Critical Overview: Elon Musk’s Proposed $44 Billion Buyout of Twitter
Elon Musk’s recent agreement to buy Twitter for $44 billion marks one of the biggest leveraged buyout deals in history. Twitter, a 16-year-old social networking platform, has become a hub of public discourse and a flashpoint in the debate over online free speech. Musk, one of Twitter’s most-watched users with over 83 million followers, began amassing a stake of about 9% in January 2022, after which he increased his criticism of Twitter, alleging that the company’s algorithms are biased and feeds cluttered with automated junk posts.
Musk’s proposal to take Twitter private has been approved by the company’s board and is expected to be completed later this year. Musk, the world’s richest person, will provide about $21 billion in equity and has secured $25.5 billion of debt and margin loan financing to fund the deal. Though Musk has spoken openly about his plans to make the platform a haven for unfettered speech online and has complained that the service is too heavy-handed when it comes to moderating user tweets, he has not outlined a specific plan to change Twitter’s policies around speech and content moderation.
Musk’s acquisition of Twitter means that he will now have to deal with one of the internet’s thorniest problems – free speech on social media. The debate around free speech on social media has been raging for years, with political conservatives arguing that Twitter, Facebook, and other internet companies have too many rules, while liberals don’t think social networks go far enough to prevent hate speech and attacks on their services. This conflict has led to numerous congressional hearings over the years and a movement to overhaul U.S. regulations around online content.
Musk’s deal to buy Twitter includes a provision that requires him to pay the company a fee if he walks away or the deal falls apart. However, the deal does not include a “go-shop provision,” which means Twitter isn’t allowed to solicit offers from other potential bidders. Though the stock initially jumped on news of Musk’s stake in the company, shares have traded well below the original offer price of $54.20 since its announcement.
Twitter has had a tumultuous history, with crises including management upheaval that saw the removal of co-founder Jack Dorsey in Twitter’s early days and his eventual return in 2015. After an initial public offering in 2013, the company considered selling itself in 2016, drawing the interest of companies from Walt Disney Co. to Salesforce Inc. In 2020, Dorsey tangled with an activist investor that forced Twitter to set specific growth targets and add greater board accountability. That served as a catalyst for Dorsey’s eventual second departure so he could focus on his other company, the digital-payments company Block Inc. Agrawal, formerly the company’s chief technology officer, took the helm in November.
Elon Musk’s proposed buyout of Twitter marks a dramatic turnabout for the company that got its start as a messaging service for sharing status updates with friends but quickly blossomed into a way for people to broadcast short posts of 140 characters or less to a public following. Twitter caught fire among politicians, celebrities, and journalists and took its place alongside social media stalwarts Facebook and YouTube as a standard-bearer of a new, more interactive way of using the web that came to be known as Web 2.0.
While Musk has not outlined a specific plan to change Twitter’s policies around speech and content moderation, his acquisition of the company means that one of the internet’s thorniest problems is now his own. How Musk will address the complex issue of online free speech remains to be seen.