Twitter is erroneously seen primarily as a social network, when it should be seen primarily as an information network. Twitter serves to disseminate information quickly and can often drive news cycles. Though from what I can tell it's widely seen as a cesspit of nonsense. But in my experience if you follow the right people, the platform can hold a wealth of knowledge from Scientists and Engineers doing really cool stuff. Regardless, Twitter has now grown to become the public square for politicians, celebrities and government bodies. It's become essential to a select few aspects of modern functioning. So when the news broke that Tesla CEO Elon Musk had acquired a 9% stake in Twitter to become its largest shareholder, people collectively raised an eyebrow.
In this post let's see what's going on and what it could all mean
Tesla's Elon Musk revealed a 9.2% stake in Twitter worth nearly three billion dollars making him Twitter's largest shareholder. Jack Dorsey, Twitter's co-founder only has a 2.25% stake. Jack who stepped down as Twitter CEO in November was the previous largest individual owner. Interestingly the next biggest owners of Twitter after Musk, are Vanguard Group, Morgan Stanley and Blackrock. Elon purchased over 73 million shares on March 14 2022 but the filing was only revealed on Monday April 4th.Twitter stock surged nearly 30% on the news though Twitter so far has remained silent on the event.
As everyone here is aware Elon Musk is a very active user on the platform with more than 80 million Twitter followers, he regularly posts memes and gets himself into all kinds of trouble. However what's interesting and has got people talking is what he posted on the 25th of March 11 days after his then-secret Twitter stock purchase. On that day Musk tweeted “Free Speech is essential to a functioning democracy, do you believe Twitter rigorously adheres to this principle”
Underneath the poll he wrote “the consequences of this poll will be important, please vote carefully”
With over 2 million votes 70% of people thought no, myself included.
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Elon then asked in another tweet on the 27th “given that Twitter serves as the de facto public town square failing to adhere to free speech principles fundamentally undermines democracy, what should be done? is a new platform needed?”
We thought as many others did that Elon was planning to start his own social media platform. We concluded that it would be an uphill battle to get traction and user retention but not many people if anyone saw the next move from Elon Musk.
So why did Elon Musk buy Twitter?
According to Ed Boyd, a Sky News business reporter, Musk decided to buy the 70 million shares “on a whim”.
Eric Gordon a law and business professor at the university of Michigan, states that it could be more strategic than that. He mentions that Twitter could generally just be a regular investment and Musk sees growth ahead on the other side of the coin, Gordon states that the purchase could be for non-investment reasons like it was hinted from his previous tweets in March. Musk may just want to make sure that the platform doesn't restrain free speech, but possibly moreover his speech.
No chief executive at Twitter would refuse to take a call from the company's top shareholder. So the purchase gives Elon Musk access to Twitter's top management. Eric Gordon goes on to say that the purchase could cause a problem when it comes to the topic of disinformation.
To me, I like the idea of people being free to say whatever they like, even ideas that I hate as long as it's not a call to violence or an incitement to cause other people hardship. If it's a bad idea or just plain wrong, the correct information would eventually push it out of the sphere. But I'm well aware that this is just the ideal situation.
The other option is just to ban those opinions but that has unintended consequences. It forces those ideas to go underground and fester unchallenged. To solidify this concept I mentioned that it was similar to the idea of what Switzerland chose to do with the Russian state media outlet Russia Today. Obviously the Swiss government didn't support the ideas expressed but they had the foresight to see that it was better to expose the wrong ideas and counteract them instead of just banning them.
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People generally come out with a better understanding when two opposing viewpoints have equal opportunity to fight it out but then again in such sensitive situations as a war, there are ideas that could have instant negative consequences.
What should be done then? it really is tough.
Who decides what is true and what is false?
Who has a monopoly on the truth?
How do you make sure that politics and corruption doesn't distort the truth?
Just as a broad example if Edward Snowden came out today he would probably be labelled as spreading misinformation and be banned. Perhaps it's a deeper societal problem, it's a consequence of the general difficulty of figuring out the truth in any given situation mainly because nobody can agree on what's actually happening anymore. Elon Musk has not spoken specifically about how he would change the rules at Twitter, but I think it's safe to say if he does do any action at all it would be on the topic of free speech.
An analysis wouldn't be complete without mentioning that Elon Musk has previously been at odds with regulators about his use of Twitter. Last month Elon Musk asked a US Judge to nullify a subpoena from securities regulators and also to discard a 2018 court agreement in which he had to have pre-approval of his Twitter posts. His lawyer had contended in court motions that the SEC is infringing on the Tesla CEO's first amendment rights. The controversy started after the Tesla founder infamously tweeted that he had “funding secured to take the company private at $420 a share” in truth the funding was far from secured and the electric vehicle company remains public. But Tesla's stock price jumped, Musk later claimed that the post was just a joke referencing weed, but both he and Tesla was fined 20 million dollars each and he was required to step down as the board chairman and provide pre-approval for his tweet. Some analysts state that getting around this issue may be one of the reasons for the Twitter purchase.
So what could happen next after Elon Musk buying Twitter?
Industry analysts and legal experts say that Musk could begin advocating for changes at Twitter immediately, if he chooses. In fact on April 8th he would tweet, do you want an edit button and most people would say yes!
Though it should be noted the security document that Musk signed indicates that his investment role would be passive, meaning he does not plan to take control of the company. It remains unclear if he's going to ask or be invited to join Twitter's board.
Still some analysts speculate that he could alter the status of his investment continuing to buy shares or even buy the company outright. Analyst for the research company CFRA, Angelo Zeno writes “Musk's actual investment is a very small percentage of his wealth and all in buyout should not be ruled out”.
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According to Bloomberg such a decision could be very significant, “Twitter is particularly vulnerable to outside pressure because unlike Google, Facebook, Amazon and Snap, the company's founders don't have special voting control over its future” Bloomberg goes on to cite how Elliott management indirectly forced Jack Dorsey from the CEO position, as a result numerous social media users have expressed concern over what Musk's share might mean for the platform.
What do you guys think? Do you think that Elon actually cares about freedom of speech or do you see this as a way to tweet whatever he wants about his companies. Feel free to discuss in the comment section below. Okay so that's about it do check out our other posts as well.
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