Elon Musk has reversed his decision earlier this year to back out of a $44bn (£38.6bn) acquisition of Twitter and is back mulling over plans for his social media platform. The two sides are now discussing how to complete the full deal, assuming Tesla’s CEO closes the deal at the agreed-upon price of $54.20 per share.
Of course, there’s a chance Musk will try to walk away again, but if he follows through on his intentions this time, here are some hints as to what he might do with his new purchase.
Address free speech issues
One of the most contentious issues surrounding the Twitter deal, when the world’s richest man seemed genuinely interested in buying it, was Musk’s concern about free speech. He is a self-described free speech absolutist who has expressed concern that the platform will reduce certain posts with its algorithms that curate what users see. In an interview before he agreed to buy the company, he expressed concern about “tweets being mysteriously promoted and downgraded without being able to figure out what’s going on.” He suggested an open-source algorithm to solve it.
A cache of texts revealed in court proceedings last week provided further evidence of his concern. Podcaster Joe Rogan asked the Tesla CEO in April — when his acquisition of a stake in the company was revealed — whether he would “liberate Twitter from the censorship happy crowd.” Musk replied, “I give advice that they may or may not follow.”
The same cache also showed Mathias Döpfner, CEO of Axel Springer, the media group that includes Politico, calling on Musk to make Twitter “censorship-free” and create an “algorithm marketplace” so that “if you’re a snowflake and don’t want content that offends you, choose another algorithm.”
Donald Trump consults on his cell phone during the meeting. He was removed from Twitter in January 2021 after the Capitol riots. Photo: Alex Brandon/AP
Another text suggested hiring a “Blake Masters type” as “vice president of enforcement,” a reference to the Trump-backed Arizona Senate candidate.
Musk has also said he opposes censorship “which goes well beyond the law”, but legislation is changing in the UK over the Online Safety Bill (although its free speech provisions may now be tweaked) and digital services in the European Union. to act.
Restoring Donald Trump
A consequence of Musk’s freedom of speech is that people banned from the platform can get their accounts back. The former US president was impeached in January 2021 after the Capitol riots, and Musk has said he will overturn it. When asked about Trump in May, he said, “I would lift the permanent ban,” adding that Twitter is “left-wing.”
Other figures banned from Twitter include US conspiracy theorist Alex Jones and UK right-wing commentator Katie Hopkins.
Musk’s financing for the takeover includes $13 billion in bank debt that will be covered by Twitter’s balance sheet. That debt needs to be paid, and according to its latest results, Twitter generated negative free cash flow (spending more money than it takes to run the business) of nearly $124 million. Twitter needs to do better financially, and cost-cutting has been on Musk’s mind.
Bloomberg reported in April that in negotiations to finance the takeover, Musk cited cost and job cuts to improve the company’s bottom line. 7,500 people work at Twitter.
In June, he told Twitter employees that the company needed to get financially healthy and cut costs. “Right now the costs are outpacing the revenues,” Musk said, adding, “It’s not a great situation.”
Launching the All app
Musk tweeted to his more than 100 million followers on Tuesday that the Twitter purchase was an “acceleration to build App X, y’all.”
He didn’t give many more details, except that the Twitter takeover would speed up Xi by up to five years. By the way, X is the name of the company vehicles Musk is using to buy Twitter.
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Buying Twitter accelerates the creation of App X
— Elon Musk (@elonmusk) October 4, 2022
But this “everything app” seems to be inspired by China. In a meeting with Twitter staff in June, Musk said the platform should be more like China’s WeChat, an app that enables instant messaging, social media and mobile payments. According to The Verge, Musk said, “You basically live on WeChat in China. If we can recreate that with Twitter, we’ll have great success.
Shortly after agreeing to buy the company this year, Musk made it clear he wanted to quintuple Twitter’s annual revenue to $26.4 billion by 2028, according to the New York Times. Advertising accounts for 90% of Twitter’s revenue, and Musk has made several proposals to generate revenue in other ways.
The revenue-boosting changes he has outlined include: increasing the popularity of Twitter’s paid subscription service by making it ad-free; the growth of Twitter’s payments business; “light” charging of commercial and government users; and find new ways to monetize tweets that contain important information or that go viral.
His financial backers are also looking for revenue growth. A consortium of banks has committed to raising $13 billion in debt as part of the financing, and backers of the more than $30 billion in equity pledged by Musk want the company to do well.
Deal with Twitter bot accounts
Musk has been adamant that the number of spam accounts on the Twitter platform is higher than the number stated by the company. He believes the actual number of annoying automated accounts on the platform is higher than what Twitter estimates to be less than 5% of its monetized daily active users (mDAU), the company’s key business metric.
The Tesla executive cited miscalculation of spam accounts as a central reason for pulling out of the July deal. He has promised to “authenticate” all people on the platform, so expect action to address the issue, which he says Twitter has overplayed.
Address issues raised by the whistleblower
Peiter “Mudge” Zatko, Twitter’s former security chief, made a series of allegations about the company in a whistleblower complaint in August. He alleged interference by foreign governments, multiple information security failures and mismanagement. Twitter has accused Zatko of spreading a “false narrative about Twitter” and said he was fired for “ineffective leadership and poor performance.”
Nevertheless, Musk was granted permission to add Zatko’s allegations to a counterclaim against Twitter. Zatko has also been interviewed by his lawyers as part of preparations for a trial scheduled for Oct. 17 in Delaware — along with Twitter’s lawsuit demanding that Musk buy the company. The non-jury trial is now expected to be postponed.
A change of management is also possible. Musk fell out with Twitter CEO Parag Agrawal, and reports in May suggested he had installed himself as interim CEO.