Investors Cautioned Against Telegram's Controversial Business Model

Investors in Pavel Durov's messaging platform Telegram are facing increased scrutiny following recent developments. The app, which boasts approximately 950 million users as of 2024, has come under fire for its alleged failure to address illegal content effectively.

Durov, often referred to as the "Russian Mark Zuckerberg," was recently arrested in Paris on charges related to the spread of child abuse material and drug trafficking. This incident has prompted campaigners to urge investors to reconsider their involvement with the platform.

Vicky Wyatt of corporate accountability group Eko stated:

"Companies that fail to crack down on harmful content are not just facing public backlash – they're putting their business on the line. Telegram's toxic business model prioritises profit at any cost."

Telegram, founded in 2013 and headquartered in Dubai, has raised approximately $2.4 billion from bond markets since 2021. Major investors include Mubadala and Abu Dhabi Galaxy, each holding stakes worth around $75 million. British and American investors have also shown interest, with Jupiter Asset Management holding bonds worth approximately $26.5 million and France's Amundi possessing a position of about $24 million.

The app's light-touch moderation approach has been a subject of controversy. Telegram has been accused of refusing to cooperate with law enforcement investigations into child sexual abuse material. The Internet Watch Foundation, a British charity, reported flagging thousands of illegal images to Telegram without receiving any response.

Despite its popularity among protesters in countries with limited free speech, Telegram has faced criticism for being used by criminals, propagandists, and even Russian armed forces. The platform has also been implicated in spreading disinformation during civil unrest, such as the far-right rioting that occurred in Britain in early August.

In response to the allegations, Telegram maintains that its moderation is "within industry standards" and argues that it is "absurd to claim that a platform or its owner are responsible for abuse of that app."

The recent events have raised concerns about the potential risks for investors. Katie Paul, director of the Tech Transparency Project, warned:

"There are risks for investors in companies that don't take compliance or oversight seriously. As governments and the public catch onto how the companies generate revenue from harm, those risks will continue to grow."

As Telegram faces increasing scrutiny, investors must carefully consider the platform's business model and its potential long-term implications. The company's ability to address content moderation concerns while maintaining its commitment to free expression will likely play a crucial role in determining its future success and investor confidence.