All A-Twitter: What’s Musk’s Move?

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It’s been a busy several days for Twitter’s CEO and Board. Sunday afternoon, Twitter’s chief executive Parag Agrawal announced that Elon Musk would not be joining its board of directors. That morning, Musk had rejected the board’s offer to join the board in exchange for capping his stake at 14.9% and no doubt other legal restrictions around what he can and cannot say publicly about Twitter.

A battle is shaping up for the Internet’s public square. Here’s a very brief timeline:

Reading the Tea Leaves

What’s really going on?

As Kara Swisher of the New York Times has noted, there’s much to be gleaned from translating some corporate speak:

There are a number of hidden messages contained herein:

fiduciary –> “Elon, don’t mock, or speak ill of the company publicly, you have obligations if you’re on the board which hem you in,”

background check –> “we always reserved the right to reject you based on potential SEC investigation and other things, so this is kind of mutual anyway,”

formal acceptance –> “you must agree in writing not to take more than a 14.9% stake, and be liable if you tweet something defamatory,”

there will be distractions ahead –> “this ain’t over”

What happens next?

Musk is mercurial. He could decide he has better things to do and sell his stake.

But it seems much more likely to me that he will continue to increase his stake. If his goal was to make marginal improvements to Twitter, he would have been inclined to stick to their announced agreement and take the board seat.

He initially filed an SEC form saying he was planning to be a passive investor in the company, but amended it yesterday (April 11th, 2022) to indicate he may be more active, and plans to keep criticizing the platform and demanding change: “From time to time, [Musk] may engage in discussions with the Board and/or members of the Issuer’s management team concerning, including, without limitation, potential business combinations and strategic alternatives, the business, operations, capital structure, governance, management, strategy of the Issuer and other matters concerning the Issuer.”

The billionaire has been vocal about some of the changes he’d like Twitter to make. Over the weekend, he tossed out the idea that users who opt into the premium plan ($3/mo), Twitter Blue, should be given automatic verification and see no ads. This one step, of devaluing “blue checkmarks” would be a sea-change in how Twitter is used today. He noted that Twitter’s top accounts are highly inactive, asking “Is Twitter dying?” He mused about turning Twitter’s San Francisco HQ into a homeless shelter, which invited an approving retort from Amazon’s Jeff Bezos. As Geekwire reported in May 2020, Amazon has already done this in part, quite successfully, in partnership with Mary’s Place.

Twitter’s board may very well adopt a poison-pill defense. But this isn’t a slam dunk; it needs majority board approval. Take a look at the existing composition of Twitter’s board; it’s no longer founders and insiders. Remember, this board said goodbye to Jack Dorsey, and rumor has it that this was in part due to sluggish stock price results and activist shareholder discontent. Twitter’s eleven-member board consists of two “insiders,” both Agrawal and Dorsey; an activist value-driven investor (Silver Lake Partners); and eight relatively independent board members with Silicon Valley and/or finance experience. Poison pill adoption often depresses the value of a stock, and some board members might not be persuaded to do this. Several of Twitter’s board members are from the Silicon Valley braintrust, and are unlikely to want to go head-to-head with Musk — and some may even very well fully agree with him.

Musk is nothing if not bold. He has risked substantial sums and bet boldly on multiple ventures in the past. He stated that “free speech is essential to a functioning democracy,” and has both an internal incentive and external incentives not to be seen as being bested here.

My guess: he’s unlikely to just sit on the sidelines, as Twitter’s biggest but minority shareholder. He could well make a run for the company, though he may prudently wait for the next recession to do so.

And what happens to Twitter’s employee base, and its policies, during this tumultuous time? It may cause some employees to see the writing on the wall, and depart. Or it might cause some to double-down on a heavy-hand. It could be a very interesting few months indeed.

Does Elon Musk like to play it safe? Or lose? What does his track record suggest?

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Steve’s a Seattle-based entrepreneur and software leader, husband and father of three. He’s half Canadian, and east-coast born and raised. Steve has made the Pacific Northwest his home since 1991, when he moved here to work for Microsoft. He’s started and sold multiple Internet companies. Politically independent, he writes on occasion about city politics and national issues, and created Alignvote in the 2019 election cycle. He holds a BS in Applied Math (Computer Science) and Business from Carnegie Mellon University, a Masters in Computer Science from Stanford University, and an MBA from the Harvard Business School. Steve volunteers when time allows with Habitat for Humanity, University District Food Bank, Technology Access Foundation (TAF) and other organizations in Seattle. More of his writings can be found at stevemurch.com.

13 COMMENTS

  1. I find this whole Twitter-Musk thing to be supremely murky — what exactly does Musk want Twitter to change? — but also fascinating. It’s the best Silicon Valley soap opera going.

    • Musk has called himself a “free speech absolutist;” he thinks that Twitter has headed in the wrong direction. Some specific suggestions he’s made include opening up the “verified” checkmark to anyone who pays for their service, acting with a lighter hand on dissent from “currently accepted” narrative, working hard(er) to remedy the bot problem, not putting people in timeouts merely for being offensive or juvenile, etc.

      • Steve, do you agree with Musk’s suggestions?

        What’s the difference between “free speech absolutist” and 4chan?

        • You’d have to narrow that down. I don’t agree with all of his suggestions — certainly not his reject joke about their name. Several of his public musings have been pretty capricious.

          It’s a private company, and is entitled to its own terms of service. Qualitatively I think there’s no question their “errors” tend to go in one ideological direction; the Hunter Biden laptop incident was particularly egregious, especially when compared to, say, the release of Trump’s tax returns. Were I at the company I’d spend some time trying to explain how moving away from conduit and headlong toward more editorial curation is ultimately neither good for our society nor good in the long term for their company or shareholders.

          Among the reasons: regulators at some point will revisit Section 230, perhaps reclassifying them as a publisher and not a conduit/platform, and Twitter is equipping them with plenty of ammunition.

  2. I still generally agree that with the exception of clear incitement to violence, the best antidote to speech with which we disagree is more and better speech. That’s not always possible, but it should be the operative goal. It was the left which used to understand that, not so long ago.

    • It should be the operative goal, and I see it still is in most instances, but as you suggest, that’s not always possible, and it’s becoming less and less possible. The internet has changed the course of civilization, and it is not hyperbole to consider that the internet may end civilization.

      Giving a platform to any yahoo that can reach a billion people instantly is incredibly powerful – it can do amazing things, but it can also create some serious problems.

      What we’re seeing is that fake news, lies and misinformation is a tidal wave that can’t be held back when left unchecked. Truth and facts will lose out to the worst unless there are guardrails put in place. History shows this over and over again.

      The Dems aren’t the ones pulling LGBTQ books from libraries and passing “Don’t say gay” laws.

      One of the primary issues with all your articles and comments is that you’re someone who enjoys immense privilege but doesn’t seem to appreciate how it has shaped your perspective. You have money, you have housing, you have healthcare, you’re a white hetero male. No one should hold that against you. But nothing that Repubs are doing right now affects you negatively, and it’s far easier for you to sit on your perch and suggest to those that don’t share your privilege that they just need more and better speech as Repubs pass anti-voter laws, and ban women’s reproductive rights, and use government social services to investiage parents with trans kids for child abuse – the list goes on and on.

      And much of the reason they can get away with that is because they’re voted into office by the low-information voters who believe the propaganda and lies and misinformation they see on social media, much of it generated by Repubs and Fox News and the like. Some of them even get elected to office themselves – see MTG amongst many. It becomes a giant downward spiraling feedback loop.

      As far as the “left” goes, they have their own crazies on the fringes – see Seattle’s “The Stranger” for instance. But they’re not in *power*. They don’t even get invited to the table. Because the vast, vast majority of voters that are left of “center” find them as scary as those on the right. The difference is that the crazies on the “right” *are* in power and they’re gaining more of it.

  3. Steve, thank you for sharing the link. I appreciate the discussion, and it raises issues that are important for everyone to consider.

    Musk labels himself a free speech abolutist. Musk acknowledges that there are limits on free speech that he accepts – laws that govern free speech such as direct incitement to violence and/or putting people in clear and present physical danger. But he doesn’t make clear whether he’s simply accepting that Twitter has to follow laws, are whether he actually believes those laws are beneficial enough to society that they’re worth having.

    Anderson (the host) lays out a series of examples tweets of escalating threats toward a political figure. Anderson asks where do you draw the line, and who decides? Musk acknowledges he doesn’t have “all the answers” and replies that when it comes to gray areas, he would err on the side of “free” speech. It’s a non-answer that avoids the problem.

    The problem is that *someone* has to decide what “incitement to violence” means. *Someone* has to decide when words are a clear and present danger. We can’t follow the law without determining where the line is. He can speak of algorithims all he wants, but there’s little scarier than letting an algorithim decide on where that line is.

    And when we do consider those lines, we have to recognize that the world isn’t the way it was when we first considered these interpretations. The word “present” meant something different in the world before the Internet. Being able to anonymously share words or images with a billion people in a nanosecond. What constitutes physical “danger” when you can put someone in physical danger from a thousand miles away?

    Many are waking up to the reality that social media itself is a clear and present danger to human civilization. And when weighing the fate of civilization vs the freedom to tweet a picture of Biden with a bullseye on his head, one seems more concerning than the other.

    That being said, I am very leery of censorship in all forms, and I think it has to be considered very, very carefully. The pendulum can very easily swing too far in either direction.

  4. You’re welcome. He very clearly says that Twitter would of course follow the laws in each country that it operates in. He also states that in his view, when it’s borderline, deference should go to speech. I’m not sure I fully agree with that rubric, but that’s what he’s verbalizing extemporaneously.

    More significant perhaps is that he begins by asserting that the algorithms and process should be transparent, and available for improvement. There is a clear sense by many that Twitter’s terms of service are arbitrarily enforced, overly harshly one one side. From COVID health, origin questions and mitigation measures, to Hunter’s laptop, to what is deemed “harmful” speech, they clearly give favor one perspective.

    That’s of course their right — it’s a private company, and we can choose to use it or not. But doing so brings them out of Section 230 protection, and makes them not as much an open public square as (in some cases) a narrative enforcement mechanism. Changes to 230 would likely have very significant impact on other services, from YouTube to Instagram to Facebook, TikTok and more. Maybe it’s needed, but I generally agree that the best antidote to mere disagreement is more speech, not less. Trust and consensus are only possible if reasonable dissent is allowed to be aired.

  5. Twitter board indeed adopts poison pill defense today. Lasts through April 14 2023, one year from today:

    https://apnews.com/article/technology-business-elon-musk-shareholder-rights-board-of-directors-35b7210a6c847d055ba690167a9092fb?utm_campaign=SocialFlow&utm_source=Twitter&utm_medium=AP

    By not putting either Musk’s offer or the poison pill plan to shareholders, this may well be inviting a class-action lawsuit. This quite likely isn’t over.

    Also noteworthy: Goldman Sachs has called Musk’s cash offer price of $54.20 per share “Too low”, and yet as of this morning, the very same Goldman Sachs had a “Sell” rating on the stock with a price target of $30.

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