Days into Elon Musk’s ownership of Twitter, his reign has already proved tumultuous. Musk has made his money through early online payments firm PayPal, electric carmaker Tesla and rocketry company SpaceX. Within days of owning Twitter, he had sacked the previous leadership; removed the company’s board; tweeted and then removed a link to a conspiracy theory; and had seen a handful of high-profile users vow to leave in protest.
Musk, a prolific tweeter with unpredictable but libertarian-tinged politics, became increasingly dissatisfied with Twitter’s leadership and censorship policies earlier this year. After falling out with its then-chief executive, Parag Agrawal, Musk made an offer to buy the company for $US44 billion ($68 billion), which was eventually accepted by Twitter’s board in April. But as the company’s prospects dimmed, along with those of the rest of the technology sector amid a troubled world economy, Musk tried to pull out of the deal.
Last week that changed and Musk walked into Twitter’s offices as its new owner – carrying a sink. “Let that sink in,” he said, in the kind of visual pun that has made millions see him as successful but relatable while others have derided him as insubstantial and unsuited to owning a platform that shapes global discourse.
So, why did he buy Twitter? And what are his plans for it?
Why did Musk end up buying Twitter?
Because there was every chance he would be forced to, at the end of an embarrassing and expensive trial. As with more than 1.8 million other businesses, Twitter is incorporated in the low-tax, east-coast US state of Delaware. Part of its appeal for businesses is that it has a reputation for taking contracts seriously. Musk, who is a frequent litigant, did not want to be bound by the contract he had signed. He claimed that Twitter had misled him about the number of spambots – automated accounts that try to lure users into financial scams or push political messages – on the platform, an alleged “major adverse event” which his lawyers claimed would let him out of the deal.
Twitter sued to enforce the deal because the price Musk had agreed to pay would deliver a windfall to investors compared to the price at which its shares were then trading. The court, led by the no-nonsense judge Kathaleen McCormick, gave every sign it viewed the spambots claim as a flimsy excuse. Texts and emails between Musk and his circle of wealthy friends, advisers and hangers-on were subpoenaed. Awkward messages such as people asking for jobs for their children at a Musk-owned Twitter or promises to chip in millions with scant diligence were exposed. Before a trial at which Musk and others would have likely had to testify, the billionaire dropped his claims and agreed to proceed with the deal as initially agreed.
What has Musk already done to Twitter?
Musk has moved fast. He has fired the company’s leadership, including its chief executive, chief financial officer and its head of legal policy, trust and safety. The men were allegedly sacked “for cause”, a kind of provision that means there was a reason for the sacking and which also allows the company to avoid tens of millions in severance payments it would otherwise owe.
He has also sent packing the nine people who made up the board of Twitter, making him the sole director.
A billionaire Saudi prince and his holding company are the company’s largest shareholder after Musk.
Meanwhile, he has ordered a revamp of Twitter’s paid membership tier, Twitter Blue, which costs $US5 a month and could be expanded to include the platform’s coveted “blue tick” verification (which means their identity has been confirmed by Twitter). Technology site The Verge reported that Musk wants the price increased to $US20 per month, although the billionaire is mercurial and known to abandon his plans at short notice.
And he has reassured advertisers that Twitter will remain a safe place for their brands, although that statement is hard to reconcile with his previously expressed view, “I hate advertising”. And while a small handful of famous users, such as the US TV producer Shonda Rhimes, known for Grey’s Anatomy, have said they will quit Twitter because of Musk’s ownership, there are no signs of a mass exodus.
Now that the company is private, its shares are no longer trading on the New York Stock Exchange. People and organisations that held shares when it went private will be paid $54.20 per share. However, the billionaire Saudi Prince Alwaleed bin Talal and his holding company have reportedly rolled over a combined $US1.89 billion in existing Twitter shares, making them the company’s largest shareholder after Musk – a situation that US Democratic Senator Chris Murphy has said warrants scrutiny from a government panel that reviews national security risks from foreign investments in the States.
Does Musk have an agenda?
Musk has described himself as a “free-speech absolutist” who has promised to overturn the ban on former president Trump, who was barred from Twitter for “glorifying violence” around the January 6 riot at the US Capitol. But how that will translate into policies for Twitter, which is already known for its often caustic discourse, is not clear.
Among the people in Musk’s “war room” running Twitter’s transition from a publicly listed company to Musk’s possession are Jason Calacanis, a left-leaning technology investor and media figure, and David Sacks, another technology investor with more conservative-libertarian politics. On a podcast he co-hosts called All In, Sacks said Musk’s track record at SpaceX and Tesla showed what he could do with Twitter. “He’s starting with this mission of restoring Twitter to being a free speech platform and the town square it was always meant to be,” Sacks said. “And in the process of doing that he’s going to figure out how to make Twitter into an even better product and into a great business, which it’s not today. I think it’s losing a few hundred million dollars a quarter.”
Twitter lost $536 million ($US344 million) in the second quarter of 2022, nearly $200 million in the first quarter and $768 million in the quarter before that.
Musk’s free speech bent has delighted conservatives, who have claimed to feel censored on the platform, and could prove profitable by allowing controversial but engaging content. It has also caused concerns from people worried that conspiracy theories, harassment and vilification could be allowed to spread on Twitter with fewer handbrakes.
“Twitter obviously cannot become a free-for-all hellscape, where anything can be said with no consequences.”
But Twitter makes almost all of its money from advertising, which relies on companies trusting that their messages will not be placed alongside or associated with objectionable content. If Musk wants to make money from his investment, which he must in order to satisfy the individuals and institutions that put billions into the deal alongside him, advertisers will be a limit on how far towards unrestrained free speech the platform can swing.
“Twitter obviously cannot become a free-for-all hellscape, where anything can be said with no consequences,” Musk said in a statement shortly after taking ownership.
What will Musk do to change Twitter?
The twin challenges facing Twitter are that it has struggled to make money, compared to peers such as Facebook’s owner, Meta, and that it has to grapple with a fire-hose of posts from some of the world’s most opinionated people that force it to balance free speech against concerns about disinformation, harassment and incitements to violence.
Musk has promised to address both, but his plans are vague. He has said he will create a council to determine which posts and users are removed from the platform. There is no detail about how it will operate yet, although Facebook has a similar body called the Oversight Board made up of prominent experts from around the world, including former politicians, that issues guidance to the company.
Musk has also said he wants Twitter to let users select what kind of posts they are shown. “In addition to adhering to the laws of the land, our platform must be warm and welcoming to all, where you can choose your desired experience according to your preferences just as you can choose, for example, to see movies or play video games ranging from all ages to mature,” Musk said in a statement.
On the financial front, Musk has promised to “defeat the spambots or die trying”, which is a problem that no social media company has managed to address. He is also reining in costs. The New York Times reported investors had been told that about half of the company’s 7500 staff would be axed. Musk has denied reports they could be fired within days to stop expensive stock options vesting.
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