Explainer-What is Trump's new venture and what are its odds of success?

By Helen Coster

(Reuters) - Former U.S. President Donald Trump has announced his return to the digital world with the planned launch of his own social media app as he promises to "stand up to Big Tech" after being banished from major platforms.

The app, TRUTH Social, will be created through a new company formed by a merger of the Trump Media and Technology Group and a special purpose acquisition company (SPAC), according to a press release they issued on Wednesday.

The venture may provide the first real test of the power of right-wing social media with the full force of Trump's support. Questions remain about how it plans to make money and avoid the same issues that led Twitter Inc, Facebook Inc and Alphabet Inc's YouTube to ban or suspend him.

Here is an explanation of Trump's venture.

What is the aim of Trump Media and Technology Group (TMTG)?

In a presentation to investors, the new venture's backers said TMTG aspires to create a media powerhouse to "rival the liberal media consortium" and "fight back against the Big Tech companies of Silicon Valley." During his presidency, Trump railed against major news media organizations and called journalists "the enemy of the people."

The company said it wants to build a "non-cancellable" global community - including a social media platform, streaming service, news division and alternative cloud provider - to compete against entrenched players in those categories, from Twitter to Disney+ to CNN to Google Cloud. It said a streaming service, TMTG+, promises "news, big-tent entertainment, exciting documentaries, sports programming and more."

The backers have not laid out a plan for pricing or revenue generation.

The TRUTH Social app is available for pre-order in the Apple App store, a sign that its backers plan to distribute it through conventional routes.

How do SPACs work?

A SPAC is a shell company that raises money in an IPO to merge with a privately held company that then becomes publicly traded as a result. SPACs have emerged as a popular IPO alternative for companies, providing a path to going public with less regulatory scrutiny and more certainty over the valuation that will be attained.

Shareholders of the SPAC, Digital World Acquisition Corp, will be asked whether they want to redeem their shares for their IPO value when the merger is poised to be completed. If they do, they will be reducing the $293 million in cash that the SPAC will have available to give to Trump's company.

What are TMTG's odds of success?

Trump attracted a large social media following before being permanently banned from Twitter and suspended by Facebook and YouTube. His @realdonaldtrump Twitter handle had 88.7 million followers. Trump has struggled to gain traction online since leaving office in January. He pulled the plug on his blog - entitled "From the Desk of Donald J. Trump" - after 29 days.

Other conservative online ventures have failed to attract huge audiences.

Gettr, a social media app launched in July by Trump's former spokesperson and senior adviser Jason Miller, has hit about 2.2 million installs globally across the App Store and Google Play, according to Sensor Tower.

The social media and streaming platforms, news outlets and web-hosting services that TMTG seeks to challenge are well-established and well-funded.

TMTG may struggle to find a web host if it becomes a source of violent rhetoric. Parler, the app backed by prominent Republican Party donor Rebekah Mercer, went dark for about a month after Amazon.com Inc suspended web-hosting services for it after the Jan. 6 U.S. Capitol riot by Trump supporters. Google also removed Parler from its app store. Parler returned online in February with Los Angeles-based private cloud infrastructure SkySilk.

Since Parler returned online - to the App store and not Google's marketplace - it has drawn a little over 100,000 installs, according to Sensor Tower.

What type of speech will TMTG prohibit?

It will not allow for making fun of Trump or his people. According to its terms of services, as a user of the site one agrees not to "disparage, tarnish, or otherwise harm, in our opinion, us and/or the Site."

(Reporting by Helen Coster in New York; Additional reporting by Steve Holland in Washington; Editing by Will Dunham)