Elon Musk Buys Twitter for $44 Billion - TidBITS (2024)

Notable Replies

1. The man, I have no time for. Let’s see what he does, but I don’t expect this to go well.

2. I also want to make Twitter better than ever by … authenticating all humans.

   Hmmm…

3. Not sure how that will work when I have several Twitter accounts for different interests and angles and others have ones for different businesses

4. What I think is scary is that Musk is taking the company private. He won’t have to report to, or answer to a board of directors or a significant % of regulators. But whatever he decides to do, it is highly likely to involve a lot of drama. Another consideration is that in sixteen years, Twitter rarely turned a profit, and the few times it did, it was minuscule. He might not be able to turn this around quickly, if at all. And the EU is already considering regulations for social media. And I am concerned about what will happen if Musk does make Twitter “a bastion of free speech.” There’s hardly any moderation or fact checking already.

   And Twitter is driven by advertising sales, and Musk has not, to my knowledge, run any companies whose revenue is driven by ad sales. And selling ads is very different than buying ads.

5. Elon Musk is erratic but apparently successful. He has a history of being provocative. He is unconventional and one of the few visionaries in the the class of Steve Jobs. Eccentric. Nobody owns him. You have to give him that. I wouldn’t want him to be my boss. Those who probably once loved him are now those who think him getting control of Twitter is horrible. Which is almost funny. And Twitter can’t be worse run than it has been lately - from someone who does not use Twitter. My involvement with Twitter is the same as my involvement with cryptocurrency. Only when I happen across tweets and blurbs. Unlike many, I have no emotion about Twitter. Musk must have great emotion because his doesn’t seem like a great investment. I have always thought Twitter was a great idea, just not for me. Perhaps it’s those who tweet, those who follow, and those that don’t do either. Johnny Depp will almost certainly now cancel his Twitter account.

6. Yeah, he’s said he wants to move away from advertising (not a bad thing) but 90% of Twitter’s revenue comes from ads. The company will be private so he won’t have to satisfy a board or shareholders, but the investment banks that are backing him presumably will want Twitter to make money. He’s mentioned subscriptions, which is a fine idea, but in a world where Twitter lets anyone spew whatever they want, it’s hard to see people wanting to pay to be part of it.

   I’m as uncertain about this as everyone else. I don’t like Twitter, barely use it, and don’t particularly approve of it, and while I don’t think unfettered free speech will make Twitter better in any way I care about (and could make it much worse), Musk is such a loose cannon that I hesitate to speculate about what he might do and what the result might be. I think the best description of him might be from D&D: “chaotic neutral.”

7. unfettered free speech

   “unfettered free speech” is not bona fide free speech which will promote democracy, and all the other good things free speech is supposed to promote. For example, the old trope: Yelling “Fire” in a crowded theatre is not free speech.

8. There’s no requirement in the Constitution or American law that requires speech to promote democracy or good things, so that’s not really applicable.

   The “falsely shouting fire in a theater” was part of Schenck v. United States (1917), which was overturned by Brandenburg v. Ohio (1969). The Schenck ruling was a bad one – it allowed the government to censor critical speech that might cause harm to recruiting during wartime, which is a much broader limit than is now the case. Brandenburg tightened up what the government can censor. For a (somewhat vigorous) discussion of the problems with “fire in a theater” see:

9. I wonder how I’d be feeling if I was a Twitter employee right now. Oh, who am I fooling? I’d never work for Twitter!

10. Yelling “fire !” in a crowded theatre was simply an example, one of many examples, illustrating that unfettered speech is NOT free speech.

    Regardless of whether or not this topic (that is, the topic of “free speech”) is addressed in the U.S. Constitution or U.S. Law, does not mean that bona fide free speech suggests “anything goes.” This is an ethical issue, not a strictly legal issue.

    Speaking of free speech, if this conversation goes down the rabbit hole any further, Adam is going to shut the thread down. Just a friendly suggestion.

11. Yep. The question of what Twitter is and should be doing with regard to speech is interesting and on topic, but let’s keep it specific to Twitter. Seth Godin has a short bit that references “yelling ‘fire’” but makes the larger point that speech in most public spaces is kept civil by the management. And that’s a good thing.

12. You invoked a specifically American legal concept, so that was how I replied. Twitter is not actually covered by that precedent as it is a private entity, not a governmental one.

    See Also

    A Look at All the Changes Implemented by Elon Musk at Twitter in his Time as Chief TwitWhat next for Twitter under Elon Musk?Elon Musk bought Twitter for $44 billion, here’s everything that happaned nextElon Musk dissolves Twitter's board of directors

    But to go back to your original point about this:

    Illustrates how complicated this discussion gets quickly because who at Twitter (or Facebook for that matter) decides what speech “promotes democracy”? Elon Musk? Mark Zuckerberg?

13. One of my relatives is an astrophysicist who works for NASA and also teaches. He knows people who work, and have worked, for SpaceX. He says every one of them thinks Musk a d—-.

14. Hey, thanks Adam. Seth’s blog is bordering on buddhist ethics, but there I go again, off topic, that is.

15. For the same reason, I refuse to drive a Tesla.

16. 44 billion dollars! It’s hard to get my 78 year old mind around that figure. I finally decided to compare it to the 5 cents I paid for a candy bar in 1949 (long story). Using an online inflation calculator, I asked it how much today’s 44 billion would have bought in 1949 dollars, and it is still a staggering number: $3,542,384,105. Over three and a half billion dollars! That kind of money could do so much good, and here it’s being wasted on an ego trip. Sad.

17. How is the money being wasted? It’s not being burnt in the Twitter parking lot, it’s going to Twitter shareholders, who will use it for such “wasteful” things as buying groceries and paying rent, and yes, some will probably even donate some to charity. While I do find the whole thing kind of pointless and silly, the $44b is arguably better in Twitter shareholder hands than Musk’s and some banks.

18. Musk is currently one of the biggest philanthropists in the US, but he keeps his big blabby mouth tightly shut about who, where and how much. In context, seems kind of strange to me. And he donated Tesla stock rather than his personal cash:

    Tim Cook is also a well known philanthropist, and he donates regularly

    And he also recently launched a fund that will match Apple employees’ donations to help the Ukrainian fight for freedom:

    Tim is sometimes outspoken about political issues:

    https://www.therichest.com/things/tim-cook-racists-apple-products/

19. “the $44b is arguably better in Twitter shareholder hands than Musk’s and some banks.”

    Point taken, although I kind of doubt that most shareholders need or use the cash for buying groceries and paying rent. I guess what I was trying to say (poorly) is that there are far better ways for the incredibly rich to give back to society than this. Hopefully, this investment will, at least, do some good in the world of social media (although I’m doubtful).

20. Twitter shareholders did launch a poison pill, but it seems that a sufficient number were lured by the $43,000,000,000 buyout Musk offered:

    Larry Ellison might still be holding on to his Tesla shares, but the biggest holders were institutional. I doubt that most of the other individuals who invested in Tesla stocks do not need to worry about being able to pay their bills for essentials. I’ll bet there are many working and retired people who benefitted from the cash buyout.

21. Who do you think the shareholders are?

    According to Yahoo Finance, 12.42% is held by insiders (that is, Twitter employees and executives) and 82.52% are held by institutions (mutual funds, ETFs, pension funds and other such organizations), leaving only 5.06% held by other individuals.

    The institutions are not code for “wall street fat cats” and other people who are frequently demonized in the press, but are the vehicle with which most of the world has invested.

    For example, if you have investments (maybe your retirement plan) in an S&P 500 index fund, you own some Twitter via an “institution”.

    The institutional investors probably didn’t have a choice. They have a fiduciary (that is, legally mandated) obligation to maximize value on behalf of their customers. If they choose to turn down an offer that is significantly higher than market value, they risk massive lawsuits from those customers.

    Similarly, the board of directors has a fiduciary responsibility to maximize shareholder value. They might be able to refuse an offer if there is another offer somewhere that they could argue is “better”, but in the absence of any significant competing offer, they will have a hard time arguing that refusal will be more profitable than acceptance.

    This is also why the “poison pill” was always doomed to failure. Good luck telling the existing shareholders that you are taking action that will deliberately lower the value of their shares, not because it’s best for the company, but because you personally don’t like the person making the buyout offer. Again, that’s inviting massive shareholder lawsuits.

    An individual can choose to refuse a great offer on principle, but those with fiduciary responsibilities (including the board of directors and institutional investors) really can’t. They are legally obligated to maximize shareholder value and therefore really can’t refuse a massive buyout offer like this without some explanation (one good enough to stand up in court) about how refusal could be even more profitable.

22. This is commonly claimed. And yet, it’s not true (per SCOTUS).

    Not so long ago it was brought up right here on this board. Too lazy to search for it myself but it’s here somewhere.

23. Please share the link when you find it.

    But even if it’s not a legal obligation, they are still obligated by their rules of incorporation.

    As a publicly traded company, the board of directors must be periodically re-elected via their annual shareholder meetings. If the shareholders (which is mostly institutional investors who are in it for the money, not for politics) believe the board deliberately destroyed share value, they will vote out that board. And if they get really upset, they could call for a new election before the annual meeting.

    Again, refusing such an offer without having a better offer somewhere or a rock-solid reason (and “we think he’s going to personally bring about the apocalypse” isn’t going to change anyone’s mind), is pretty much asking to be fired from your job.

    See Also

    Twitter Has Undeniably Gotten Better Under Elon Musk

    Furthermore (a point I failed to mention before), the executives of a company are compensated mostly in stock and stock options, which often have price objectives that must be met before the shares and options will vest. Given a choice between “accept it and get very rich” and “reject it and lose most of the value of your compensation package”, only a die-hard ideologue is going to reject it over politics.

24. Simon is correct; the US Supreme Court ruled otherwise:

    https://caselaw.findlaw.com/us-supreme-court/13-354.html

    What the ruling makes clear is that value isn’t just about money.

25. I just looked at Twitter’s articles of incorporation and I don’t see any such obligation. Perhaps you could point to it?

    https://www.sec.gov/Archives/edgar/data/1418091/000095012313007113/filename2.htm

26. The American Public Media radio program Marketplace earlier this week ran a story on the alleged responsibility to “maximize shareholder value.”

27. No, there isn’t a written requirement to maximize profit at the expense of everything else. But the board of directors are elected by and serve at the pleasure of the stockholders:

    • Section 4.5(a) states that there are 7 directors, elected by different blocks of shareholders
    • Section 4.5(d) states that the shareholders can vote to remove directors

    So yes, there is nothing that forces the directors to accept or recommend accepting such a deal. But the practical reality is that if they refuse and tell others to refuse, the shareholders (especially the institutional investors) are going to demand a good reason why, when acceptance means nearly doubling the value of their investment.

    And a poison pill makes matters even worse. Then they would have to explain to those shareholders why they are not only refusing to accept a deal doubling the stock’s value, but are in fact taking steps to drastically slash the value of existing shares by issuing massive blocks of new shares that will only be sold to insiders that agree with the board’s decision.

    It takes a lot to convince institutional shareholders to vote out a board of directors, but something like this could easily do it, and the directors know it. Very few people are going to sacrifice their own net worth and their jobs over this.

    It’s not like the corporate raider scenario (where poison pills have been used), where the board can argue that the company will be broken up and dissolved if the deal goes through. There is no hint of that in this situation - the only objections to the deal is that many people simply don’t like Musk as a person, and that’s not going to convince investors to accept the corresponding losses.

28. That’s what I thought. Thanks.

    The point I would highlight is that there’s a vast difference between Twitter having a legal requirement (either through the law or their articles of incorporation) to maximize profits and stock price, and Twitter having to answer to shareholders who have a variety of different interests. One’s the law and the other is a discussion. The Twitter stockholders may be most interested in those values, but they may also be responsive to an argument that selling to Musk would turn Twitter into a version of Truth Social or Gab, neither of which have flourished.

29. Canada is also considering social media regulation. Not saying it’s a good idea.

30. TidBITS and Twitter, eh? Then, again, is IS, after all, your publication, ACE. Talk about “The Thread That Wouldn’t Die” topic and the proverbial can of worms.

    Twitter is a sewer and has been since its inception. When I ran a multi-line BBS, I validated every, new sign-up. There were NO nom de plumes and first AND last names accompanied every post. For the years the BBS lasted, it was popular and busy.

    Character can be defined by what one will do when no one is watching and what they will do when their actions/words will not directly benefit them. My guess is that, even the most honorable among us, when assured of no accountability, will run amok from time-to-time.

    Bravery can be defined by saying what one will while, at the same time, signing-off using their REAL name. I have been doing so since the first time I posted in a public forum - and that was on newsprint. So far, my home hasn’t been torched. Of course, I keep my insurance up-to-date.

    I am particularly amused observing the panicked gyrations of those with a particular sociopolitical conviction over the acquisition of the sewer by the electric dragster/spaceship guy. Everyone can just relax: It’s a cinch the service can’t get much WORSE.

31. I was an early member of Cafe Utne, still going as a forum, and we had moderated conversations, on occasion heavily moderated. Real names, people came from the States and visited me in person, we visited long term contacts in the US at several points too. It was real nice to meet up face to face after years of chat online.

    Would I do that with Twitter? Perhaps, but with only a few individuals. I have had very positive experiences with users, mainly through being quite selective about who I follow and who can follow me. I was part of the very first wave but blocked a good deal of characters over the years.

    What Twitter is strong at is gauging the various tribal responses to issues of interest, in my case film, education, tech and photography and the place where I live.

    I would dispute that it is irredeemably awful, in many cases it is a vital current response to events of interest. A kind of impromptu always ready newsroom.

    As a public arena however it is unruly and only so useful and given the lack of real conversation only so good. For quality give me a forum I respect any day. The TidBITS slack channel as a gathering of trusted and focussed and intelligent posters is a better place to view an Apple launch than the stream of repetition such events prompt on Twitter.

    The political tribes, including the likely return of the last president being perhaps the prime example, are far less appealing if not downright disturbing. The key worry is that what happens on our devices has become important, and actual life as lived by the 80% of the people who don’t ever look at Twitter is impacted by the chattering classes who do. I have found that you can carve out a positive space on Twitter but it takes work, but equally people can carve out negative spaces and that doesn’t take much work at all…

32. The Founding Fathers would disagree.

33. In general, I’m a great believer in putting your name on anything you post, but I do acknowledge that there are some very good reasons for anonymous or pseudonymous posting, particularly where personal safety is at risk.

    However, and I realize I’m no Twitter expert, but it seems to me that there’s effective anonymity in the number of users on Twitter at this point. Sure, there may be a name associated with a post, but with hundreds of millions of users, most names aren’t that different than random collections of characters that might or might not actually identify a person. If there are no social consequences to posting, there’s no downside in signing your posts.

    And more to the point, the algorithm ensures that controversial posts that generate lots of engagement are rewarded, which does the exact opposite of encouraging constructive, civil discourse. Predicting Elon Musk is a fool’s game, but his past behavior doesn’t suggest to me that he sees civil discourse as a goal.

34. And Twitter has had big and longstanding disinformation, hate speech, bullying and harassment problems:

    Is Musk’s position on “free speech” going to make the problems any better?

35. I think that’s a bit of thin hope for, eg, Russian journalists to rely on.

36. Which is exactly why I said:

37. Separating who deserves anonymity from who doesn’t is going to be really difficult. Who decides?

38. Clearly, Elon Musk.

    There are too many variables to know what will or will not happen with Twitter. It just seems to me that a lack of anonymity, if Musk takes it in that direction, probably won’t improve the level of discourse for the reasons I stated but will ensure that people for whom anonymity is essential for personal safety jump ship. I don’t know if Musk would care either way. I don’t care for myself, since I don’t like or use Twitter particularly, but all I can do is hope that it becomes less of problem for society at large than it is now.

39. And now, Elon Musk says he isn’t buying Twitter after all. Given the ups and downs of this story, I don’t even want to publish an ExtraBIT about it, since for all we know, the deal could be back on tomorrow. The best thing to come up the entire debacle is that @glennf turned me on to Matt Levine’s newsletter, which is so amusing that I read about the world of high finance even though I have no actual interest in it. Here’s what Matt wrote about Musk pulling out of the Twitter deal.

    https://www.bloomberg.com/opinion/articles/2022-07-09/elon-s-out

    And more on it today:

    https://www.bloomberg.com/opinion/articles/2022-07-11/the-price-of-not-buying-twitter

40. As most here know, Twitter advertising revenue depends upon its number of actual subscribers. It’s advertising revenue is its real net worth. It Twitter has a significant number of bad accounts - and particularly if it has not been careful about cleaning them up - the net worth could be significantly less, it’s advertisers may be wanting some $$$s back and the SEC or ??? may decide to take a peak behind the green curtain.
    David

41. Advertisers would be mad if Twitter was lying to them, of course, but as Matt Levine pointed out in the second post I linked to above, if Twitter has more bot accounts than it says it does (which there is no reason to believe), then it’s earning MORE money per real user than it would seem to be now. And there would be more room for growth, because more people could sign up for Twitter. Plus, of course, Musk said one of the reasons he wanted to buy Twitter was to clean up bot accounts.

    Levine says it way more amusingly. :-)

42. This is Twitter’s major source of revenue, but a few years ago they said they removed third-party data from its ad platform. This was on the same day that it apologized for using third party user data without consent is a one-two punch for the social media company. While Twitter’s third-party data decision follows a similar move by Facebook last March that was in response privacy concerns.

    A Twitter exec told The Wall Street Journal that its decision was based on simplifying ad purchasing for marketers, many of whom the exec claimed aren’t using Twitter’s third-party data. Still, the move could make it more difficult for marketers to target their advertising on the platform, although they will still be able to purchase third-party data on their own.developed a third party ad sales revenue stream that is a significant part of their bottom line”

    Twitter developed this revenue stream after a s—-storm of disastrous PR about a previous third party ad sales program they had. Facebook/Cambridge Analytica got clobbered about this same issue at the same time. Musk most definitely must have known about this before he opened his big blabby mouth about buying Twitter.

    “Twitter’s move to remove third-party data from its ad platform coming on the same day that it apologized for using user data without consent is a one-two punch for the social media company. While Twitter’s third-party data decision follows a similar move by Facebook last March that was in response privacy concerns, a Twitter exec told The Wall Street Journal that its decision was based on simplifying ad purchasing for marketers, many of whom the exec claimed aren’t using Twitter’s third-party data. Still, the move could make it more difficult for marketers to target their advertising on the platform, although they will still be able to purchase third-party data on their own.”

    So in addition to ads Twitter delivers to its members on its apps and web pages, they are still selling external third party ads.

43. Quite frankly, I’m not surprised Musk backed out of the deal. I think that was his plan from the start and he had no intentions of actually going through with the purchase. He certainly received a lot of attention he always thrives for. But that’s just my opinion.

44. It’s not just your opinion. I think exactly the same.

    He’s a narcissist who needs to be the center of attention 24/7. Like a little child. A bit embarrassing for what should be a grown man if you ask me. Obviously the SEC needs to fine him far more than just $20M until he gets it.

45. There are reports in the news that Musk’s net worth has fallen about $65 billion since he announced the intention to purchase twitter. That and the increased cost of financing debt: I wonder if that’s part of the reason he’s searching for reasons to back out of the deal.

46. Matt Levine has written quite a bit about this. When you’re as rich as Musk is, the rules don’t seem to apply, so yes, he could have done this purely for giggles. And he’s probably on the hook for at least $1 billion. But when you’re worth $225 billion (as of this minute), that may still be worth the fun. It also continues to cement his reputation as an unpredictable maverick, which may help (or hurt) him in the future.

    Just inscrutable, but with incomprehensible amounts of money available, it’s perhaps not surprising.

47. I’m not sure I’d use “maverick” to describe somebody who has no issues creating havoc on an almost global scale just to secure himself some “fun”. I would definitely not consider maverick and some sense of responsibility as mutually exclusive, but perhaps that puts me in the minority. Call me old-fashioned I guess.

48. Perhaps the Dungeons & Dragons alignment of “chaotic neutral” describes him better. :-)

49. It was his littering of the magnificence of space with a dumb gag that finally shut the door on Elon for me.