New York
SME Business
—
Elon Musk has completed his $44 billion deal to buy Twitter, a source familiar with the deal told SME Thursday, putting the world’s richest man in charge of one of the world’s most influential social media platforms.
According to two sources familiar with the matter, Musk fired Parag Agrawal, CEO of Musk and two other executives. Twitter has declined to comment.
The deal’s closing removes a cloud of uncertainty that has hung over Twitter’s business, employees and shareholders for much of the year. Musk tried for months to end the deal after initially agreeing in April to purchase the company. He first raised concerns over the number of bots and then later, he was confronted by whistleblowers.
Musk and Twitter avoided the trial scheduled for earlier in this month by concluding the deal. But Musk’s takeover, and the immediate firings of some of its top executives, now raises a host of new questions for the future of the social media platform, and the many corners of society impacted by it. Two sources claim that Musk fired policy head Vijaya Gaudde and CFO Ned Segal on Thursday.
Musk has said he plans to rethink Twitter’s content moderation policies in service of a more maximalist approach to “free speech.” The billionaire has also said he disagrees with Twitter’s practice of permanent bans for those who repeatedly violate its rules, raising the possibility that a number of previously banned, controversial users could reemerge on the platform.
Many will be monitoring to see if Musk can allow Donald Trump, the former president, back onto the platform. He has stated that he would. It could have huge implications on the US midterm elections in the future, and possibly the presidential campaign of 2024, depending upon the timing.
Musk’s actions could be a catalyst for reshaping the political and media ecosystems, and influencing public discourse. They also have the potential to disrupt the emerging sphere of conservative-leaning online properties. These new social media platforms were created largely as a response to complaints about Twitter bans and restrictions.
Earlier this week, Musk visited Twitter’s San Francisco headquarters to meet with employees. He also posted an open letter to Twitter advertisers, saying he doesn’t want the platform to become a “free-for-all-hellscape where anything can be said with no consequences.”
The acquisition also promises to extend Musk’s influence. Already a billionaire, he oversees, or holds significant stakes at companies involved in developing rockets, cars, robots, satellite Internet, and more experimental ventures like brain implant research. The billionaire now has control over a social network platform which shapes the way hundreds of million of people share their news.
The months-long Musk deal was chaotic even for Twitter, which is a company that has been known for its chaos throughout history.
Musk, an influential and controversial Twitter user joined the company in early this year after he gained a more-than 9% stake. After announcing he had become Twitter’s largest shareholder, Musk accepted and then pulled out of an offer to sit on the company’s board.
Musk then offered to buy Twitter outright at a significant premium, threatened a hostile takeover and signed a “seller-friendly” deal to buy the company that involved waiving due diligence.
“This is not a way to make money,” Musk said in an on-stage interview shortly after making an offer to buy Twitter. “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.”
Musk also pledged to “defeat the spam bots or die trying,” referring to the fake and scam accounts that are often especially active in the replies to his tweets and those of others with large followings on the platform.
Musk started to raise concerns over the existence of fake and spam Twitter accounts within weeks of the acquisition deal and eventually attempted to cancel the contract.
Twitter sued him to follow through with the agreement, alleging that Musk was using the bot argument as a pretense to get out of a deal for which he had developed buyer’s remorse. Many stocks, including those of social media companies fell in the weeks following the announcement. This was due to concerns over rising inflation and the looming recession. The downturn also hit Tesla and, in turn, Musk’s personal net worth.
Many legal experts believe that Twitter is on a strong foundation to get the agreement enforced before the courts. Musk declared that he would stick to the terms of the deal, two weeks prior to the litigious court battle. As the parties negotiated, Musk’s attorneys asked a judge to stay the legal proceedings, prompting pushback from Twitter, which feared that Musk might not stay true to his promise to close the deal.
In a sharp response, Twitter’s lawyers wrote that Musk had been attempting to exit the deal and “now, on the eve of trial, Defendants declare they intend to close after all. ‘Trust us,’ they say, ‘we mean it this time.’”
Kathaleen St. Judge McCormick, Delaware Chancery Court Chancellor gave notice to the parties that they had until Oct. 28, at 5 p.m. or risk a rescheduled hearing.
With the deal drama out of the way, attention now turns to Musk’s plans for Twitter.
Beyond the removal of Twitter’s CEO and other executives, Musk’s takeover could also usher in the return of some measure of influence over the company by founder Jack Dorsey, who stepped down as CEO in November and left its board in May. Although Dorsey stated that he would not be returning to Twitter in a formal capacity, he did discuss the matter privately with Musk and provided advice.
Musk has also reportedly told prospective investors in the deal that he planned to get rid of nearly 75% of the company’s staff, in a move that could disrupt every aspect of how Twitter operates. He previously discussed dramatically reducing Twitter’s workforce in personal text messages with friends about the deal, which were revealed in court filings, and didn’t dismiss the potential for layoffs in a call with Twitter employees in June.
Twitter might not be able to use many of its current staff under Musk. Musk has repeatedly made clear he would overhaul Twitter’s content moderation policies and bolster what he calls “free speech,” potentially undoing years of efforts from the company to address misinformation and harassment and to create “healthier” conversations on the platform.
It could have ripple-effects across social media. Although Twitter is smaller than most of its competitors, it has often been a role model in how the social media industry deals with problematic content. This includes when Twitter was the first to ban Trump after the January 6 Capitol Riot.
Many alternative social media networks, which are aimed at conservatives and those who feel that mainstream services overreach their speech rights, have been launched in recent years. These services include Trump’s Truth Social and Parler, which Kanye West recently said he would acquire. While it’s unclear how far Musk could go in fulfilling his free speech dreams, any loosening of existing content moderation policies could effectively make Twitter, which provides a much larger audience, a more enticing service for some of the users who have fled to those smaller, fringe services. Musk’s efforts to relax content restrictions could lead him into legal problems, particularly in Europe.
Apart from content moderation, Musk has also tossed out a wide range of other possible changes for the platform, from enabling end-to-end encryption for Twitter’s direct messaging feature to suggesting recently that Twitter become part of an “everything” app called X, possibly in the style of popular Chinese app WeChat.
Despite his months-long attempt to get out of buying the company and his own recent remarks that he is “obviously overpaying” for it, Musk has tried to sound optimistic about Twitter’s potential.
“The long-term potential for Twitter, in my view, is an order of magnitude greater than its current value,” he said on Tesla’s earnings conference call last week.
