Elon Musk made an offer of $43 billion (40 billion euros) on Thursday for social messaging network Twitter. The reactions are not very positive, from both shareholders and the Twitter board. That put up a protective wall on Friday to prevent a hostile takeover.
Musk himself does not seem convinced of the feasibility of the offer. “I have a Plan B,” the tech entrepreneur said in a statement on Thursday evening conversation with lecture network TED. Though he’s the richest man on Earth, he’s not Twitter’s best-known savior.
1 Twitter can’t be saved
Musk wants to save Twitter. The network (200 million monthly users) has struggled with growth and profitability since its inception. Previous sales attempts and continued moves at the top brought no change. CEO Jack Dorsey, one of the founders, left in 2008 and returned in 2015. To leave again in 2021.
Dorsey, who also runs the payment service Square, was a remote manager – for him the way to run two companies at once. Musk is the mirror image: someone who runs multiple companies and meddles with the smallest details. Twitter employees don’t feel comfortable with such a boss, according to an internal meeting that The New York Times through anonymous sources.
The Twitter board does not accept the enemy’s offer. Shareholders reacted lukewarm – the price hovered at $45, while Musk offered $54.20 per share. Incidentally, the last part of that number – 420 – is interpreted as a nod to weed aficionados. That’s humor the Musks way.
2 Elon Musk doesn’t really want to ‘buy’ Twitter
Musk provides few details about how he plans to fund the offer. “I could afford it,” he says in the TED interview†
But he can’t just put $43 billion on the table. The majority of his wealth (now estimated at $260 billion) is in Tesla stock. Musk must apply for a loan based on that interest. Banks will be cautious because the Tesla price is unpredictable.
Musk has a 9 percent stake in Twitter. He hopes that other shareholders will not have to be bought out, but will rally behind him. “I don’t necessarily want to own Twitter, everyone will blame me for everything.”
But he keeps in mind that his plan will fail. “There is a Plan B,” Musk said. It’s vague what that means; Musk will probably then sell his existing stake and dismiss the entire Twitter adventure as a joke, possibly starting his own social network seriously.
3 Technology can’t do everything
Twitter often intervenes to ban fake news, hate, violence and spam from the timeline. Musk thinks he can offer users – and especially himself – more freedom by improving the technology. For example, by openly reviewing and improving algorithms that determine how prominently tweets can be seen. For example, Twitter can show that there is no manipulation behind the scenes.
But the possibilities for regulating a social network with technology are limited, Mark Zuckerberg experienced. For years, the Facebook founder proclaimed that algorithms could “learn” to remove hate speech or calls to violence. But in the end, Zuckerberg had to hire tens of thousands of moderators to keep Facebook somewhat clean.
How is Twitter going to do that? During the TED interview shoots Musk when asked about his views on freedom of expression. Everything should be possible as long as it is within the limits of the law, he says. But he does not explain whether and when human evaluators should intervene. He does state that Twitter blockages – such as those imposed by Donald Trump – should be temporary. “A timeout”.
4 Twitter is no longer a village square
Twitter is a town square for everyone, Musk promises. But Twitter is primarily a network where celebrities and politicians communicate directly, without the intervention of the media. The same media do use Twitter for their journalistic agenda. That gives people like Musk (81 million followers) extra reach. He uses Twitter to spread price-sensitive information, even though the stock watchdog SEC imposes restrictions on him, much to the frustration of the techno entrepreneur.
You won’t find a cross-section of the population on Twitter. Twitter has 38 million users in the US, barely ten percent of the population. The network is no longer growing and has increased the number of advertisements in recent years to continue to make a profit. Competitors like Snap and TikTok are growing faster, both in users and in revenue, and Facebook and Instagram are many times bigger.
Musk wants to get rid of ads on Twitter in exchange for paid subscriptions. That makes the group of potential Twitter users even smaller; all other social media are free. He also wants the option to edit tweets afterwards. Last week Twitter announced for quite some time to work on such an edit button. It seems that that promise is being fulfilled, even without the intervention of Elon Musk.
A version of this article also appeared in NRC Handelsblad on 16 April 2022
A version of this article also appeared in NRC on the morning of April 16, 2022