Elon Musk Nears Buyout of Twitter: Does it Matter?
The Tesla and SpaceX CEO has been pursuing a hostile takeover of Twitter in recent weeks, and the deal is set to finally go through this afternoon.
One of the most popular stories in recent weeks has been the potential hostile takeover of Twitter by Tesla and SpaceX CEO Elon Musk. While Musk’s push to buy twitter has been in the front of the mind of political fanatics (myself included) for the past few weeks, now that Twitter’s judgement day approaches it is important for us all to take a step back and ask if Musk’s Twitter acquisition even matters, to the people like me who care and perhaps more importantly to the average American who doesn’t even use Twitter. The short answer is yes, it does matter, in fact it’s consequences could shape much of American political discourse going forward.
How did we get here?
While Elon Musk’s feud with Twitter has been long-standing, this recent saga started in mid March when Musk made the move to buy a 9.2% stake in the company valued at more than $3 billion and making himself the largest single shareholder of the company. His ownership was welcomed by Twitter CEO Parag Agrawal and Founder Jack Dorsey including the announcement that Musk would be given a seat on Twitter’s Board of Directors.
While appointment to the board would seem like an obvious win for Musk in his mission to shape Twitter into a more free speech friendly platform, a seat on the board would come with serious baggage. Most consequently, Musk would not be able to substantially increase his ownership stake and would also not be allowed to publicly comment negatively on the company, as doing so would violate his fiduciary duties to shareholder value. Seeing that he could not accomplish his goals for Twitter from this position, Musk moved forward with his nuclear option: A full scale hostile takeover of Twitter.
For those who do not know, a hostile takeover typically involves a competing company buying a controlling share in a company from shareholders, going over the head of the board members. In the case of Twitter, Musk is attempting a full buyout of 100% of the company in order to take Twitter private. To do this Musk has offered $54.20 per share of Twitter totaling a over $43 billion valuation of the company, and a significant overpay based on Twitter’s current stock price which has increased over 20% since Musk announced his original purchase. The Twitter board has little options but to accept the offer, since refusing to do so would open them up to being sued by shareholders for not acting in their best interest. Musk has also signaled that if the board refuses to sell or pursues a “poison pill”, where they would issue millions of new shares tanking the stock value while increasing Musk’s liability, he would simply sell his 9% stake, tanking the value of the company and opening up the board to additional litigation.
While the Board had previously pursued the poison pill option, this morning it appears they have become much more receptive to Musk’s offer now that he has secured over $46.5 billion in funding for the deal. Sources say that the deal could be completed as early as after-hours today with Musk potentially becoming the sole owner of Twitter.
Why Does This Even Matter?
To many Musk’s buyout of Twitter might seem inconsequential. The transfer of ownership from one group of billionaires to another billionaire would not seem to be something the average person should care to pay attention to. Especially considering only 22% of adult Americans even use Twitter, it is not even the most popular social media brand. However, Twitter serves as the social media of choice for politicians, pundits, and other actors within the political system. It is where our politicians and news media go to put out their takes on issues, and it is where the elite discourse of the countries’ political class occurs. Where Twitter lacks in overall size, it makes up for in its influence.
Musk’s mission for Twitter generally is to make the platform a bastion of free speech on the internet. While he has not defined exactly what changes he would make to content moderation, many assume this would involve changing several rules ranging from Twitter’s definitions on hate-speech to misinformation. In a tweet a month ago, before announcing his ambitions to buy Twitter, Musk asked his followers if they believe Twitter adhered to free speech, an overwhelming 70% of over 2 million votes said no.
Musk has even gone as far as to say that he does not care about the cost for Twitter or even making it profitable. “This is just my strong, intuitive sense that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization…I don’t care about the economics at all.”
Musk’s moved have led to many outright supporters and detractors of his acquisition of the company. On one side, many have been celebrating the potential purchase hoping for Twitter to become the center of free speech on the internet and restore Twitter to its original purpose. Others fear that these changes would open up Twitter to misinformation and see the reinstatement of banned figures like former President Donald Trump. A more general criticism against Musk has come at his wanting to influence political discourse, something he has already accomplished in some ways through his own large twitter following, and at the general issue of billionaires controlling information, similar to complaints about Jeff Bezos’ purchase of the Washington Post.
While you could agree or disagree with how Twitter as a platform should be run with regards to free speech and other issues, we can see fairly certainly that if Musk takes control and makes many of these potential changes, the effect on political culture will be large. Twitter has come under fire multiple times in the past few years for questionable free speech related decisions. Twitter made the decision leading up to the 2020 election to ban circulation of a NY Post story about information allegedly found on the laptop of Hunter Biden, son of then candidate Joe Biden. While the story was said at the time to be Russian disinformation, the Biden campaign never denied the laptop belonged to Hunter and no evidence of disinformation ever came forward. Twitter also joined other social media companies in making the decision to ban then President Donald Trump for his alleged role in inciting violence in the Capitol on January 6th 2021. While Trump very much deserved to be banned under Twitter’s content moderation rules, doing so violated a norm that sitting politicians be allowed on the platform and many critics of the decision have argued that Trump’s ban is unfit considering officials from China, Russia, and Iran are allowed to spread propaganda on the platform. Lastly there is the long standing case of banning certain person’s and views for misinformation surrounding the Covid-19 pandemic that have occurred throughout the past two years and continue on Twitter and other social media platforms.
These possible changes to Twitter also poses a challenge to the landscape of alternative social media platforms. There have been several attempts at creating free speech alternatives to Twitter led by conservatives who disagreed with Twitter’s decisions, most notably the platforms Parler and the Trump created Truth social. If Musk enacts his changes we could see a return of many users to Twitter and an abandoning of alternative platforms. We could also see the emergence of a new left-wing Twitter like social media platform which would be a very large change in the discourse between abandoning Twitter in favor of a more free speech alternative to leaving Twitter in favor of more speech restrictions.
It does not matter whether you agree or disagree with Musk’s plans for the platform to acknowledge that any of these decisions being changed would have large impacts on the political landscape in the country. The spread of information on social media, and attempts to undermine this with disinformation has become a cornerstone of communication in the digital age. If Twitter becomes more open to free speech there will be benefits and consequences both of which will largely effect political discourse in the country. Especially as we approach a very important election in 2022 and an even more important 2024 election, the role of Twitter will become even more visible and important with Musk’s leadership. We will also see a single person with such a large amount of control over the avenues of communication. Of course only time will tell how Musk uses his new found power and whether it will help our fractured political discourse in the Untied States are send it further spiraling out of control.