Elon Musk has made a significant move by acquiring Twitter for a whopping $44 billion in cash. This bold move will grant Musk control over the immensely popular social media platform and its millions of active users, as well as its influence on global leaders. The purchase price represents a significant premium of almost 40% to the closing price of Twitter before Musk disclosed his stake of over 9%. However, this acquisition has raised numerous concerns regarding the future of free speech on the platform.

One of the main criticisms Musk has had of Twitter is its moderation policies. He strongly believes in free speech and has advocated for Twitter to make their tweet prioritization algorithm public. He has also expressed worries about giving too much power to corporations that advertise on the platform. With Musk taking charge, there is an expectation among political activists that moderation will decrease and banned individuals, including former President Donald Trump, will be reinstated. This prospect has been welcomed by conservatives supporting fewer controls, but human rights activists fear it may lead to an increase in hate speech.

Musk has also proposed some user-friendly changes to the platform, such as introducing an edit button and implementing measures to combat spam bots flooding the platform with unwanted tweets. These improvements could make Twitter more attractive to users and enhance the overall user experience. After Musk provided financing details to Twitter shareholders, who initially had doubts about the deal, discussions regarding the acquisition gained momentum. Under pressure, Twitter engaged in negotiations with Musk and eventually agreed to the proposed purchase price of $54.20 per share.

In a statement, Musk emphasized the importance of free speech and highlighted Twitter’s role as a “digital town square” for engaging in crucial debates about humanity’s future. Following the announcement of the deal, Twitter’s shares rose by 5.7% to $51.70. While this represents a significant premium compared to the previous closing price of the stock, it is still much lower than the $70 range at which Twitter traded last year. Some investors believe that given more time, Twitter could have achieved higher valuations on the public markets. However, Musk’s offer demonstrates that if public markets fail to properly value a company, an acquirer will eventually step in.

Musk’s acquisition of Twitter follows a trend of billionaires obtaining control over influential media platforms, reminiscent of Jeff Bezos’ acquisition of The Washington Post in 2013. The purchase of Twitter was financed through a combination of debt, margin loans, and equity commitments amounting to $46.5 billion. Despite his immense wealth, Musk has stated that he is primarily concerned with having a trusted and inclusive public platform rather than the economics of Twitter. He views it as vital for the future of civilization.

It remains uncertain how much time Musk will dedicate to Twitter or what changes he will implement once the deal is finalized. Parag Agrawal, Twitter’s current CEO, acknowledged the uncertainty surrounding the platform’s future direction. Analysts have noted the potential benefits and drawbacks of the deal. While it is seen as positive news for skeptical Twitter shareholders, it may divert Musk’s attention away from Tesla, his electric car company. Nonetheless, Musk’s Twitter account, with its 84 million followers, remains an essential tool for promoting and maintaining the public image of Tesla.

The acquisition has received approval from Twitter’s board and is now awaiting a shareholder vote. Regulatory obstacles are not expected to be a significant issue. Although Twitter is relatively smaller in size compared to social media giants like Facebook, it has played a substantial role in shaping world events. It was credited with catalyzing the Arab Spring uprising and has been criticized for contributing to the storming of the U.S. Capitol on January 6, 2021. After Twitter banned Donald Trump, Musk expressed concerns about the power of tech companies in determining what constitutes free speech. Trump himself is currently developing a Twitter rival called Truth Social.

While the White House refrained from commenting specifically on Musk’s deal, it reiterated President Joe Biden’s concerns about the ability of social media platforms to spread misinformation. The administration has emphasized the importance of holding these platforms accountable. Analysts have observed that Twitter’s board had limited options once Musk presented his financing package, and there were no other bidders. The concerns raised by Musk’s acquisition of Twitter are not new and reflect broader discussions about the influence and responsibilities of social media platforms in shaping public discourse.

Useful links:
1. Business Insider – Elon Musk’s Acquisition of Twitter Raises Concerns About Free Speech and Moderation Policies
2. CNBC – Elon Musk’s Acquisition of Twitter Highlights the Potential Disconnect Between Private and Public Market Valuations