Elon Musk, the CEO of Tesla, has purchased a 9% interest in Twitter, making him the social media platform’s largest stakeholder, while also challenging the social media platform’s commitment to free expression and the First Amendment.
Musk’s ultimate goal in buying 73.5 million shares for $3 billion is unclear. Musk, who has 80 million Twitter followers and is active on the network, questioned if Twitter’s free speech is damaging democracy in late March.
Twitter and other social media sites have come under scrutiny in the past for enabling damaging comments that ranged from encouragement to violence to orchestrated harassment and racist hatred. More lately, these platforms have taken strong measures to reign in such activity, frequently receiving political right-wing condemnation comparable to Musk’s. Following the Jan. 6 Capitol insurgency last year, Twitter and Facebook drew backlash after suspending former President Donald Trump’s accounts.
It’s unknown when Musk purchased the stock. The incident that triggered the submission, according to a Securities and Exchange Commission document made public on Monday, occurred on March 14. Musk has also hinted at the prospect of launching a competing social media network, thanks to his large and devoted Twitter following.
Musk, according to industry observers and legal experts, may start campaigning for changes at Twitter right once if he so chooses. Because the value of Twitter’s shares has been declining since early last year, CFRA Analyst Angelo Zino stated in a letter to investors that the company may be seen as an acquisition target.
Jack Dorsey, a co-founder of Twitter, stepped down as CEO in November. Musk’s Twitter investment has grown to more than four times that of Dorsey, who was formerly the company’s largest individual stakeholder.
“Musk’s real stake is a very small fraction of his fortune, and an all-out buyout should not be ruled out,” Zino, a Twitter and social media journalist, stated.
According to Erik Gordon, a law and business professor at the University of Michigan, Musk might regard Twitter as an investment with significant growth potential, or he could be purchasing for non-financial reasons, such as ensuring that the network does not restrict his speech.
“What he could be afraid about is Twitter saying, ‘We’re doing our job against disinformation,’ if enough of his tweets come to seem like disinformation.” Gordon remarked. According to Musk, no CEO would refuse a call from the company’s largest shareholder, therefore the acquisition provides him access to Twitter’s senior management.
Musk hasn’t said anything about any potential Twitter rule changes, but the social media platform’s history of suspensions and bans is widely known.
Trump’s removal from Twitter and Facebook has prompted challenging concerns about free expression in a social media market driven by a few internet behemoths, an issue that Trump and conservative media have pounced on. Musk received a lot of plaudits from those circles on Monday.
Michael Flynn, a former general who served as Donald Trump’s national security advisor for a short time until being barred from Twitter in January 2021, offered Musk some free advice over Telegram.
“Hey Elon, how about allowing all of folks who were kicked off Twitter for being pro-Trump and pro-America back on?” Flynn wrote.
Twitter terminated far-right U.S. Rep. Marjorie Taylor Greene’s personal account earlier this year for several breaches of the platform’s COVID-19 misinformation policy. Other people banned in recent years include right-wing conspiracy theorist Alex Jones and his Infowars show for abusive behavior, Steve Bannon for suggesting the beheading of Dr. Anthony Fauci, former Ku Klux Klan leader David Duke for breaking the social media site’s hate speech rules, and right-wing conspiracy theorist Steve Bannon for suggesting the beheading of Dr. Anthony Fauci.
Musk recently described himself as a “free speech absolutist” on Twitter, explaining why his Starlink satellite internet service, which is part of his aerospace company SpaceX, would not block Russian state media outlets that have spread propaganda and misinformation in support of the Kremlin’s narrative on its war in Ukraine.
However, advertisers, who are Twitter’s primary source of revenue, would not appreciate such rigidity, according to Brian Wieser, GroupM’s worldwide head of business intelligence. Because a poisonous platform can drive many other users away, brands who advertise on Twitter greatly want some content rules.
“Some kind of communication, such as encouraging an insurgency or advocating harming people, are not the kinds of things most marketers want to promote,” said Wieser, a media analyst for advertisers.
The shares of Twitter increased by about 30% on Monday. Twitter’s stock has risen about 50% since March 14, the date indicated on the company’s filing, indicating that Musk’s investment has paid off handsomely – so far.
A request for comment from Twitter was not immediately returned.
Musk informed his millions of Twitter followers in March that he was ” seriously considering” developing his own social media network, and he has often fought with financial authorities over his use of Twitter.
Musk is embroiled in a fierce legal battle with the Securities and Exchange Commission over his capacity to post on Twitter. In court filings, his counsel argues that the SEC is intruding on Tesla CEO Elon Musk’s First Amendment rights.
After Musk tweeted about having the money to take Tesla private for $420 per share in October 2018, Musk and Tesla agreed to pay $40 million in civil fines and have Musk’s tweets vetted by a corporate counsel.
Tesla’s stock price rose despite the fact that the cash was far from certain and the electric vehicle firm remained publicly traded. The settlement occurred after the Securities and Exchange Commission (SEC) filed a securities fraud case against the company. It outlined improvements to the company’s governance, including Musk’s removal as chairman of the board and pre-approval of his tweets.
Musk’s lawyer is now seeking a Manhattan federal court to dismiss the settlement, claiming that the SEC is harassing him and intruding on his First Amendment rights.
According to the SEC, it has legal jurisdiction to subpoena Tesla and Musk over his tweets, and Musk’s attempt to have the settlement thrown out is invalid.
The SEC also said that it is looking at Musk’s tweets from November 6, 2021, in which he asked followers if they thought he should sell 10% of his Tesla stock. The commission said it issued administrative subpoenas as part of its investigation into whether Musk and Tesla are adhering to the 2018 agreement’s disclosure measures.
Musk sold more than 15 million shares for a total of $16.4 billion. Musk is close to selling 10% of his stock after several transactions in late December.