A $44 billion deal
Musk signed the contract to buy Twitter back in April, but announced in July that he was withdrawing from it, accusing Twitter of making misleading statements about the number of fake accounts on the platform. Lawsuits followed, and in early October, Musk changed his mind again and offered Twitter to complete the deal. During this period, the billionaire has sold shares of the electric car manufacturing company “Tesla” worth more than 19 billion dollars, which experts explain with efforts to finance the acquisition of “Twitter”. Musk’s deal to buy Twitter is the largest such deal ever made in the tech industry.
Musk saddled Twitter with $13 billion in debt to close the deal, and it will pay more than $1 billion in annual interest. Additionally, Twitter has historically lost money and grown more slowly than some of its competitors. By buying Twitter, Musk has taken on a huge financial burden that could cost him the status of the world’s richest man.
The pursuit of profit
After coming into Musk’s possession, on October 28, the quotation of “Twitter” shares on the New York Stock Exchange was suspended. “Twitter” has become a private company that is currently losing more than four million dollars a day. At least that’s what Musk said when explaining why layoffs are necessary. On November 10, Musk warned employees that “Twitter” could be threatened with bankruptcy. True, this is not the first time that Musk has warned about the threat of bankruptcy in one of his companies.
To make Twitter financially successful, Musk hastily introduced a monthly subscription fee for verified account holders. Previously, anyone whose identity had been verified by Twitter employees could receive a blue mark as a verified account, but Musk’s vision is to make such a mark available to anyone for $8 a month. This led to a wave of fake accounts, causing both comical situations and real losses for businesses. The victims of this situation are the US drug manufacturer Eli Lilly, the US arms manufacturer Lockheed Martin and other companies. To fight against fake accounts, Twitter introduced an additional identification mark for certain verified accounts – a gray “official” inscription. The sign first appeared on the website for a short time, but was restored on November 11. In an effort to curb the creation of fake accounts, Twitter also stopped giving new accounts the blue Verified Account badge. The introduction, withdrawal and re-implementation of blue and gray tags does not give the impression that Musk has a clear plan for the microblogging site’s future development, and has drawn criticism from anti-disinformation experts, who have warned that such chaotic changes could make it harder to identify reliable information, especially in the US after the midterm elections. .
Musk has also stated several times that he wants to include the payment function of “Twitter” in the future. Users could connect their online banking accounts to Twitter, and later the company could switch to debit cards, checks or something else. Before Musk’s era, “Twitter” had already tried its hand in this sphere a little, but it lacked modern payment systems. Musk has also announced that he plans to invest heavily in video, stating that Blue Badge subscribers could initially be given the option to post 10-minute videos, then 42-minute videos, and later even several hours of content. The idea of offering users to send messages directly to celebrities for a fee, setting a fee for viewing certain videos and other ideas is also being considered.
Uncertainty about the site’s future development and Musk’s own controversial tweets, such as an attack on the husband of US House Speaker Nancy Pelosi, have scared away advertisers. Many companies have stopped advertising on Twitter, not wanting to associate their brands with something scandalous. Musk acknowledged that advertisers opting out had caused a huge drop in revenue, and at an event organized specifically for advertisers, he called on companies to continue using the platform. But Musk’s actions give the impression that he cares less about advertisers than he probably should, given that about 90% of Twitter’s revenue comes from advertisers.
It is worth reminding here that Twitter is much smaller than its competitors TikTok, Facebook, Instagram and YouTube. Advertisers can do without Twitter, but often chose the platform because they had a good relationship with Twitter’s marketing team or because of the efforts of Twitter employees, but Musk has fired many of those employees, according to The Atlantic magazine. “.
Mass dismissal of employees
Immediately after buying Twitter, Musk dismissed the company’s entire board of directors, becoming the sole director. 10 days later, Musk fired half of Twitter’s 7,500 employees in an unsigned email. The mistake also laid off employees needed to implement Musk’s plans, and Twitter is now trying to bring them back, Bloomberg reported. Musk has also ended Twitter’s remote work policy, which became widespread at the company during the Covid-19 pandemic. The remaining employees are forced to work in a chaotic environment under conditions of increased workload.
The manner in which the job cuts and Musk’s nonchalant attitude have offended many current and former Twitter employees. One Twitter employee told Platformer that the day after the layoff felt like a disaster. Half of the colleagues had been fired, but no one knew who exactly. They sent each other messages to find out who was left – like after a disaster. Twitter’s chaos has been further deepened by the departure of officials responsible for security and privacy last week, which also provoked a stern warning from US regulators.
Protection of privacy and freedom of expression
The Twitter mess has attracted the attention of the US Federal Trade Commission (FTC), which has reminded Twitter of its commitment to US privacy regulations. European Union (EU) Internal Market Commissioner Thierry Breton has also reminded that “Twitter” in Europe will have to comply with EU regulations, which include the General Data Protection Regulation (GDPR) and in the future also the upcoming Digital Services Regulation. With 450 million people, the EU has far more potential Twitter users than the US, and the EU has stricter rules protecting internet users’ rights. Downsizing and various experiments in the development of “Twitter” may make it difficult to comply with these rules, but Musk cannot afford it.
Recently, “Twitter” has seen an increase in extreme content. An internal Twitter document obtained by Reuters shortly before Musk’s Twitter sale closed shows that pornography is one of the fastest-growing topics among English-speaking active users. This is a serious problem for advertisers and not a sign of a healthy platform. There are serious concerns that extreme content on Twitter will increase and loud voices will become louder at the expense of other opinions. The question is who will be allowed to use this platform to make their message louder? There is reason to worry that Musk could inadvertently give these privileges to racists, conspiracy theorists and trolls, according to the American magazine “The Atlantic”.
Soon after buying Twitter, Musk announced that he would create a Twitter content moderation board to evaluate future policies regarding posting and reactivating closed accounts. UN High Commissioner for Human Rights Falker Turk has called on Musk to ensure that human rights play a central role in Twitter management. He urged Musk to protect freedom of speech, avoid content that harms the rights and privacy of others, and ensure that Twitter does not incite discrimination, hatred or violence.
The composition of Musk’s investors has also caused concern. After “Twitter” came into Musk’s possession, Prince Alwaleed bin Talal of Saudi Arabia and his company “Kingdom Holding Company” became the second largest investor in “Twitter”. US Democratic Senator Chris Murphy has called for foreign investors to be evaluated and whether they have any influence on the operation of “Twitter”, and US President Joe Biden also announced on November 9 that it is worth investigating Musk’s connections with foreign countries. Murphy expressed concern to Politico that Saudi investors could use their influence on Twitter to suppress opinions they don’t like or track their opponents and critics.
Musk has declared himself a “freedom of speech absolutist,” but reminded The Atlantic that in the age of social media, no one has managed to balance both freedom of speech and preserving truly open discussions on the Internet on a large scale. The magazine added that many who have tried and failed have often turned out to be more principled and sensible than Musk. At least most of them didn’t post conspiracy theories.
Musk is also the CEO of Tesla, SpaceX, The Boring and Neuralink. These are huge companies representing completely different lines of business. It’s hard to imagine the burden Musk has on managing these companies, and the addition of Twitter to this group has only increased it. Meanwhile, Twitter’s user base continues to grow, and despite criticism and obvious problems, there’s a chance that Musk may be able to put Twitter on a financially successful path. The only question is, will it be the Twitter we know anymore?
Sources: AFP, CNN, DPA, “Platformer”, “The Atlantic”, “Politico”.