What to remember from Elon Musk’s takeover of Twitter

It’s done: Elon Musk is the new owner of Twitter. The American billionaire only took about ten days to bend the board of directors of the social network. On April 25, the latter announced that he had unanimously accepted the takeover offer from the boss of Tesla and SpaceX. In this context, Elon Musk will pay $54.20 per share, which values ​​the American company at nearly $44 billion. From the start, he had indicated that it was his “best and last offer”. It is this one that has therefore been retained by the board of directors of Twitter. The transaction is expected to close within the next six months.

To achieve this tour de force, Elon Musk had initially discreetly acquired a 9.2% stake in the capital of the firm created by Jack Dorsey for nearly 3 billion dollars. Before this information was revealed at the beginning of April, the billionaire placed his pawns on the media level through a series of polls on Twitter to question his community on the functioning of the social network with 217 million active daily users.

Its subscribers had thus felt that Twitter was not conducive to freedom of expression. Faced with the results of these polls, Elon Musk had finally come to the conclusion that it was necessary to create a new social network based on an open source algorithm and which would guarantee freedom of expression. And this, when he had already laid the first stone of his strategy to get his hands on the social network…

The timeline of events then accelerated on April 4 when it was revealed that Elon Musk had become Twitter’s largest shareholder. Ten days later, the billionaire launched his raid to afford the entire social network. And if the board of directors of Twitter immediately reacted to the hostile takeover offer by triggering a so-called “poison pill” measure to calm the ardor of the boss of Tesla, the latter quickly pushed the staff of the social network in its entrenchments. First by securing a financing plan of 46.5 billion dollars to complete the transaction, then by going to meet several shareholders to defend its takeover offer.

As most of the shareholders were won over by Elon Musk’s proposal, the pressure became increasingly strong on the board of directors of the Californian company. The latter ended up reviewing his position by engaging in discussions with Elon Musk on April 24, before giving in 24 hours later by agreeing to sell the microblogging site to the billionaire.

Mixed feelings among Twitter employees

With this acquisition, a new page opens for the social network. His future looks uncertain as Elon Musk has “committed to addressing free speech issues” of the platform. Internally, the announcement of this acquisition generated mixed feelings among employees. Some are open to the idea that Twitter, as a private company, has a better chance of improving its service than a public company that is accountable to its shareholders, in particular thanks to the greater clarity promised by the billionaire on how recommendation algorithms work.

But others, who receive part of their compensation in shares, wonder about the benefits of such an operation, according to The Verge. Also according to the American media, Parag Agrawal, the general manager of Twitter, should leave the company once the transaction is finalized. In the meantime, the latter told his employees that there would be no short-term layoffs, without however deciding on a possible hiring freeze. Still, the fears of Twitter employees are understandable in the current context, especially since Elon Musk is regularly accused of having created a toxic work climate in his Tesla factories and of putting insane pressure on the shoulders of its employees.

The change that the billionaire wants to implement should also be visible to Twitter users since he wants to make the platform an El Dorado for freedom of expression. But there too, this idea, laudable on paper, raises many concerns. “Although it is presented as a battle for free speech, this acquisition is really a battle for content moderation: is it responsible or is it censorship? ‘would attack disinformation and hate speech on Twitter, or allow them to escalate further in the name of free speech’analyzes Mike Proulx, vice-president and director of research at Forrester.

The stakes are all the greater as the mid-term elections (midterms) in the United States are only six months away. However, Twitter is one of the platforms of choice for political figures to campaign, which does not fail to lead to excesses. The microblogging site is also in the sights of American justice, alongside other platforms such as Facebook and Reddit, for their role in the attack on the Capitol in Washington on January 6, 2021.

That day, supporters of Donald Trump had invaded this symbol of American democracy after being encouraged to head for the Capitol by the former tenant of the White House, who constantly challenged the results of the presidential election. American in his tweets. The latter had been ousted from his favorite social network after this event which had shocked the whole world. Despite the takeover of Twitter by Elon Musk, who spoke out against the deletion of accounts like that of Donald Trump, the former American president has made it known that he will not return to Twitter. He prefers to stay on his Truth social network, launched last February. But greater freedom of expression left to extreme or conspiratorial remarks could bring many users back to the platform and contribute a little more to the polarization of society, both in the United States and in the rest of the world.

Elon Musk held back by the DSA in Europe?

In addition, the total freedom of expression advocated by Elon Musk could quickly come up against the Digital Services Act (DSA), a text which aims to better regulate the operation of the platforms of technological giants. This new legislation, for which the European institutions have just reached an agreement with a view to its entry into force in the course of 2023, particularly targets social networks, and more generally sites with more than 45 million active users. within the EU.

In particular, the DSA must make it possible to improve moderation on social networks for anything related to violence (misinformation, revenge porn, cyberbullying, etc.). The document must also oblige a host to remove illegal content, but also to verify how algorithms work, how decisions to remove content are made and how advertisers target users. Gold, “Musk promised transparency for Twitter’s algorithm, but delisting the company is the best way to lose accountability”notes in a tweet Olivier Tesquet, journalist at Telerama and specialist in digital issues. In his view, this is “one of the many paradoxes of this acquisition”.

These measures particularly target platforms such as Facebook, YouTube, Instagram, TikTok or Twitter. The DSA provides for fines of up to 6% of the annual turnover of these companies. In the event of a repeat offence, the penalties could be increased, even going as far as banishment from European territory. Elon Musk therefore knows what awaits him if he wants to override the new European regulations. And it seems difficult for an American company like Twitter to afford to lose its users from the Old Continent if it wants to generate growth and become profitable.

Moreover, the financial aspect of Elon Musk’s approach should not be overlooked as Twitter, which was created in 2006, suffered 2.3 billion dollars in losses between 2013 and 2017. American company waited until 2018 to generate the first annual profit in its history. But it is still today a fleeting performance since the company conceded an annual loss of 221 million dollars in 2021. “If Musk decides to relax content moderation policies, it puts Twitter’s advertising dollars at risk. Brands are increasingly aware of their adjacency to risky content or misinformation, so they can direct their dollars to other channels that have implemented greater security measures”, explains Mike Proulx, of Forrester. As a reminder, Twitter recorded $4.5 billion in advertising revenue last year. To date, advertising represents 85% of its turnover. So be careful not to weaken this precious financial windfall…

For now, the one who seems most satisfied with the takeover of Twitter by Elon Musk is above all Jack Dorsey, the emblematic founder of the social network. “Twitter as a business has always been my only problem and my biggest regret. It belonged to Wall Street and the advertising model. Removing it from Wall Street is the first good step”, he judged in a series of tweets. Before qualifying his statement: “In principle, I don’t think anyone should own or run Twitter. It should be a protocol-level public good, not a business. Solving the problem of being a business though, Elon is the singular solution I’m into. I trust. I trust his mission to expand the light of consciousness.”

In principle, I don’t believe anyone should own or run Twitter. It wants to be a public good at a protocol level, not a company. Solving for the problem of it being a company however, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.

— jack⚡️ (@jack) April 26, 2022

The next few months will give a first indication of the direction given to Twitter by the most whimsical of American billionaires. In the eyes of Jean-Christophe Liaubet, partner at Fabernovel, Elon Musk could notably use the social network to realize his ambitions in payment, at the dawn of the Web3 revolution. “I think payment is one of those things that drives Elon Musk when it comes to innovation. Meta didn’t succeed with Diem because the band didn’t have the right karma and he scared people with his 3.5 billion users. With a smaller user base and going more incrementally, perhaps Twitter with Elon Musk at its helm is better placed than Meta to realize the ambition behind Diem. And tomorrow, we There will also be these subjects with Web3. It’s the future of money. We’re going to experience things that are going to be quite interesting. Minting your own money is something that could strongly motivate Elon Musk”he explained to the Digital. It would be a homecoming for the billionaire, who notably contributed to the development of PayPal.