Elon Musk’s $44 Billion Twitter Acquisition: Reasons and Impact
Twitter's board of directors has approved Elon Musk's $44 billion (£34.5 billion) buyout bid for the acquisition of social media. Mr. Musk, who made the surprise proposal less than two weeks ago, said that he would unlock the "tremendous potential" of Twitter.
He also demanded a slew of adjustments, ranging from loosening content restrictions to eliminating fake accounts.
According to Forbes magazine, Mr. Musk is the world's richest person, with a net worth of $273.6 billion, owing mostly to his ownership of electric vehicle producer Tesla, which he also controls. He is also the CEO of SpaceX, an aerospace company.
"Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated," Elon said in his statement announcing the deal.
"I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spambots, and authenticating all humans," he added.
"Twitter has tremendous potential - I look forward to working with the company and the community of users to unlock it."
Mr. Musk's fight toward Twitter ownership has progressed at a breakneck pace. In early April, it was revealed that he had become the firm's largest stakeholder, with a 9.2 percent interest.
He was subsequently invited to join Twitter's board of directors, but declined, before making a surprise bid for the firm on April 14th, claiming that he wanted to "unlock" its potential as a stronghold of free expression.
Twitter attempted to deter him by threatening to dilute the shares of anyone who purchased more than a 15% interest in the company. However, once Mr. Musk provided additional financial facts about his planned bid, the company's position evolved.
He has acquired $25.5 billion in finance and will own a $21 billion interest in the company.
Elon and Twitter - A Chaotic History
Musk, who has more than 80 million Twitter followers, has a tumultuous past on the network. Mr. Musk, who has a history of squabbling with journalists and blocking critics, hinted on Monday that he regarded Twitter as a place for dialogue.
He commented a few hours before the deal, "I hope that even my worst critics remain on Twitter since that is what free expression means."
Musk has been on Twitter since 2009 and has expressed interest in purchasing it as early as 2017. He's also been a prominent critic of Twitter, pushing for reforms such as reversing content restrictions and stressing free expression as a "societal necessity."
He tweets memes, updates about his electric vehicle startup, Tesla, and, like the rest of Twitter users, witty observations on his daily life.
Musk's tweets, though, aren't all fun and games. For his online activities, the executive has received blowback — and in some cases, legal action.
In August 2018, he joked on Twitter that he had enough money to take Tesla private for $420 a share.
The Securities and Exchange Commission (SEC) found after an inquiry that Musk's tweets were false and harmed investors, and issued two $20 million penalties to Musk and Tesla.
Musk got into controversy with the SEC once more in 2021, when he posted a poll regarding whether or not to sell his stock and then did so. Musk and his brother are now being investigated for insider trading in relation to whether Musk informed his brother ahead of time that he would tweet the poll.
Musk's Twitter feuds landed him in court in Los Angeles in 2019 when he was charged with defamation for tweets and other accusations he made against British cave diver Vernon Unsworth.
Musk became enraged after Unsworth mocked his intentions to rescue a group of teenage footballers from a cave system in Thailand, labeling him a "pedo person" in a tweet to Musk's then 22 million followers.
After receiving widespread criticism from the public and his investors, the Tesla chief eventually apologized and removed the tweets.
He has been chastised for a series of tweets in which he downplayed the danger of Covid-19 and spoke out against lockdowns. He posted (and later removed) a meme portraying Canada's Prime Minister Justin Trudeau to Adolf Hitler in response to the Covid-19 vaccination regulations.
Many people are worried about Musk's takeover of the corporation because of his freewheeling personal style on Twitter, and if his "free speech" philosophy would transfer into damaging regulations.
Why is Musk Interested in Twitter Ownership?
Musk was so eager to purchase Twitter that he made a "best and final offer," declared that he had a Plan B in case that failed, and met personally with several big Twitter shareholders to persuade them of his offer.
Musk made a $54.20 per share bid for Twitter and detailed his strategy to raise $46.5 billion to fund the transaction. Twitter's stock soared on Monday morning on news that the business was close to reaching an agreement with Musk.
So, why would the world's richest man, who already owns Tesla and SpaceX, want to acquire the social media company?
Musk has stated that he wants to foster free and open expression on the platform, which he believes is critical for the exchange of ideas. He elaborated on some of his goals at a TED interview shortly after announcing his candidacy.
“Well, I think it’s very important for there to be an inclusive arena for free speech,” Musk said. “Twitter has become kind of the de facto town square, so it’s just really important that people have both the reality and the perception that they are able to speak freely within the bounds of the law.”
Musk has not stated if he will lift the lifetime ban on former President Donald Trump, who was barred from the site following the January 2016 uprising.
Critics of Musk's idea have raised the fear that he will enable extremist material on the site, which Twitter and other social media giants are still struggling to eliminate. During his TED talk, Musk admitted that content management isn't a black-and-white problem.
He stated that his deal wasn’t about making money:
“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,” he said. “I don’t care about the economics at all.”
How will Musk turn around Twitter?
Twitter's shares will be delisted and the company will be taken private as part of the buyout, which is scheduled to conclude later this year. Musk claims that this will allow him to make the changes he wants to the company.
He has proposed, among other things, enabling lengthier posts and allowing users to amend them after they have been published.
Following the announcement of the acquisition, Twitter's stock rose more than 5% on Monday. Here are the possible changes that could be made to Twitter:
Free Speech
Tesla and SpaceX CEO Elon Musk identifies himself as a "free speech absolutist" who has blasted what he perceives as excessive moderation on social media sites.
Musk has claimed that while nasty remarks are still lawful, social media platforms should not erase them. Harassment, abuse, and messages that threaten physical damage to others are already prohibited on Twitter. Other safeguards exist on the site, such as a restriction on misrepresentations about COVID-19.
Edit Button
An edit button is one of the most requested product upgrades among Twitter users. Twitter, unlike Facebook, Instagram, and other social media applications, does not allow users to edit information after it has been published.
Musk has stated that he favors the ability for individuals to modify the content of their tweets, a suggestion that has sparked a heated dispute among academics, journalists, and other heavy Twitter users.
Experts worry that adding an edit option will be weaponized by bad actors who would use it to cover up abuse or harassment as if it never happened or to deceive or manipulate others.
Making Twitter’s Algorithm Public
Musk has stated that the software that governs what people see on Twitter and how broadly it travels should be opened open. He favors putting Twitter's algorithm on GitHub, a prominent code-sharing site for programmers.
While some proponents of increased transparency at social media businesses argue that releasing Twitter's thick and intricate algorithm to the public would achieve nothing, others argue that doing so would be counterproductive.
Every day, billions of bits of material are processed by a social network the size of Twitter. The rationale behind how and why tweets go viral, as well as Twitter's recommendation algorithm, is so thick and intricate that even the company's own software developers are baffled.
Eliminate bot armies
Another move Musk supports is combating the rise of bots on Twitter, which are fake accounts that are designed to reply to tweets on specific themes. Musk's business empire is infamous for attracting bots, including bots that support his electric vehicle firm Tesla and attack Musk critics.
He has not stated that he would like to curb such bots, but he has proposed that scammy bots advertising crypto scams be cracked down on.
Remove Ads
Currently, advertising accounts for about 90% of Twitter's revenue, but the firm has struggled to lure advertisers to the site, which frequently descends into political conflagrations and nasty online brawls.
The corporation will no longer be under the same pressure from shareholders to consistently increase advertising income now that it is private. Musk has suggested that it switch to a subscription model.
Last year, Twitter introduced Twitter Blue, a premium service that costs $2.99 a month and includes features such as an undo button that allows users to retract tweets before they are published.
Only time will tell in which direction Twitter will head after the takeover. We can only hope the best for the social media giant.