Government action to ban social media platforms risks strengthening Big Tech’s grip on the industry further, limiting access for smaller players, an exec at BlueSky has warned.

Rose Wang, Bluesky’s chief operating officer, told CNBC on the sidelines of SXSW in London on Wednesday that the smaller open-source platform isn’t opposed to regulation but that smaller players in the industry should be protected.

“I support the protection and the safety of youth, the question that we have then is at what cost, because essentially what I’m scared of is in the long term, we’re headed to a world where there’s about three to five platforms, and extreme heavy regulation of those platforms, and basically the whole compliance teams of these platforms are 10 times the size of our entire team,” Wang said.

“So, basically, we’re living in a world where it’s almost impossible for smaller entrants to come in and build healthier spaces,” she added.

The open-source platform was created within X, formerly known as Twitter, in 2019 and endorsed by Twitter co-founder Jack Dorsey. Bluesky spun off in 2021 and soon after gained prominence as a rival to the Elon Musk-owned platform. It’s since grown to 43 million users as of March, which is still only around 10% of X’s estimated 450 million users.

Bluesky has struggled to maintain popularity, and by the end of October last year, it had reportedly seen a 40% drop in daily mobile active users over the past 12 months. Wang said the company has around 40 employees.

“These platforms have led to a place where the bottom line is the thing that drives what they do… so I understand why governments have to step in and regulate, because the platforms have done nothing right,” Wang explained.

While governments say they’re looking to protect young people, tech firms have pushed back, arguing that the measures won’t necessarily prevent teens from seeing harmful content and will ultimately cut off teens from friends and community.

Australia was the first to enforce a blanket social media ban for teens under the age of 16-years-old in December, with major social media platforms like Meta’s Instagram, ByteDance’s TikTok, Alphabet’s YouTube, Elon Musk’s X, and Reddit forced to implement age verification methods such as facial estimation through selfies, uploaded ID documents, or linked bank details.

Fines for not complying can reach up to 49.5 million Australian dollars ($35 million) if they fail to take “reasonable steps” to comply. Bluesky also introduced age assurance checks to keep under-16s off its platform, according to Australia’s eSafety Commissioner.

Australia’s ban set a precedent, with several countries worldwide looking to propose similar legislation, including the U.K., Spain, France, and Austria. In the U.S., state-level legislation is looking more likely than a national ban.

“I just want to end here with not saying that regulation is bad; it’s that regulation needs to work together with innovation,” Wang said.

“I think that there needs to be basically more channels between the smaller, medium-sized players and small businesses with regulators, because they need to be protected, while also then the very Big tech players who we know are circumventing regulation need to be regulated, and so I think that nuance can be struck.”

Micro-blogging startup Bluesky has gained over 1.25 million new users in the past week, indicating some social media users are changing their habits following the U.S. presidential election. 

Bluesky’s influx of users shows that the app has been able to pitch itself as an alternative to X, formerly Twitter, which is owned by Elon Musk, as well as Meta’s Threads. The bulk of the new users are coming from the U.S., Canada and the United Kingdom, the company said Wednesday. 

“We’re excited to welcome everyone looking for a better social media experience,” Bluesky CEO Jay Graber told CNBC in a statement.

Despite the surge of users, Bluesky’s total base remains a fraction of its rivals’. The Seattle startup claims 15.2 million total users. Meta CEO Mark Zuckerberg in October said Threads had nearly 275 million monthly users. Musk in May claimed that X had 600 million monthly users, but market intelligence firm Sensor Tower pegged X’s monthly base at 318 million users in October.

Created in 2019 as a project inside Twitter, when Jack Dorsey was still CEO, Bluesky doesn’t show ads and has yet to develop a business model. It became an independent company in 2021. Dorsey said in May of this year that he’s no longer a member of Bluesky’s board.

“Journalists, politicians, and news junkies have also been talking up Bluesky as a better X alternative than Threads,” wrote Similarweb, the internet traffic and monitoring service, in a Tuesday blog.

Some users with new Bluesky accounts posted that they had moved to the service due to Musk and his support for President-elect Donald Trump. 

“It’s appalling that Elon Musk has transformed Twitter into a Trump propaganda machine, rife with disinformation and misinformation,” one user posted on Bluesky. 

This is Bluesky’s second notable surge in the last couple of months. 

Bluesky said it picked up 2 million new users in September after the Brazilian Supreme Court suspended X in the country for failing to comply with regional content moderation policies and not appointing a local representative.

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Brazil’s recent ban of Elon Musk’s social media platform X has boosted the profile of its smaller rival, Bluesky, as people search for alternatives to voice their opinions.

Bluesky said in a post that it had attracted two million new users in a span of a week, and the app appeared to be experiencing some problems on Wednesday, with several users reporting an outage.

“There will almost certainly be some outages and performance issues,” Bluesky developer Paul Frazee said in a post, adding, “We’ve never seen traffic like this. Hang with us!”

On Saturday, the company also said that users from Brazil were setting new all-time highs for activity.

The reported uptick in the platform’s traffic comes after a Brazilian Supreme Court justice ordered a nationwide suspension of the X platform on Friday. A Supreme Court panel affirmed the ruling on Monday. 

Predating the ban, X indicated it would not comply with court orders in Brazil concerning its content moderation policies and a request to appoint a new legal representative in the country.

The judge, Alexandre de Moraes, has also ordered daily fines for people or businesses in Brazil that use virtual private networks (VPNs) or other methods to access X while it’s banned, according to local media. 

X is estimated to have over 22 million users in Brazil. 

As of Wednesday, Bluesky was the top free app on Brazil’s iOS App Store, followed by Threads — an X-alternative by Meta Platforms which also own Facebook and Instagram. 

“We’re so back,” the official Threads account posted on Wednesday without providing further context. 

Bluesky was first announced in 2019 as a project to build an open, decentralized social protocol, backed by Jack Dorsey, founder of Twitter — which was rebranded as X after Musk bought it. Bluesky became an independent company in 2021. Dorsey cut ties with the platform earlier this year.

Bluesky, Threads and the open-source, decentralized network Mastodon, have been competing to unseat X as the top microblogging platform.

Amid controversies surrounding Elon Musk’s Twitter takeover in 2022 and his subsequent changes to the platform, these companies have experienced a jump in their users.

Bluesky’s sign-ups from the U.K. had reportedly surged last month, while Musk had been posting controversial comments about nationwide riots in the country.

However, despite reports of advertisers and some users fleeing X, none of the alternatives have emerged as a credible threat to X. 

Threads appears to be the closest, with over 200 million monthly active users, according to a post on Threads by Instagram head Adam Mosseri in August.

In May, Musk said in a post that X had reached 600 million monthly active users and around 300 million daily active users.