Twitter Takeover: Elon Musk deal to buy social network for $44bn accepted
April 26, 2022
3 min read
What's going on here?
On Thursday 14 April 2022, Elon Musk launched a hostile bid offering to buy 100% of Twitter’s stock and take it private. On Monday 25 April 2022, the board reached a deal with Elon, accepting his offer of $44bn.
What does this mean?
After launching his bid, Musk claimed that his takeover of Twitter would “unlock” the “platform for free speech around the globe”. Musk’s bid was announced a day after he publicly declared his 9% shareholding of Twitter, successfully becoming one of the platform’s largest shareholders but rejecting a seat on Twitter’s board.
In response to Musk’s hostile bid, Twitter had initially aggressively responded by threatening a ‘poison pill’ manoeuvre. This tactic allows Twitter to adopt a year-long shareholder rights plan which will “enable all shareholders to realise the full value of their investment in Twitter”. As a result, if Musk were to seek a shareholding of above 15%, Twitter can allow other shareholders to buy additional shares at a discounted price. This would have diluted the ownership interest of the hostile party (in this case Musk), substantially raised the cost of the bid, and made it difficult for Musk to gain control over the company without the board’s consent.
Nevertheless, the board has now unanimously accepted the deal, and will be putting the deal to a vote by shareholders.
What's the big picture effect?
Musk is seeking to unlock the “tremendous potential” that he believes the social media network holds. As a result of the takeover, he is seeking to make a series of changes to Twitter which will allow for the relaxation of content moderation, the removal of fake accounts and bots, and the reinstatement of previously banned accounts.
This is a significant deal as the company has not been seen as the most profitable of social media platforms. In contrast to Facebook, Twitter has failed to take over at the same exponential rate and has largely been regarded as not a ‘fun place to be’. Although it offers bite-sized news outlets and peoples’ opinions, it allows for a mixture of information and misinformation to be accessible to people.
The deal has reignited debate about free speech on social media, as Musk has been outspoken about the role of social media in democracy. In his statement announcing the deal, Musk wrote that “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”. Twitter’s internal moderation standards have been hotly debated – some people view it as too relaxed, and others view it as too stringent. Most notably, Donald Trump, former President of the United States, was booted off the platform for “the risk of further incitement of violence”.
Twitter has previously tried to combat this issue by assigning Chief Executive Parag Agrawal to the task, who had previous experience running Bluesky – Twitter’s project to create a decentralised protocol for social media, which started in 2019 (The Verge). Nevertheless, Musk’s claims that he would “match the laws” of each country Twitter operates in, suggesting that the social media platform moderation processes are still not sufficient and must become more transparent to its users.
As governments around the world try to regulate social networks, it will certainly be interesting to see how Elon will add to the debate. However, the question still stands: should Elon Musk be the arbiter of free-speech?
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