The world’s richest man completed his record-breaking acquisition of the social media platform, ushering Twitter into a new era.
Elon Musk now owns Twitter after months of rambling, litigation, verbal mudslinging, as well as a narrow escape from a full-fledged trial.
According to three people familiar with the situation, Mr. Musk sealed his $44 billion purchase of the social media platform on Thursday night. He furthermore started cleaning house, firing at least four top Twitter execs, including the CEO and CFO, on Thursday. Mr. Musk showed up at Twitter’s headquarters in San Francisco on Wednesday and met with engineers as well as ad executives.
The agreement, which came after months of controversy as well as litigations as Mr. Musk altered his mind about purchasing the company, placing Twitter on an unclear path. Mr. Musk, a self-described “free speech ideological purist,” has stated that he would “overturn the complete ban” on former President Donald J. Trump from the social media platform.
Mr. Musk’s flexible approach to Twitter speech may intensify long-simmering concerns of harmful content as well as misinformation, impacting political debates all around world. Preliminary tests will come in a matter of days, when Brazil votes its president and Americans vote in midterm elections on November 8. Twitter stated that it would prohibit false claims regarding voting as well as election results, but that was long before Mr. Musk bought it.
“There may be actual consequences to his leadership,” said David Kaye, a law professor at the University of California, Irvine who has worked with the United Nations on free expression issues. “To the degree that global leaders perceive they have this uncensored territory which they can stretch to ascertain the extent to which they can go.”
Some Republicans have applauded the acquisition, claiming that Twitter censored conservative viewpoints. According to researchers, Twitter’s rules have been critical in combating online hateful rhetoric as well as disinformation. Some advertisers are concerned about their brands appearing side by side with controversial tweets.
“It’s a ‘back-to-the-future’ throwback to content rules circa 2010, but one that disregards the lived reality over the past decade,” said Colin Crowell, Twitter’s former global public policy chief who left the company in 2019. “Ultimately, people realize that the Wild West requires a sheriff, not only to ensure the safety of citizens, but also improve the potential for commercial activity.”
Mr. Musk also has pledged other significant changes at Twitter, such as new management, job cuts, and the pursuit of new revenue streams. Twitter, which is headquartered in San Francisco and employs over 7,500 people, has struggled to consistently grow its advertising-based business as well as attract new users. The firings of top execs on Thursday indicated that Mr. Musk wanted to act quickly.
Mr. Musk, 51, will reimagine Twitter without having to reveal its performance every few months. By taking the firm private, he avoids having to answer to stockholders on a regular basis and therefore can make adjustments to the service away from prying eyes.
Mr. Musk, who also runs the electric car manufacturer Tesla as well as the rocket company SpaceX, didn’t respond instantaneously to a request for clarification.
The completion of the transaction was a victory for Twitter’s board. When Mr. Musk agreed to pay $54.20 per share for the company in April, Twitter was chastised for welcoming a too-low price. However, as the global economy deteriorated and Twitter’s stock dropped, the deal price emerged to be a victory for shareholders, and thus the board pushed to compel Mr. Musk to adhere to the agreement.
A spokesman for Twitter did not respond right away to a request for statement.
Twitter top management who were dismissed on Thursday included CEO Parag Agrawal, CFO Ned Segal, top policy and legal executive Vijaya Gadde, as well as general counsel Sean Edgett, according to two people familiar with the situation. According to them, at least one of the fired execs was escorted out of Twitter’s headquarters.
Mr. Musk, one of Twitter’s most active users with over 109 million followers, started buying shares of the company this year. In April, he agreed to buy the firm for $44 billion, promising to improve content moderation guidelines, eliminate spam, add new features, and provide greater transparency about the algorithms used to advertise content.
“Twitter has immense potential and I look forward to working with the company as well as the user community to realize it,” he said in an April statement.
But, after a few weeks, he began to doubt the deal. Mr. Musk slammed Twitter execs in charge of content decisions, claiming that the company was failing to accurately calculate spam accounts on its platform. When Twitter CEO Parag Agrawal attempted to refute Mr. Musk’s claims, he replied with a poop emoji.
Mr. Musk resolved in July that he didn’t want to own Twitter anymore, claiming that he was misinformed about the quantity of spam on the platform. He disclosed his decision to withdraw from the purchase.
Mr. Musk was sued by Twitter to compel him to follow through on the agreement.
Mr. Musk was accused by the company of attempting to back out of the agreement because the economic slump had reduced his personal wealth.
Mr. Musk had agreed to contribute approximately $33 billion of the $44 billion bargain himself.
The case was heard in Delaware Chancery Court, which gets to hear a lot of corporate cases. The court scheduled a five-day trial to hear the case in mid-October.
But, faced with days of affidavits as well as an uncertain outcome, Mr. Musk changed his mind. He attempted to bargain down the deal price. Those dialogues were a failure. This month, Mr. Musk stated that if Twitter dropped its legal action against him, he would continue with the purchase at the original price.
The judge overseeing Twitter’s litigation agreed to postpone the case until Oct. 28, granting Mr. Musk 3 weeks to complete the transaction.
Mr. Musk has big ambitions for Twitter, which he plans to convert into a “all of it app” called X. In investor presentations about the agreement this spring, he predicted that Twitter will have $26.4 billion in annual revenue as well as 931 million users by 2028. Last year, the company earned $5.08 billion in revenue and had over 200 million active users.
Mr. Musk has indicated that cuts may be necessary to keep Twitter’s costs under control. Many of the company’s staff may be laid off. In recent days, Twitter has attempted to reassure its employees by asking them to disregard mentions of possible layoffs.
Twitter’s effectiveness will be critical as Mr. Musk juggles investing in the company’s future with repaying the interest on the $12.5 billion in loans he did take out to bankroll the transaction. Given its patchy profits, analysts have queried whether Twitter can carry the cost of those payments.
Those debts will also be a source of distress for the investment firms that put them together, as the market for these kind of loans has plummeted since Mr. Musk confirmed his bid in April.
Advertisers may be cautious of doing business with Mr. Musk after he criticized the use of ads on Twitter and suggested that the company find another revenue stream.
Several advertisers have also expressed reservations about their brands making an appearance besides the risky content that Mr. Musk has stated should be permitted on Twitter, while others have favored to spending their money on social media platforms such as Facebook as well as TikTok.
Mr. Musk responded to advertiser worries with an open letter on Thursday, indicating that some content moderation would persist.
“Obviously, Twitter cannot turn into a free-for-all hellscape in which anything can be said with no consequences,” he wrote. “Twitter envisions to be the world’s most respected advertising platform.”
