Why Musk wants Twitter
He already owns the vastly more profitable Tesla, so why stake $44b on a social media platform?
Elon Musk’s bid to buy Twitter, once thought of as a long shot, has now been accepted. The billionaire will pay about US$44 billion for the company in a deal expected to close this year.
Musk was so motivated to buy Twitter that he put in a ‘‘best and final offer’’ for the company, and met privately with several large Twitter shareholders to convince them about his bid.
He offered $54.20 a share, and outlined his plan to secure $46.5b to finance his deal. Twitter’s shares spiked on Monday amid reports that a deal was close.
So why does the world’s richest person want to buy Twitter?
He has said he wants to promote free and open speech on the service, which he sees as an essential place for sharing viewpoints.
During a TED interview shortly after announcing his bid, he said: ‘‘Well, I think it’s very important for there to be an inclusive arena for free speech. 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.’’
Critics of Musk’s plan have expressed concerns that he would allow extremist content on the site, which Twitter and other social media companies struggle to fully eradicate. He acknowledged during the TED interview that content moderation is not a clear-cut issue.
‘‘Well, I think we would want to err on the, if in doubt, let the speech, let it exist. But if it’s a grey area, I would say let the tweet exist.’’
He reiterated 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 civilisation,’’ he said. ‘‘I don’t care about the economics at all.’’
How quickly could he change things on Twitter?
Probably not that quickly. The deal still needs to be finalised, a process that could take weeks or months.
After that, Musk has pledged to take Twitter private, but also keep as many shareholders as allowed by the law. He hasn’t announced plans for what a leadership team or potential board of directors would look like.
What has Musk said about a possible edit button on Twitter?
The edit button is probably one of the most requested features on Twitter. Picture this: you have crafted your perfect, punchy, 280-character-or-less thought, you type it out, you press ‘‘Tweet’’. Then you see a typo.
Twitter does not have a way to edit tweets without deleting and resending. Musk asked his followers whether they wanted an edit button in a poll on Twitter, and 73.6% of the more than 4 million voters said yes. A day later, Twitter’s communications team confirmed the company was already working on the feature.
What has Musk said about making Twitter’s algorithm more open?
He wants to make Twitter’s algorithm more transparent, including letting people see whether their tweets were promoted or demoted. By making it ‘‘open source’’, it would be available for everyone to view and improve upon. He believes that will help prevent ‘‘behind-the-scenes manipulation’’.
Researchers say this plan is vastly more complicated than Musk’s proposal makes it seem. Opening the algorithms could reveal trade secrets and invite abuse.
How have investors and commentators reacted?
‘‘I think there is nothing better for Twitter than Elon Musk buying it and ideally replacing the board, and also doubling down on investments into products and new revenue-generating sources,’’ said John Meyer, a technology entrepreneur and investor. ‘‘Musk has the track record that he can do the impossible.’’
It would be easy to see why other Twitter shareholders might welcome a shake-up, as well as a chance to cash out of their investment. Before Musk disclosed his 9% stake in Twitter earlier this month, the shares were trading below US$40 – not that much more than its $26 price when it went public in November 2013. Since then, the tech-driven Nasdaq has more than tripled.
Twitter has struggled to consistently post profits while generating lacklustre revenue growth compared to the two dominant forces in digital advertising, Google and Facebook.
Meanwhile, Tesla’s stock is now worth nearly 300 times more than when it went public in 2010. And after struggling for more than a decade, it is now extremely profitable, with net income of $3.3b during the first three months of this year alone. – Washington Post/AP