With his new purchase of a 9 percent stake in Twitter, Elon Musk is not only diversifying his investment portfolio. The Tesla boss is also deepening his ties to one of America’s premier venues for public discourse – potentially hinting at future ambitions to influence the platform’s handling of free speech, content moderation and digital censorship.
The ultimate goal of Musk’s $73.5 million share purchase, valued at $3 billion based on Friday’s closing price, remains unclear. But tweets he posted just days after buying the stake suggest that Twitter’s status as a discussion forum may have weighed heavily on his purchase decision.
“Given that Twitter serves as a de facto public marketplace, failure to uphold the principles of free speech fundamentally undermines democracy,” Musk said richest man in the world and an active Twitter user with 80 million followers, posted March 26. Regulatory filings show Musk bought his shares on March 14.
“What is to be done?” He added, before continuing in a follow-up tweet, “Is a new platform required?”
The latter question has kept surfacing in recent years, as social media took on an increasingly larger role in America’s public discourse, and accordingly sparked a debate about whether and when platforms delete, hide, or fact-check users’ posts.
Such arguments have plagued the internet for decades, but rose to national prominence in 2016 and 2020 amid concerns about election misinformation; during the COVID-19 pandemic when medical misinformation went viral; and after the January 6 riot in the US Capitol, as people debated the risk social media poses to public safety.
In fact, Twitter, Facebook and other platforms took unprecedented steps after the uprising Move to ban former President Trump for his part in the day’s events. After the notoriously social media savvy “chief tweeter” was clipped from his favorite soapboxes, many young social networks saw a chance to snag one of the biggest posters in the world – or at least get some of his followers to join.
However, these ambitions largely failed to materialise. Instead of joining a pre-existing app like Parler or Gab, both of which have searched To build a brand around the absolutism of free speech, Trump hinted that he could create his own platform from scratch.
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But even these efforts were largely unsuccessful. Trump’s self-developed app Truth Social was stopped from the start due to technical complications and has seen its user base ever since stagnate; Trump card only posted once on the platform. A personal blog Trump started in a similar vein has failed to regain the momentum of his Twitter brand.
If Musk’s recent tweets are any indication, the billionaire tech magnate is pursuing a similar goal, but from the opposite direction. Rather than attempt to port his brand to a niche platform or build his own largely unmoderated website from the ground up, Musk’s 9 percent stake in Twitter suggests he might instead seek to transform Twitter from within.
Though Musk is now Twitter’s largest shareholder, his stake is a “passive investment,” meaning he’s barred under US securities laws from gaining control of the company — but that doesn’t stop him from doing so in the future through active investment.
Nor does that mean Musk has to remain passive when it comes to communicating his thoughts publicly or internally via Twitter, said Charles Elson, founding director of the Weinberg Center for Corporate Governance.
“He’s always good at voicing his opinions,” Elson said — something Musk doesn’t shy away from. “Fasten your seatbetls.”
An ideological stance on America’s content moderation debates isn’t the only explanation for Musk’s move. Twitter also plays a practical role in his business empire, primarily as a PR tool.
“No one has benefited more from the existence of Twitter than Elon Musk,” said David Kirsch, a professor at the University of Maryland’s Robert H. Smith School of Business and co-author of the recent book Bubbles and Crashes. “Donald Trump used Twitter to win the presidency, but Elon Musk used it to maintain the Tesla narrative and support the stock when the company was on the brink of collapse.”
Musks is one of the most followed accounts on Twitter. He often tweets to promote Tesla technology and SpaceX launches, but often causes controversy. Most notorious was a Musk tweet implies A rescue diver was a pedophile after the man belittled Musk’s plan to use a miniature submarine to rescue children stuck in a cave in Thailand. Musk is also currently involved in one litigation with the US Securities and Exchange Commission in connection with a tweet claiming he could take Tesla private for $420 a share.
“No one has been more adept at using Twitter to control public narratives,” said Kirsch, who is currently studying the impact of Twitter bots on Tesla’s stock price and reputation. (Bots are automated Twitter accounts created to resemble real people and are often used to flood the app with programmed messages.)
Musk could invest “if he believes Twitter is introducing policies that limit his ability to use the platform,” Kirsch added.
However, Musk’s exact intentions are difficult to discern. His only tweet since the purchase was announced was a cheeky “Oh hi lol”.
Should Twitter move towards a more absolutist free speech policy, it would likely limit the available market for smaller platforms that have been pursuing this strategy for years.
But in statements to The Times, some of these companies claimed that an ideological victory is still a victory.
“We appreciate that Elon Musk has validated our thesis and the exploding interest in a market that Gab has been pioneering for nearly six years,” Andrew Torba, founder of far-right platform Gab, said via email. “Anything that encourages more speech, not less, is a good thing in our book.”
Mark Weinstein, founder of Facebook alternative MeWe, also claimed that “Elon Musk becoming Twitter’s largest shareholder is great news.”
“I’m encouraged that he will help bring Twitter back to its roots by embracing the principles of free speech,” Weinstein said in an email. “Musk’s investment will likely negatively impact newer Twitter alternatives like Gettr and Truth Social. Social media is one of the most difficult industries to compete in.”
Parler CEO George Farmer wrote that he is encouraged by Musk’s “shared passion for the fundamental importance of free speech.”
Twitter didn’t respond to a request for comment on whether the company expects site policies to change as a result of Musk’s investment, nor did it clarify how it will moderate Musk’s personal account, since he’s also a key stakeholder.
Regulatory filings describe Musk as a long-term investor trying to minimize his buying and selling of the stock. Industry analysts are skeptical that the Mercurial CEO will remain on the sidelines.
“We would expect this passive participation to be just the beginning of broader discussions with Twitter’s board/management that could ultimately lead to active participation and potentially more aggressive ownership by Twitter,” Wedbush Securities’ Dan Ives said in an early note to clients Monday.
Shares of Twitter were up more than 22% at Monday’s opening bell.
SEC rules require buyers of significant stakes in companies to report their purchases to the agency within 10 days. Musk bought the stake on March 14, according to his filing. He hadn’t submitted anything as of March 25, when he posted a Twitter poll asking whether the platform adheres to the principles of free speech. He submitted his application on April 4, 11 days late.
That could cause Musk more problems. “A deadline is a deadline, and the SEC can impose penalties,” said Elson, the director of the Weinberg Center — though Musk has shown he’s willing to tolerate it.
In fact, the CEO has repeatedly run afoul of financial regulators over his use of Twitter. His latest acquisition comes as he is embroiled in a bitter dispute with US securities regulators over his ability to post on the site.
In October 2018, Musk and Tesla agreed to pay $40 million in fines and have Musk have his tweets approved by a company attorney after he tweeted that he had the money to sell Tesla for $420 a share to take private.
Funding was far from secured and the electric vehicle company remains publicly traded, but Tesla’s stock price skyrocketed. The settlement specified governance changes, including Musk’s removal as CEO, as well as the pre-approval of his tweets. The SEC filed securities fraud charges, alleging that Musk’s posts manipulated the stock price.
Musk’s attorney is now asking a US District Court judge in Manhattan to overturn the settlement, claiming the SEC is harassing him and violating his First Amendment rights.
Musk’s reveal of his stake in Twitter shares comes two days after Tesla Inc. released first-quarter shipping numbers. Although the company delivered 310,000 vehicles during this period, the number fell slightly short of expectations.
Shortly after the November tweets about the Tesla stock sale, Musk began selling shares, writing on Twitter that the sale would be used to pay for stock option tax obligations. Analysts put his tax liability at $10 billion to $15 billion. But some of the money could have been used to buy Twitter’s stake.
To date, he has sold more than 15 million shares worth approximately $16.4 billion. With some sales in late December, Musk is close to selling 10%.
The Associated Press contributed to this report.
https://www.latimes.com/business/technology/story/2022-04-04/elon-musk-biggest-twitter-stakeholder What Would Free Speech Look Like On Elon Musk’s Twitter?