Elon Musk reaches deal to buy Twitter for $44 billion

By: AFP
Published: 08:50 AM, 26 Apr, 2022
Elon Musk reaches deal to buy Twitter for $44 billion
Caption: News about Elon Musk's bid to takeover Twitter is tweeted in Chicago, Illinois.–AFP
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Elon Musk, the world's richest man, struck a deal Monday to buy Twitter for $44 billion, capping a saga complete with hostile takeover threats before delivering him personal control of one of the most influential social media platforms on the planet. 

Twitter famously served as a megaphone for former US president Donald Trump before the platform banned him, and Musk -- a self-proclaimed "free-speech absolutist" -- has said he wants to reform what he sees as the platform's over-zealous content moderation.

"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," Musk said in a statement released by Twitter. 

"I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots and authenticating all humans."

However advocacy groups were wary of the type of content Musk might allow on the platform, and Derrick Johnson, president of the NAACP civil rights organization, tweeted, "Do not allow Twitter to become a petri dish for hate speech, misinformation or disinformation. Protecting our democracy is of utmost importance."

At the White House, Press Secretary Jen Psaki said "no matter who owns or runs Twitter," President Joe Biden -- himself a Twitter user -- is "concerned about the power of large social media platforms."

Twitter stock closed 5.6 percent higher in New York trading.

- 'Back against the wall' -

Musk bought a nine-percent stake in Twitter earlier in April, then offered to buy the whole company outright, citing a mission of preserving free speech.

While the firm's board initially said it was reviewing his offer, it later rebuffed him and adopted a "poison pill" plan that would have made it harder for Musk to acquire a controlling position.

But last week, Musk -- whose immense wealth stems from the popularity of Tesla electric vehicles as well as other ventures -- said he had lined up $46.5 billion in financing comprised of debt, a margin loan and his personal fortune.

Dan Ives, an analyst at Wedbush Securities, predicted earlier in the day that since the board could not find another buyer, it would likely accept his offer.

"This basically put (their) back against the wall, they had to come to the negotiation table," he said in an interview on CNBC.

The publicly traded firm will now become a private company owned by Musk, who negotiated a purchase price of $54.20 per-share, Twitter said.

"Twitter has a purpose and relevance that impacts the entire world. Deeply proud of our teams and inspired by the work that has never been more important," the company's CEO Parag Agrawal said in a tweet.

- Trump downplays return -

Musk's efforts have raised hopes about the commercial potential of Twitter, which has struggled to achieve profitable growth despite its important spot in culture and politics.

Under Agrawal, who took over as Twitter CEO late last year, the company has made progress on new monetization features such as subscription products, Truist securities said in a note, adding that "short term, Musk's involvement at this stage runs the risk of disrupting those efforts."

Progressive groups were particularly concerned that Musk may permit a return to the platform by Trump, who was banned from Twitter after last year's assault on the US Capitol by his supporters seeking to overturn the 2020 presidential election result.

"The sale of Twitter to Elon Musk would be a victory for disinformation and the people who peddle it. Musk could unleash a wave of toxicity and harassment and undo Twitter's efforts to increase quality engagement and make its platform safer for users," Angelo Carusone, president of Media Matters for America, said in a statement.

In an interview with Fox News, Trump said "I am not going on Twitter," preferring instead to stay on his "Truth Social" media network.

"I hope Elon buys Twitter because he'll make improvements to it and he is a good man, but I am going to be staying on Truth," he said.

Musk-ruled Twitter: users left to fight trolls and misinformation?

Elon Musk's vow to let everyone say whatever they want on Twitter after his takeover of the social media giant could put the onus on users to combat bullying and misinformation on the platform, experts say.  

Details of Musk's plans for Twitter were slim after his deal to buy the tech firm was announced Monday, but the Tesla chief portrays himself as a free-speech absolutist.

But the privatization of Twitter with Musk as its master has raised concerns from analysts and activists that the site will be capriciously ruled by the world's richest man, with more focus on attention and profit than on promoting healthy online conversations, which has been a priority at the service.

For Syracuse University assistant professor of communications law Kyla Garrett-Wagner, Musk's takeover of Twitter is not a free speech rights victory.

"What we have done is put even more power into fewer hands," she told AFP.

"If Elon Musk decides tomorrow that he wants to shut Twitter down for a week, he can do that."

She noted the US Constitution's first amendment only bars governments from gagging what citizens say -- leaving the billionaire entrepreneur the power to decide what can and cannot be posted on the private entity of Twitter.

"This is not the street corner," Garrett-Wagner said. "This is the proverbial Wild West but owned by a minority elite that doesn't represent minority voices."

- 'The trolls take over' -

Musk's promised hands-off approach to content is a particularly thorny matter when it comes to high-profile cases like that of former US president Donald Trump, who was banned from Twitter after an assault on the Capitol by his supporters.

"Musk says he is going to turn Twitter into a social media platform with no moderation; there have been several of those and they don't work," said analyst Rob Enderle of Enderle Group.

"The trolls take over, they get too hostile and drive people away from the platform."

Musk has said he is averse to banning people from Twitter due to misbehavior, prompting speculation that he would lift Trump's ban.

But Trump on Monday said he would not be returning to Twitter even if his account were reinstated, saying he would stick to his own site, Truth Social.

- App store trouble? -

If Musk pulls back on policing content at Twitter, advertisers would also have to take the lead to ensure their messages were not associated with toxic content, according to advocates and academics.

"Accountability now rests with Twitter's top advertisers, who need to make it clear that if Twitter becomes a free-for-all of hate, extremism and disinformation, they will walk," said Media Matters for America chief Angelo Carusone.

"It is also critical that Google and Apple hold Twitter to the same standards they applied to other apps like Parler," he added, referring to a social network popular among conservatives. 

The tech giants would need to reiterate that "Twitter will not get special treatment and that a violation of their terms of service will result in the platform being removed from the app stores," according to Carusone.

Musk will also face tough judgement in the court of public opinion, with Twitter users apt to turn away from the platform if it becomes hostile and flooded with misinformation, Garrett-Wagner said.

Some of Musk's own tweets have raised eyebrows, as he once mocked a Tesla whistleblower and in 2018 called a rescue worker who criticized a plan to save children from a flooded cave in Thailand "a pedo guy."

While Musk has talked about ridding Twitter of software "bots" that fire off spam, actually confirming that users are living people could prove challenging, Baird analyst Colin Sebastian told investors in a note.

Sebastian noted that Musk's idea of charging for coveted blue check marks that verify users' identities is a "no-brainer," but it is likely only a small minority of people would pay for the status.

Musk has also said he believes anyone should be able to scrutinize the software behind the service.

But that kind of transparency could come with the unintended consequence that it will just be exploited by "bad actors" who find ways to game the system to promote their posts, analysts have warned. 

"The rhetoric around transparency is that it will lead to an epiphany and people will change," Garrett-Wagner said.

"It's a misleading comfort to think everything will be okay if we know how it is working."

AFP

Agence France-Presse is an international news agency.