Social Truth, the application launched by Donald Trump as a free speech platform for conservatives, faces serious financial and legal pressures in its quest to survive.
Why it’s important: The app is the former president’s biggest business venture since leaving office — and his best shot at creating an alternative populist megaphone to cement his political brand after being banned from Twitter.
Driving news: Truth Social owes one of its vendors, an internet infrastructure company for conservatives called Right Forgingabout $1.6 million in backward payments, sources familiar with the disagreements told Axios.
- The situation, first reported by Fox Businessputs Truth Social at risk of losing the cloud hosting support it needs to operate.
- Truth Social soft launched in February and rolled out widely to all US iOS users in May. Cloud support, sources tell Axios, may have contributed to the full rollout of Truth Social postpone.
Zoom in: If Truth Social fails to get the cash to repay RightForge, the dispute could proceed to arbitration, one source said.
- “RightForge is committed to serving its clients,” CEO Martin Avila told Axios. “We were there from the ground floor and we support the president and all of his efforts and we are committed to building free speech of internet-based American ideas.”
Big Image: Outside of financial matters, Truth Social and blank check company he plans to join forces to go public facing serious legal issues and regulatory investigations that could derail the plan.
- The US Patent and Trademark Office (USPTO) has reject Trump app to trademark for “Social Truth.“
- The blank check company — named Digital World Acquisition Corp. – is under investigation by the SEC for possibly negotiating their deal before going public, which would be illegal if true.
- An investor sue CEO of Digital World Acquisition Corp. last year, claiming fraud.
- There is confusion as to whether a certain Social Truth board member or not actually still on the boardincluding Trump himself.
Between lines: Truth Social’s financial problems are linked, in part, to the setbacks associated with the merger.
- Trump Media & Technology Group (TMTG), the parent company of Truth Social, announced plan to join the Digital World Acquisition Corp. last year, a move that would bring it to the public.
- Going public will give TMTG access to the roughly $1 billion it says it owns raised from various hedge funds and investors.
- Last week, DWAC tried to postpone income reports to securities regulators. The week before, that ask shareholder approved the extension of the merger agreement with TMTG for one year.
Playing state: It is not clear who has supported the operation of the application to date. Missed payments to at least one of its top vendors indicate that Truth Social is struggling to maintain financial stability while waiting to access that cash.
- According to the latest regulations submissionDWAC has approximately $293 million in cash held in the trust, which represents the majority of its assets.
- Neither TMTG nor DWAC responded to requests for comment.
intrigue: It’s not clear how many people — or who exactly — work for Truth Social. Most members of Trump’s inner circle are not involved in the day-to-day operations of Truth Social.
- Its CEO, former Republican congressman Devin Nunes, occasionally appears in the media to discuss the app, and several people have said on LinkedIn that they work for Truth Social.
- Earlier this year, three high-ranking officials in the fields of product, technology and law leave the company. Two sources with knowledge of the departure said the executives resigned partly because of cash flow problems.
Yes but: The app’s administrative challenges haven’t stopped conservatives from exploring the service, which Trump now posts regularly without worrying about being strangled or banned.
- As of mid-August, the app had nearly 3 million downloads worldwide on iOS (mostly in the US and several thousand in the UK), according to Data.ai, an app measurement company.
- Truth Social view download spike in response to the FBI execution of search warrant at Mar-a-Lago earlier this month.
- Trump has nearly 4 million followers on the app, compared to the roughly 88 million he had on Twitter before becoming prohibited last year.
What we watched: Truth Social is not yet available on the Android operating system, which means around 44% of smartphone users in the US cannot download it.