing out that app for the yet-to-be-launched social media platform is available for pre-order from Apple, with Google Play likely to follow, acceptance by those two is also contingent upon following their terms of service.
As Jones wrote, "On slide 8 TMTG has a high-level timeline of U.S. media from newspapers, radio, cable television and social media from the 1790's to 2021. As can be seen on the timeline it includes when Parler, a conservative social media app, was removed from Apple's and Google's stores. Trump's TMTG Truth could very suffer the same demise if it winds up violating the platform's terms of service."
As the Telegraph reported after the Jan 6th Capitol riot, Parler -- an alternative for Trump fans -- was dropped by both Apple and Google Play over accusations they had become an "ongoing and urgent public safety threat." Similar accusations about content and postings by his "Truth Social" users could mean Trump's site would suffer the same economic crippling fate.
Add to that, will be the need for infrastructure to handle a massive surge of Trump fans who sign up and immediately begin commenting and posting information.
"Creating a large, scalable and reliable technology platform takes time, commitment and hundreds of millions, if not billions of dollars," Jones explained. "Large technology teams have to be hired and retained along with a tremendous number of servers to store and distribute content. Usually a start-up will lean on Amazon's AWS or Microsoft's Azure to provide this service in the short-term and potentially longer-term. However, just because the hardware portion is outsourced doesn't mean TMTG won't need a large and skillful technology team."
He then warned, "What happens if these companies deem that the content on the servers doesn't comply with their terms of service? It will be extremely difficult for TMTG to build a large enough organization in a short timeframe to support its offerings and therefore the stock price."
Jones also added that TMTG is boasting that it will compete with companies like Netflix and Disney+ when it comes to content as a come-on to subscribers; a claim the journalist dismissed out of hand.
"The company appears to want to create a subscription model such as Netflix and Disney+ but with traditional cable or television network offerings," he wrote before adding, "Netflix and Disney+ have created huge content libraries over multiple years, if not decades, and licensed them in the case of Netflix, which cost and continue to cost billions of dollars on annual basis. If TMTG wants to create this kind of content it will either have to raise a lot more equity or take on hundreds of millions, if not billions of dollars, in debt like Netflix has done."
You can read the entire analysis here.