An Acquisition to Remember
By – Avi Soni
“When something is important enough, you do it even if the odds are not in your favour.” On April 14, 2022, famous business magnate Elon Musk made a surprise offer to buy the American media company, Twitter. With a mega offer of 44 billion dollars and numerous controversies surrounding it, this takeover was watched and followed by millions of people worldwide.
While the offer was made in April, Elon Musk’s connections with Twitter go way back to January 2022. In late January, Elon Musk started buying shares of Twitter and by 14th March, became the largest shareholder of the social media platform with a 9.2% stake in the company. In late March, Musk also started becoming very active on Twitter by tweeting criticisms and taking polls on whether the social media platform adhered to the principle that ‘free speech is essential to a functioning democracy.’
Elon Musk’s interest in Twitter was very evident and it came as no surprise when he decided to join the board of directors of Twitter on 5th April. However, things got interesting when, 5 days later, Musk announced that he would not be joining the board after all and that he intended to take Twitter private. Subsequently, Twitter met with various financial and legal advisors to deliberate on the ramifications of such a deal and discover its possibility. Musk was eager with his vision of Twitter and thus, he made an unsolicited offer to purchase the company for 43 billion dollars and take it private. While this was seen as a hostile takeover, some analysts believe that this was a threat to purchase the remaining stocks if the management declined Musk’s idea of going private. Twitter, in response to this, adopted a poison pill strategy that allowed the existing shareholders to buy additional stock at a discounted price and ultimately make the acquisition more expensive for Musk.
On April 25, Twitter accepted Musk’s offer to buy the company and valued the deal at 44 billion dollars. Over the next few days, Musk gathered the funding to finance this acquisition by taking out loans, selling Tesla shares, and bringing in other investors.
On May 13, to the surprise of the Twitter management and the world, Elon Musk put the deal on hold citing concerns over the presence of spam and bot accounts on the platform. Twitter shareholders and management were furious with this decision and on 26th May, the shareholders brought in a class action lawsuit against Musk over alleged stock manipulation. Fake accounts and the prevalence of bots was a very serious issue for Musk so much so that he soon moved to pull out of the deal due to this reason.
On 12th July, Twitter sued Elon Musk in Chancery Court in Delaware to force him to complete the original deal. They publicly expressed their dissatisfaction with Musk and criticised him for having a carefree and selfish attitude. The trial was set to begin in October, however, before that could happen Musk, out of the blue, expressed his interest to honour the original deal. On 28th October the deal was closed and Twitter, after a roller-coaster ride, was acquired by Elon Musk.
Elon Musk was quick to make changes in the management after the acquisition. He fired the CEO, chief financial officer, chief legal officer, and general counsel within a day of him taking control of the company. Within a few days, he also began layoffs within the company that cut roughly two-thirds of the 7500-person workforce. The layoffs were a bolt from the blue and brutal in nature.
Spam and bot accounts were a serious issue for Musk on Twitter and thus, to fight this, he released a new version of its subscription service called Twitter Blue. Twitter Blue subscription allowed users to obtain a blue verified tick on their account and get their tweets and replies on the top of the feeds. While this service aimed at removing impersonating accounts, there were numerous reports where imposter accounts were formed for celebrities and companies. Twitter, to tackle this problem, made some changes to the criteria for receiving a blue tick and strengthened its account review policy.
Freedom of Speech is always a key factor of social media platforms like Twitter. It is no secret that Musk disagreed with the content moderation and freedom of speech of the old Twitter. Musk strongly believes that the officials from the previous leadership allegedly suppressed right-wing voices. Musk, in order to prove this, also gave select journalists access to the company’s internal communication dubbed ‘The Twitter Files’. Elon Musk announced that this would not continue at Twitter and that he would work towards changing the existing skewed system of content moderation.
Musk was quick to dismantle the Trust and Safety Council which was made up of various independent civil and human rights organisations that worked to address hate speech, harassment, self-harm, and other problems on the platform. He also eliminated an unknown number of contract workers who focused on content moderation.
What is their plan for content moderation? The answer to this question is still a blur to the public. With a smaller workforce, analysts believe that Twitter will focus more on regions like Europe where huge fines are imposed on social media platforms for violation of the Digital Service Act. Musk, in response to hate speech concerns, announced that Twitter would soon be forming a content moderation council that is devoted to these issues. He is confident that Twitter would encourage free speech and would ensure that hate speech and false information are not tolerated.
Will it succeed under Musk? The future of Twitter is anyone’s guess. The success of Twitter depends on numerous factors and not just on one person. Would people stick with this social media platform, or will they switch? The good thing is that Twitter is a unique platform till now and thus, users will not be able to find a close substitute for it. At the moment, Twitter reports that its user base is growing faster than ever, but time will only tell if Elon Musk is an angel or devil for Twitter.
Citations:
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