Elon Musk’s bid to buy Twitter and take the company private was successful on Monday, 11 days after the world’s richest man first announced he would like to buy the social media company.
“Free speech is the foundation of a functioning democracy, and Twitter is a digital town square where issues vital to the future of humanity are discussed,” Musk said in a statement announcing the board’s approval of the $44 billion deal. “I also want to make Twitter better than ever by adding new features to the product, making algorithms open to increase trust, defeating spambots, and authenticating all people.”
The company’s management initially tried to fend off the application by accepting “poison pill“Measures that would make a hostile takeover more difficult.
But Musk has announced that he has $46.5 billion in funding. lined up in documents filed with the Securities and Exchange Commission on Thursday, prompting Twitter’s board to meet Sunday to discuss the proposal. After this meeting, the board open negotiations with Musk, which stretched out late into the night, according to a New York Times report.
The deal values Twitter shares at about $54 a share, up from the $39 the shares were trading at before Musk’s interest in the company became apparent in early April, when he purchased a 9% stake in the company. below the stock’s 2021 high of $77 per share. After the deal was revealed, Twitter shares rose 5.7% to $51.70 by the end of trading on Monday.
At a virtual meeting on Monday afternoon, Twitter CEO Parag Agrawal said no layoffs are planned “at the moment.”
In response to a staff member’s question about the recovery of former President Trump’s Twitter account, Reuters reported that Agrawal said, “After the deal closes, we don’t know which direction the platform will go.”
Musk has stated that his interest in Twitter is not motivated by the company’s finances, but by its role as a public forum and his belief that he can run the platform better than its current management.
But Musk has indicated that he will lean Twitter’s content moderation in a permissive direction, writing in his SEC filing: “I invested in Twitter because I believe in its potential to be a platform for free speech worldwide, and I believe that free speech is – it is the public imperative of a functioning democracy.”
Since its launch in 2006, Twitter has become one of the staples of the social media era, but it has struggled to become a profitable business and has been the site of explosive controversy over the moderation of online speeches.
Founded by Jack Dorsey, Evan Williams, Noah Glass, and Biz Stone as a site that allowed users to post 140-character messages via SMS text messages, Twitter experienced its first surge of interest after being unveiled at the 2007 SXSW festival in Texas.
The next few years brought explosive growth. In 2011, the company announced that it had 100 million monthly active users. By the time Twitter went public in 2013, that number had doubled to over 200 million people.
But Twitter couldn’t keep up with that growth rate. While Facebook, Instagram and the new platform TikTok have overtaken Twitter to over 1 billion users over the past decade, Twitter has plateaued. In 2019, the company counted 300 million monthly users before changing the reporting figures. According to the latest corporate documents, it now has 217 million active users that can be monetized daily.
Under the leadership of a number of executives, Twitter really figured out how to squeeze more money out of these users. Revenue has grown from $1.4 billion in 2014 to over $5 billion in 2021. But the company recorded profits only in 2018 and 2019, and has returned to losses for the last two years.
Research firm MoffettNathanson wrote that Musk’s proposal was “a deal steal for shareholders given the company’s operational, monetization and valuation issues,” but the authors warned they “expect advertisers to be less willing to spend on Twitter. if Elon Musk removes content moderation to promote free speech.”
However, while user growth has stalled, Twitter has become a go-to platform for journalists and politicians, and this shifting combination has turned it into one of the key battlegrounds in the fight against online harassment, restrictions on public speaking, and the power of tech companies.
Nowhere has the fight been more bitter than in the debate over Trump’s ban on the platform. During his presidency, Trump used Twitter daily to express his opinion on current events, announce changes in US policy, and communicate with his 88 million followers.
Often, the president’s tweets were untrue, and after the 2020 presidential election, he often tweeted the unsubstantiated conspiracy theory that he was the rightful winner in that election, which he claimed was manipulated in some way to make him lose. After Jan. 6 attempt to overthrow the US government, Twitter close the current president’s account and permanently removed him from service.
Musk’s bid for the company and the free speech rhetoric sparked speculation that he would reinstate Trump’s account. Musk has not directly commented on this possibility. Trump said in April interview that he “probably wouldn’t be interested” in returning to Twitter, which he said had “become very boring”.
Musk, whose startup roster includes the company that would eventually become PayPal as well as Tesla and SpaceX, has never been banned, but he faced his own face on Twitter that the SEC imposed after he said in an August tweet 2018 that he “funding secured“For a proposal to make a publicly traded Tesla private at $420 per share.
Musk never received funding for the deal. The tweet led to him being charged with fraud by the Securities and Exchange Commission. In the settlement, Musk agreed to a $20 million fine and a three-year suspension from Tesla’s chairmanship. The Securities and Exchange Commission also requested that he appoint a company employee to review his tweets for possible violations of securities law.
Musk continued to tweet information about Tesla stock, future financials, upcoming products, and other information that could be construed as the sort of “substantial information” that the SEC was looking to put a brake on. The timing of his responses to subscribers indicated that there had been no verification.
After Joe Biden became president, the Securities and Exchange Commission began sending subpoenas to Musk in the “secured funding” case and hinted that it was investigating other Musk-related cases.
Musk recently said he was pressured into signing an agreement with the US Securities and Exchange Commission and only did so because Tesla was on the verge of bankruptcy at the time and that fighting the government over fraud allegations could cut off access. to finance and sink the company.
Musk’s acquisition of Twitter is not expected to overlap with his other businesses and his antitrust review will not be considered, but some observers, including Amazon CEO Jeff Bezos, Musk’s rival in the private space industry, have suggested that Musk’s business interests are in China. , an important supplier and market for Tesla, could come into conflict with its ownership of the social media platform.
“Twitter is currently among the platforms that provide some opportunities to protect the interests of Chinese dissidents, and therefore if they lost it as a way to communicate with each other and the rest of the world, this would entail a serious loss of human rights,” said David Green. director of civil liberties at the Electronic Frontier Foundation.
“Has the Chinese government just gained some influence over the town square?” Bezos tweeted.