Written by Jasper Danielson – Edited by Emilia MacDonald
Elon Musk, prominent businessman and entrepreneur, has risen to fame primarily as the outspoken and zealous CEO of Tesla and SpaceX. Making appearances on numerous talk shows and podcasts, Musk always seems to have a new grandiose proposal to discuss or project to undertake. Most recently, Musk has ventured into the world of social media with the purchase of Twitter.
Twitter, one of the world’s largest social media platforms, is designed to promote public dialogue. Individuals can share short posts, otherwise known as tweets, which are comprised of up to 280 characters (140 in Japanese, Korean and Chinese) to be seen by all other users. Twitter has thrived due to its instantaneous nature: tweets are posted and seen in real-time. The platform’s capacity to spread information rapidly, coupled with its broad and diverse userbase, has allowed it to become a central force within the political landscape for both politicians and the politically-interested, casual users alike.
Musk was motivated to acquire this social media platform thanks to the characteristics mentioned above. On April 13th, Musk first expressed his interest in the platform via a letter sent to Twitter’s then-Chairman Bret Taylor:
“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy. However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company. As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash…”
It was not until October 27th, however, that Musk officially took over the company following a lengthy legal battle. Nevertheless, Musk was quick to take action once in power — he immediately fired four of the company’s top executives including Parag Agrawal, CEO; Ned Segal, CFO; Vijaya Gadde, the top legal and policy executive; and Sean Edgett, general counsel. This swift and assertive first move certainly appears to be a precursor for many more drastic changes to follow suit in the future. With this anticipation, it begs the question: what kinds of changes are we likely to see?
As previously mentioned, Musk intends to advocate for more extensive rights to free speech within Twitter’s confines. “I think my strong, intuitive sense is that having a public platform that is maximally trusted and broadly inclusive, is extremely important to the future of civilization” Musk asserted. The distinction between voicing extremist views and flat out hate speech is far from black and white, however, and maintaining a site that allows one while simultaneously condemning the other will most definitely be an uphill battle. Yet, the alleviation of Twitter’s regulations is not Musk’s only goal. He has also alluded to the creation of an ‘everything app’, X, that would encompass all aspects of social media — everything from facilitating instant communications, to ordering food and making online payments — all combined into a single platform. Though it is still unclear whether the creation of this mega-app would be accomplished by remodeling Twitter itself, Musk has claimed that buying Twitter would accelerate the creation of X by 3 to 5 years.
It thus becomes apparent why Musk intends to privatize Twitter. Currently a publicly held company, Twitter is accountable to its shareholders. This means that anyone with the desire to invest in the company, is able to purchase Twitter’s stock (TWTR). Therefore, individuals with very large stock holdings in Twitter hold (at least some) power over the company’s decisions. Likewise, a loss of shareholders might financially strain the company. If investments are pulled out, the company’s value drops and it subsequently loses market share. Alternatively, a privately held company is not open to public investment and thus will not be subject to pressures from shareholders. Accordingly, if Musk privatized Twitter, he would be free to make any changes, as radical as they may be, without having to consider or account for external sources. In other words, if Musk privatizes Twitter, he would have the agency to roll back on any site-wide regulations to which he sees fit. He would be entirely capable of creating X in any which way he pleases — there would be virtually no oversight nor audience to appease.
If Twitter is privatized, the company’s stock price will fall and Musk will face an immediate financial loss. However, he has made it clear that his decision to purchase Twitter was not necessarily financially motivated. In this case, he has claimed that he is prepared to take on a financial loss in order to accomplish his goals. With this in mind, it appears as though the privatization of Twitter will be paramount to the success of Musk’s plans. If the company is successfully privatized, Musk will have the capacity to implement any agglomeration of changes. However, as long as the company remains public, he will continue to face pressure from his shareholders who are unlikely to share his extravagant goals due to a fundamental misalignment of motives for maintaining control of the platform. Decisions made within the coming months will dictate much of Twitter’s future; the site’s ultimate fate will be greatly influenced by whether Musk is capable of raising enough capital to privatize Twitter.
Image courtesy of Flickr and Heisenberg Media
References
Greene, B., & Friedman, O. (2022, April 15). Elon Musk talks Twitter, Tesla and how his brain works at TED2022. TED Blog. Retrieved November 10, 2022, from https://blog.ted.com/elon-musk-talks-twitter-tesla-and-the-future-at-ted2022/
Huang, K. (2022, October 6). What does x mean to Elon Musk? The New York Times. Retrieved November 10, 2022, from https://www.nytimes.com/2022/10/06/technology/elon-musk-x.html
Musk, E. (2022, April 13). Amendment No. 2 to Schedule 13D/A Under the Securities Exchange Act of 1934. Retrieved November 10, 2022, from https://www.sec.gov/Archives/edgar/data/1418091/000110465922045641/tm2212748d1_sc13da.htm
Musk, E. (2022, October 4). Twitter probably accelerates x by 3 to 5 years, but I could be wrong. Twitter. Retrieved November 10, 2022, from https://twitter.com/elonmusk/status/1577428673971777536
Tabahriti, S. (n.d.). Elon Musk’s first move as Twitter’s new owner has been to fire at least 4 top executives, including CEO Parag Agrawal. Business Insider. Retrieved November 10, 2022, from https://www.businessinsider.com/elon-musk-fires-4-top-twitter-execs-including-ceo-parag-agrawal-2022-10