Donald Trump’s Truth Social app faces financial fallout

Former President Donald Trump’s social media team Truth Social is locked in an uphill battle with one of its providers claiming the platform is starving the company of more than $1 million in payouts contractors, FOX Business has learned.

If the allegations are true, they would suggest Truth Social’s finances are in disarray, say people with direct knowledge of the matter. Internet infrastructure company RightForge is said to be one of Truth Social’s biggest suppliers and creditors.

In October, RightForge announced it had reached a deal to host Truth Social, which Trump helped create after being banned by twitter after the January 6 riots. RightForge is now alleging that Truth Social reneged on its contractual monthly payments for setting up the platform’s web services infrastructure, according to three people with direct knowledge of the matter.

These people say RightForge maintains that Truth Social has only made three payments and has stopped making payments since around March. RightForge claims Truth Social owes it approximately $1.6 million and is threatening legal action to recover the money, the people add.

RightForge CEO Martin Avila declined to comment “on private matters,” but did not deny the disagreement between the two entities. He added in a statement: “Our founding vision is to create a second Internet to support American ideas online. RightForge believes in the mission of President Trump’s Free Speech Platform and wants to continue supporting the President in his media efforts.

Social application of truth
Interest in the platform recently peaked following the FBI raid on Trump’s Mar-a-Lago residence.
AFP via Getty Images

A spokesperson for Truth Social also did not deny the case when contacted by FOX Business. A Trump spokesperson had no comment.

Since his launch in februaryTruth Social was the former president’s main intermediary in making public announcements and reviews of attacks. While its reach pales in comparison to Twitter’s roughly 200 million daily active users, interest in the platform has recently peaked following the FBI raid on Trump’s Mar-a-Lago residence.

Truth Social is part of Trump Media and Technology Group, a holding company for the platform which, according to regulatory filings, has broader plans to expand into streaming and other services to promote Trump’s political brand. Trump is said to have a majority stake in Truth Social, although his monetary investment in it is negligible to nonexistent, and he does not control its day-to-day operations.

In January, former California Republican Representative Devin Nunes was named CEO of Trump Media, with Trump described in regulatory filings as its chairman. Nunes did not email back to comment.

But Truth Social’s launch was anything but smooth. Its early rollout was plagued with technological issues. More recently, its planned merger with Digital World Acquisition Corp., a special purpose acquisition company, or SPAC, was postponed indefinitely amid various investigation of his business dealingsincluding a Justice Department grand jury investigation and a Securities and Exchange Commission investigation.

Digital World and Trump Media said they are cooperating with the probes even though they appear to be a major stumbling block in bringing about the merger. In a recent regulatory filing, Digital World said it was seeking shareholder approval to delay the September 8 deadline for merging the companies until next year as investigations swirl.

In the same filing, Digital World said, “If President Trump becomes less popular or if there are new controversies that damage his credibility or people’s desire to use a platform associated with him, and from which he will derive a financial advantage, [Trump Media’s] results of operations, as well as the outcome of the proposed business combination, could be adversely affected.

A Digital World representative did not return an email or phone call for comment. Digital World shares are down more than 42% since the start of the year.

Trump himself faces mounting legal issues, including a Justice Department investigation into his role in the Jan. 6 Capitol riot; a New York State civil investigation into the Trump Organization’s finances, real estate and branding activities; and, most recently, a DOJ investigation into whether he mishandled classified documents at his Mar-a-Lago estate that led to the recent FBI raid.

Trump says the investigations are politically motivated as he prepares for a possible White House bid in 2024. While traffic to Truth Social has increased amid controversies, it’s unclear if any of that is helping his results.

Donald Trump earlier this month.
A filing indicates that Truth Social is not yet generating revenue and “may begin generating revenue from the Truth Social platform as early as 2023.”
Reuters

In a May regulatory filing, Digital World said, “There is no operating history on which to base an assumption as to the likelihood that [Trump Media] will prove fruitful and [Trump Media] may never generate operating income or achieve profitable operations. If TMTG fails to address these risks, its business will most likely fail. »

The filing adds that Truth Social is not yet generating revenue and “may begin generating revenue from the Truth Social platform as early as 2023.”

The folks at RightForge believe their business hiccups with Truth Social are rooted in the platform’s business issues, the three people told FOX Business. RightForge markets itself as an Internet company that caters to conservatives, an alternative to the progressive elite that dominates Silicon Valley.

In an October 2021 interview with Axios announcing his partnership with Truth Social, Avila said, “If you think the president should be de-platforming, we think you’re not really interested in living in a free country. And that’s really what we’re looking to do, is to make sure that America stays true to its fundamental ideas and that the market for ideas stays open.

He added that RightForge was working to create an infrastructure to allow Truth Social to compete with Twitter and have more than 75 million users. “We’re laying the groundwork for that,” Avila told the publication. “That’s why there will be servers everywhere.”

It’s unclear if Trump Social has issues with other providers over payment for services, these people add. A person with knowledge of the matter said Trump Social informed RightForge that it had stopped making payments for “breach of contract.” FOX Business could not determine the alleged violation.

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