Elon Musk made himself too big to regulate by buying Twitter
As a public company, Twitter, like Tesla, has shareholders whose interests are under the protection of the Securities and Exchange Commission, the same agency that has burned Elon Musk multiple times over the past few years for damages. potentials caused to Tesla shareholders. .
But private companies, like the one Musk is about to make Twitter, don’t have that kind of protection. They are managed at the discretion of their owners.
And few owners take as much pleasure in stirring up trouble as Musk, whose clashes with the SEC began in earnest in 2018, when feds fined Musk and Tesla each $20 million to settle charges. of fraud after he sadly tweeted “I’m considering taking Tesla private at $420. Financing assured. Apparently that wasn’t the case, and Musk had to resign as chairman of Tesla’s board of directors, as well as submit to the scrutiny of his tweets by lawyers to make sure he didn’t. mislead or harm shareholders.
He was back in hot water with the SEC within months, after he tweeted that Tesla would produce half a million cars in 2019. In 2020, Tesla shares fell after he tweeted, “The price of the Tesla’s stock is too high imo”, and the SEC yelled at it. a little more, joining the National Labor Relations Board, which caused him to take down a tweet advising Tesla employees against forming a union.
A man like Musk might well have chafed at having to obey “mum can I” restrictions aimed at correcting his legendaryly poor impulse control on Twitter. But now that he’s agreed to buy Twitter for around $44 billion and take the company private, Musk will never again have to worry about the SEC interfering with his freedom to tweet what he wants. wants, true or false.
“To pay off the huge debt incurred by the company and its new owner, Twitter will have to generate a lot more revenue, which means big changes for the platform.”
However, the buyout is an LBO, or leveraged buyout, one of the largest in history. Musk pledged $21 billion in cash, the source of which was undisclosed at the time of writing; the rest is debt, financed by a group of banks including Morgan Stanley, Bank of America and BNP Paribas, whose debt obviously accounts for more than half of the deal – $13 billion in bank loans, plus $12.5 billion in loans against Musk’s Tesla stock, according to a Time report. Rich as Musk is, that’s a lot of sugar.
As Bob Dylan sang, everyone has to serve someone, and to some extent Musk and Twitter will probably now serve the banks, instead of the SEC. In other words, in order to pay off the immense debt incurred by the company and its new owner, Twitter will have to generate a lot more revenue, which means big changes for the platform.
Since Twitter shareholders will make a lot of money on their shares, the SEC won’t complain about the sale, and antitrust regulators probably won’t either, since Musk isn’t buying a competitor. The White House bleated, just a little, with press secretary Jen Psaki saying, “The president … has long maintained that tech platforms should be held accountable for the damage they cause.” In short, the sale, as unlikely as it seemed just a few days ago, seems likely to materialize.
After the announcement, Musk was quick to point out his much-vaunted goal of making Twitter a haven for “free speech.”
This egalitarian and noble sentiment is at odds with Musk’s long, erratic and troubled history on Twitter, which continues to this day. He tweeted a series of wildly incorrect 2020 COVID-19 predictions (“Based on current trends, likely close to zero new cases in the US as well by the end of April”), offered his support for the presidential candidacy by Kanye West and accused the 2018 rescuer of Thai children from a cave of being a “pedo”. Just days ago, angered by reports that Bill Gates is shorting Tesla stock by $500 million, Musk tweeted a pregnant man emoji next to a photo of Gates and the caption, “in case you need to lose a boner quick.”
The sale of Twitter is expected to take around six months to close, and for many journalists, myself included, the biggest concern is the fate of the platform’s opening up as a key hub where journalists around the world communicate without hindrance. Large corporations now control most communications between journalists on the Internet, and authoritarian governments have either tightened their grip on permitted sites or eliminated the open Internet altogether. For all its flaws, Twitter is one of the few places where individuals in democratic countries can contact each other, freely and in public, outside of the immediate control of a platform. It is very dangerous for a mercurial, imperially involved man, the richest in the world, to have absolute control.
And this is not a random whim. Musk’s purchase of Twitter goes hand in hand with oligarchic moves like Peter Thiel’s attack on Gawker in 2016 and Joe Ricketts’ shutdown of DNAinfo in 2017. Money itself having long ceased to have a real meaning to them, hyper-rich men are quite willing to squander huge amounts of it to control and silence their critics, and remove all obstacles to their own ambitions.
We may not see Elon Musk’s new Twitter ban users for speaking out about his taste for hats or his childish attempts at wit, but it will be interesting to see, after he takes over, how many long discussions of Tesla shorts will continue to be freely permitted on the platform. .