News that Elon Musk — best known for his work at SpaceX and Tesla and for needling the U.S. Securities and Exchange Commission — purchased nearly $3 billion worth of Twitter stock that took the tech world by storm at the start of the week. Shares of Twitter shot higher in the wake of the news, padding both Musk’s accounts and those of the company’s other investors and employees.
The tech mogul quickly converted his putatively passive stake into a board seat the next day, creating yet another news cycle around his investment activity, the future of the social network and corporate governance more generally.
The entrepreneur is an outspoken corporate executive and fan of using Twitter to make news, incense his critics and generally have more fun than most CEOs. But the SpaceX founder did provide some context in late March, arguing on Twitter that Twitter is falling short of its putative remit as a “town square.”
TechCrunch’s Amanda Silberling previously talked through Musk’s then-stated view that Twitter should be more open and the chance that he might build a competing service. That commentary came before Musk bought a little more than 9% of Twitter and got a seat on its governing council, so it’s time to dip back into the question and do a bit more thinking.
Below, we’ve gathered thoughts from Amanda Silberling yet again, new TechCrunch recruit Kyle Wiggers and Alex Wilhelm. Silberling thinks that influence is the correct prism through which to view Musk’s comments and actions, while Wiggers is more focused on the corporate governance perspective and Wilhelm weighed in on what good personality-focused social networks can and cannot bring. Let’s have some fun!
Alex Wilhelm: Why doesn’t Elon just get a Discord?
I’ve been chewing on the matter of major names taking their fans to new platforms since we saw an exodus of certain right-wing figures to alt-Twitter services in recent years. Some left voluntarily, some with a boot firm in their backside. But what they all share is the fact that their new homes have generally failed to challenge Twitter’s hegemony.
The lesson is not that a handful of individuals or narrow ideologies make Twitter great. Indeed, it’s the opposite. The great body of Twitter users and their myriad, diffuse viewpoints make Twitter great. This makes building a “new, better Twitter” around anything too focused essentially a doomed effort. At best you’ll create a modest, insular community that generally agrees with either you or your treasured viewpoint.
And we have a service for that! It’s called Discord, and it’s pretty good.
Elon doesn’t want that, I reckon. As Amanda argues below, he doesn’t want to lose influence. So why not buy a bunch of the company’s stock and strong-arm your way into its inner sanctum?
But I wonder if what Elon has in mind for the social service would help Twitter stay broad and multi-perspective. His legions of Twitter fans have an influence in the other direction, I’d warrant. So the current record isn’t exactly pristine.
Though to his credit, Elon is actually rather good at Twitter in that his tweets are hilarious, often out of bounds and have a habit of making news.
It’s impossible to quantify what portion of Elon’s current clout comes from his Twitter account, but I don’t think it’s a small amount; there are a host of wealthy businesspeople in the market that you and I don’t know about. Elon makes news in more ways than one, but as we’ve seen with some folks when they were cut off from the social network, it can be hard to replace, so Twitter matters.
The Elon-Twitter equation before he bought a few billion dollars of the company’s stock felt somewhat balanced: Twitter had to deal with a public company CEO causing a stir, and, in exchange, Elon got to post all over a social media service that is replete with media and investors and fans, his three core constituencies. But unlike most people who are in a similarly symbiotic relationship with Twitter — the media, for example — Elon can effectively cut a check, wind up holding a huge number of shares and parlay that stake into a formal role.
It’s a double-edged sword, as Elon was getting the benefits of Twitter before without owning a material share of the company’s public equity or helping shoulder its responsibilities to its users, employees and shareholders. Now he’s on the inside, and therefore partially responsible for the platform’s success — or struggles.
If he makes it worse, it will be not only a shot in the foot of his accounts, but also his reach.
I suppose we have to hope that Elon is too busy to cause enough trouble at Twitter to make it more the way that he wants. And if he truly, completely, absolutely must have his own social network so that he can bask in fandom and adulation without criticism, he can still fire up a Discord. Hell, they’re even free.
Amanda Silberling: Elon is afraid of the monster under his bed
Oh, how long ago last week feels. It was a simpler time, when Elon Musk casually floated the idea of building his own social network. Now, he owns 9.2% of Twitter after making a $3 billion purchase. And I felt guilty about ordering takeout this weekend.
“Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy,” the billionaire CEO tweeted last week. “What should be done?”
Evidently, buying almost a 10th of the social platform is one option. Starting his own Twitter competitor isn’t off the table — he tweeted that he was “giving serious thought” to this two weeks after he initially filed to purchase a chunk of Twitter, which was only made public Monday.
Musk seems more afraid of the response of Twitter users (and the SEC) to his antics than the rules of the platform itself. After all, he compared Twitter’s new CEO Parag Agrawal to Joseph Stalin and raged against coronavirus lockdowns, yet he wasn’t censored.
Musk is part of a class of late-stage entrepreneurs who fear a loss of influence like it’s a monster under the bed — it seems scary, but when you really think about it, it’s ultimately not a threat to them.
Like Musk, David Sacks also made his early riches off of PayPal (Sacks was COO of PayPal and later invested in Musk’s SpaceX as an angel). One of Sacks’ latest ventures is a podcasting app called Callin, which only restricts free speech if it could threaten the app’s presence on app stores. Meanwhile, Substack has also emerged as a free-speech-first platform with “hands-off” content moderation policies. And then there’s Truth Social (lol), Parler, Rumble. If you want to be “uncensored” on the internet, you’re not exactly limited. The problem is that Musk doesn’t have 80 million followers on these other platforms.
What kind of posts does Twitter restrict anyway? Targeted harassment, doxxing, non-consensual nudity, interference in elections, spam, terrorism, child sexual exploitation and false information about COVID-19.
These policies exist to protect vulnerable people from harm, and it’s laughable to think that some vocal billionaires who can buy their way into influence over the “de facto town square” have more to lose than someone who is being harassed on Twitter with revenge porn, for example. And thankfully, the Twitter rules would (hopefully) stop that from happening.
So it’s strange that these incredibly powerful and wealthy men feel so threatened by the content moderation policies of existing platforms that they are willing to pump millions (or billions) of dollars into their own ventures (or Twitter itself).
Perhaps what Musk is actually afraid of is that the public (and government regulators) aren’t afraid to disagree with him when he says dumb shit. That’s not a Twitter problem.
Kyle Wiggers: Musk’s bid for corporate influence at Twitter is concerning
Remarkably, Elon Musk, the man who once boiled journalism down to “get[ting] max clicks & advertising dollars,” has purchased a nearly 10% stake in Twitter — a platform that, while imperfect, has demonstrated time and time again the value in moderated mass communications. My esteemed colleague Amanda Silberling did a thorough job of outlining why this is cause for alarm. One of the questions in my mind: What chance does Musk have of affecting change within Twitter at the policy level?
There isn’t a playbook for the sort of investor activism Musk might embark upon. To date, tech giants — in particular social networks — have been insulated from these types of maneuverings thanks to protectionist share structures. Facebook is a prime example — the company has a “dual class” structure designed to maximize the voting power of CEO Mark Zuckerberg and just a small group of insiders. Twitter has only one class of shares.
Normally, this is a good thing. It means that Twitter co-founders like Jack Dorsey and Evan Williams or the company’s current CEO, Parag Agrawal, aren’t given any special decision-making powers. Every Twitter shareholder’s vote carries the same weight.
But it can become a corporate liability. For example, some analysts, including Dan Ives, the managing director at investment group Wedbush Securities, believe that Musk’s stake could be the precursor to a full-blown takeover bid.
That isn’t to paint activist investing with a broad brush. Funds such as Jana Impact Capital arguably do good by buying large numbers of shares in underperforming companies and then encouraging the companies to make changes to promote corporate responsibility. For instance, Dutch organization Follow This, which focuses on responsible practices in the oil and gas industry, recently pushed Chevron, ConocoPhillips and Phillips 66 shareholders to vote in favor of proposals to cut emissions.
But not every shareholder has the best of intentions. And, given that Musk — who holds questionable views of journalistic credibility — has accused Twitter of “failing to adhere to free speech principles,” the path forward is troublingly murky. While Twitter has had its share of missteps, those who’ve most vocally accused the platform of censorship have pointed as evidence to the deplatforming of specific personalities or groups. Deplatforming, while a controversial step, has proven effective at rousting extremists — including self-identified neo-Nazis and members of the Islamic State group — from the platform.
Will Musk be successful in bending Twitter to his will, though, as the company’s largest shareholder? That remains to be seen. Twitter’s board — which includes Agrawal (whose appointment Musk disagreed with) and Dorsey — retains the right to issue preferred stock, which could come with special voting rights and other privileges. In a twist, Musk was appointed to the board this morning (but agreed to limit his stake to 14.9%) and has already floated the idea of adding an edit button to tweets — a feature Twitter leadership has long resisted.
But consider that relatively few activist campaigns are successful, broadly speaking. According to a 2020 Harvard Law School report, just 17% of activist investor campaigns in 2019 achieved their goals, while the majority — 56% — failed to gain traction.
That’s all to say that Musk’s move doesn’t spell the end of Twitter as we know it. Twitter has survived activist investor challenges before, after all — even when its CEO at the time (Dorsey) owned a relatively modest percentage of the company’s shares. There may be a time to panic, particularly if other aligned activist investors take a stake in the company. But it isn’t right now.