Elon Musk, Twitter’s largest shareholder, has launched a takeover bid for the social media company, offering to buy it for $54.20 a share and take it private. So how would Twitter change under the billionaire CEO of Tesla and SpaceX?
Musk’s offer is a 54% premium over the day he began investing in Twitter in January and would value the company at about $43 billion.
Musk told Twitter chairman Bret Taylor that he would “reconsider my position as a shareholder” if his bid is rejected.
“Twitter has extraordinary potential. I will unlock it,” he wrote in an April 13 letter to Taylor enclosed in the filing.
Hours after he made the $43 billion offer Thursday, Musk said he was not sure he would be able to buy Twitter. Musk made the comments at the TED2022 conference in Vancouver.
Asked if there is a “Plan B” if his offer is rejected, Musk said “there is” but declined to elaborate.
A regulatory filing on April 4 revealed that Musk bought a 9.2% stake in Twitter. The following day, Twitter said Musk would join its board of directors. He later turned down that offer.
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Elon Musk’s ‘free speech’ stance fires up conservatives
Musk says he’s a “free speech absolutist” and has expressed concerns about Twitter straying from its roots as “the free speech wing of the free speech party.”
“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,” Musk wrote.
“However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form,” he continued. “Twitter needs to be transformed as a private company.”
And with that, Musk waded deeper into a superheated, bitterly divisive political debate over social media moderation.
On the one hand, many view limits on harmful or extreme speech are vital to free-flowing discourse on Twitter.
“Twitter works because it has limits, terms of service, rules. A ‘free speech’ board where anything goes will immediately be infested by spam, scams, racism, Nazis, trolls with nothing else to do, and hate speech,” conspiracy theory and QAnon expert Mike Rothschild tweeted. “It would be worthless and impossible to use.”
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Conservatives, however, accuse Twitter and other mainstream social media companies that they say are run by liberal elites of selectively targeting conservatives and silencing their voices.
Those grievances only escalated following the attack on the U.S. Capitol, as social media companies suspended then-President Donald Trump’s accounts.
On news that Musk had made a bid for Twitter, conservative commentator Brent Bozell, founder and president of the Media Research Center, tweeted: “Free at last. Free at last. Conservatives may be free at last!”
Analysts warn that making Twitter a free speech free-for-all could harm its business. They say if there was no buffering of hateful, offensive or extremist posts, individual users would be less likely to use Twitter.
Advertisers and publishers, concerned about their messages being paired with problematic posts, also want content standards even if that means the platform has fewer users and is less popular, said GroupM analyst Brian Wieser.
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“We think that free speech absolutism on Twitter and Musk’s preferences would likely lead to a worse business, and worse platform for advertising for large brands even if Musk were otherwise able to find ways to grow usage or users on the platform,” Wieser wrote in a blog post.
Wedbush Securities analyst Dan Ives says throttling content moderation would ignite ” a political firestorm with leaders from within the Beltway all the way to Brussels.”
“The last thing some of them would want to see is Musk owning Twitter,” Ives told USA TODAY.
Would misinformation spread on Twitter if Musk takes charge? Baird analyst Colin Sebastian says Musk has been highly critical of content restrictions that Twitter considers misinformation including COVID-19.
“He also has publicly advocated for tools to edit tweets – maybe because Musk has deleted many of tweets that contained controversial or offensive content,” Sebastian wrote in a research note.
Reinstating former President Donald Trump could also be a factor but Sebastian says “we assume Musk has bigger ambitions.”
Would Elon Musk get rid of ads on Twitter?
Musk’s recent tweets suggest he’s interested in a subscription-based business and he’s not a big fan of advertising.
Twitter’s subscription business called Twitter Blue gives power users additional features. Musk said he would slash the price of Twitter Blue from $3 to $2 a month and would charge for a year subscription upfront.
In return, Twitter Blue users would get a blue checkmark (and guaranteed suspension if the account is used for spam).
According to Musk, he would ban ads from Twitter Blue because “the power of corporations to dictate policy is greatly enhanced if Twitter depends on advertising money to survive.”
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Is Musk suggesting that Twitter end its dependence on ads? That would be difficult to pull off in the short-term.
Musk would likely focus first on an ad-free Twitter Blue to build a subscription business with an eye toward phasing out Twitter’s business showing ads to users.
Twitter’s advertising business has not kept up with its social media competitors. Twitter has just 1.1% of the US digital advertising market. according to eMarketer. It’s expected to capture 1.2% next year, according to a eMarketer forecast from Insider Intelligence.
Some analysts speculate that Musk is banking on power users like himself – those with the biggest followings – to get more people to tune into Twitter. Musk recently said that the most followed accounts on Twitter rarely tweet.
“We believe that enhancing efforts to remove spam content would ultimately drive higher user engagement and lower churn,” Jefferies Research analyst Brent Thill wrote in a research note. “In addition, further investment in platform health could also drive more activity from the most followed accounts.”
Elon Musk may be after your Twitter data
Musk wouldn’t make over-the-top changes to Twitter, but rather he would want access to the users’ data if he ran the company, said Karen North, a professor at the University of Southern California and social media expert.
“I think that’s what he’d want to capitalize on. Musk’s more interested in the data than the moment-by-moment tweeting,” North said. “If we went into business, what would you rather have the data or a messaging platform? Let’s go with the data.”
North said she’s “not concerned yet he would create a more toxic environment,” because all social platforms have similar issues that need major addressing.
“Musk could loosen things up for users and it could be worse and things could change, but he loves to control and to be able to say things in his own way and others. It fits his pattern of behavior,” North said. “He’s a master at the message and he may be wanting to control how it gets out, big and small.
“And he wants to track it, all of it.”
Does Elon Musk really want to buy Twitter?
Musk might be in a 50/50 position, either he gets to run Twitter or he will cash out his stocks, said Jeffrey Sonnenfeld, Yale School of Management senior associate dean for leadership studies.
While Musk would see owning Twitter as a big media grab comparable to former Amazon CEO Jeff Bezos owning the Washington Post and Salesforce CEO Marc Benioff buying Time Magazine, he’s not going to waste his time with Twitter if the board doesn’t want him, Sonnenfeld said.
“I think he is completely torn,” Sonnefeld said. “It could be a good time to sell his stake, but if he gets a lot of headwinds, then he’s not going to want to sell.”
While Musk may say all of the right things about why he wants Twitter, Sonnenfeld said Musk also has a track record of not following through on other business ventures. He notes the Boring Company, his ballyhooed underground transportation project, that last completed work on a second tunnel in Las Vegas nearly two years ago.
That company has proposals for other projects in Los Angeles, Chicago, and Washington, D.C.
“Where are all of these tunnels he promised to connect these cities,” Sonnenfeld said about Musk. “He is one of the greatest creative minds, but he tends to create a lot of distraction when things in other areas aren’t going well. He very well could be using Twitter as another diversionary maneuver.”
Terry Collins is a money and tech reporter and can be reached at email@example.com