If Elon Musk thought that casting himself as Twitter’s saviour would win widespread backing for his $43bn hostile takeover bid, he was in for a rude awakening.
The world’s richest man laid out some sweeping claims for this week’s unsolicited approach. Shareholders, he promised, would “love” the rich premium he was offering. He would bring free speech back to one of the most important social media sites. And he would overhaul the management of a company that had lost its way.
With characteristic hype, he even pitched his bid as a benefit to humanity. “Civilisational risk is decreased the more we can increase the trust of Twitter as a public platform,” he said in an interview at a TED conference, hours after his approach had been revealed.
On all counts, the claims have fallen largely on deaf ears. Even before Twitter’s board revealed its opposition early on Friday by adopting a poison pill takeover defence, shareholders had given their own vote of no confidence. Twitter’s shares dropped nearly 2 per cent on news of the bid, in a sign of Wall Street’s low confidence in it succeeding.
“I would be pretty surprised if the Twitter board were willing to give in at $54 given where the stock was just six months ago,” said Rich Greenfield, a partner at consultancy LightShed, voicing a widespread view before news of the poison pill. Musk’s emergence as Twitter’s biggest shareholder (a position he lost to Vanguard this week) sent the shares up 38 per cent earlier this month on hopes he would be a catalyst for change. But his offer is still 26 per cent below the 12-month high.
If Musk’s proposal was intended as a sighting shot, then it left many investors unsure of how serious he was about following through — particularly given his incorrect claim once before to have had “funding secured” to take Tesla private.
Feeding the scepticism, Musk smirked as he took the TED stage shortly after his bid, and then reopened the “funding secured” controversy by insisting he had had the money all along. He only settled a complaint from regulators, he claimed, because they had backed him into a corner where Tesla was facing bankruptcy.
Going public with a hostile approach for Twitter before he had financing in place or discussing it in depth with the board was a “highly unusual” move that had not made it any easier for people to judge his true intentions, said Ann Lipton, associate professor in business law and entrepreneurship at Tulane University. Twitter’s directors were left in a position of trying to assess not only whether the price he was offering was a fair one, but also whether he is even willing to pay it. Without the financing, “it’s very hard to believe that he is”, she added.
Musk’s attempt to wrap his bid in the banner of free speech, meanwhile, also drew a sceptical response from many experts who have worked on keeping the largest social media platforms free of hate speech and misinformation. He said he wanted to end the secretive system through which Twitter favoured some tweets over others, and make it less likely users are banned. “Time outs are better than permanent bans,” he said.
The declaration drew halfhearted applause on the Republican right, where the permanent ban against Donald Trump has become a symbol of Silicon Valley bias. But some questioned how far Musk would be able to go in challenging the wider practice of content moderation.
“Reinstating Trump would be the ultimate litmus test,” said Jason Miller, a former senior Trump adviser. Without that, “it’s all just window dressing”, he said — though he added that Twitter’s culture and its employees’ left-leaning views would make it hard to completely change the ethos.
Among many experts, Musk’s claim that Twitter was suppressing free speech was dismissed as a naive claim that failed to take into account years of effort to weed out hate speech and misinformation.
Twitter is grappling with a deeper problem caused by its advertising business model, which “rewards extreme speech”, said Roger McNamee, a Silicon Valley investor who has campaigned against Facebook. That has forced it to try to fight back a tide of hatred and misinformation, in turn drawing criticism over alleged censorship, he and others have said.
In another move that he claimed would improve freedom of speech, Musk said he would publish the algorithm that determines what users see on Twitter. “Having a black box algorithm, promoting some things and not other things”, could be “quite dangerous”, he claimed.
However, most digital services keep their ranking algorithms secret, and disclosing Twitter’s could make it possible for people to “game the algorithm and manipulate the content” users see, said Greg Sterling, co-founder of Near Media and an expert on search and social media. That could cause particular problems given Twitter’s role in political debate and its use by some governments to release official information, he added.
The promise of a stronger commitment to free speech on Twitter could also damage the company’s business by making its site less attractive to brand advertisers, according to some advertising experts and financial analysts.
It isn’t “necessarily good for civilisation if inaccuracy is allowed to spread under the guise of free speech”, said Arun Kumar, chief data and technology officer at advertising group IPG. Advertisers “don’t want to be associated with fake news or hate speech”, he added.
Musk himself said this week that he was not investing in Twitter for economic reasons, suggesting that he might not be swayed by such concerns. A week ago, in a tweet that he later deleted, he also claimed that its reliance on an advertising business model had exposed Twitter to the “power of corporations to dictate policy”.
But experts warn that relying on other business models such as subscriptions for its income could reduce the reach of the service. “There would be much less conversation if it was a paid platform,” said Greenfield.
Voicing a widespread view, McNamee said all the doubts surrounding Musk’s bid showed it might be more a pursuit of attention than a concerted effort to take control of Twitter. Yet Musk has never followed the conventional course, and his huge personal wealth and declared aim of taking control of the company have made it hard even for most critics to dismiss his approach out of hand.
With Twitter digging in against his opening shot, Wall Street may soon get to see whether Musk really has the desire — and the patience — for a drawn-out fight.