Twitter revealed in a caption on Thursday that Musk had offered to buy the company out for more than $ 43 billion, saying the social networking platform “must be turned into a private company” in order to build trust with its users. “I believe that freedom of speech is a social imperative for a functioning democracy,” Musk said in a statement. “I now realize that the company will neither prosper nor serve this social imperative in its current form.” Later that day, during an on-stage interview at TED 2022, he went even further: “Having a public platform that is highly credible and broadly inclusive is extremely important for the future of civilization.” Since appearing on stage in 2006, Twitter has been hosting thriving social and political commentary, breaking news, gossip scandals, cat memes and controversy over the color of dresses. It did, however, provide a platform for viral misinformation and lies, intimidation and hate speech and troll gangs that can shout posters with which they disagree, launching tidal waves of miserable images, threats and similar acts of cyber-aggression. Twitter has made a significant effort to maintain the latter, while maintaining the former – though not always in ways that satisfy most users. Like other platforms, it has introduced restrictions on tweets that threaten violence, incite hatred, intimidate others and spread misinformation. These rules led to Twitter’s decision to ban former President Donald Trump after the Capitol Uprising in 2021. Twitter has also become a destination for brands and advertisers, many of whom prefer stricter content restrictions, and a loudspeaker for high-profile figures such as Trump and Musk, who have used it to rally supporters and promote business ventures. Musk, who described Twitter as a “de facto town square”, outlined some concrete possible changes on Thursday – such as favoring temporary rather than permanent bans – but has largely described his goal in broad, abstract terms. He said he wanted to open the “black box” of artificial intelligence technology that leads to the flow of Twitter, so that people have more transparency about why some tweets can go viral and others disappear. “Personally, I would not be there to edit tweets,” he said, “but you will know if something was done to promote, demote or otherwise influence a tweet.” The billionaire was an ardent critic of Twitter, mainly because of his stated belief that he lags behind the principles of freedom of speech. The social media platform has angered Trump supporters and other right-wing politicians whose accounts have been suspended for violating its content standards on violence, hatred or harmful misinformation. Musk has described himself as a “liberal of free speech”, but is also known for blocking other Twitter users who dispute or disagree with him. While Twitter’s user base remains much smaller than that of competitors such as Facebook and TikTok, the service is popular with celebrities, world leaders, journalists and intellectuals. Musk himself has more than 81 million followers, competing pop stars such as Lady Gaga. Shares of Twitter closed at $ 45.08, down just under 2%, well below Musk’s offer of $ 54.20 per share. This is generally a sign that some investors are skeptical that the deal will materialize. The stock remains below the 52-week high of about $ 73. Musk called the price his final bid, though he did not provide details on funding. The offer is non-binding and is subject to financing and other conditions. Twitter said it would decide whether accepting the offer was in the best interests of shareholders. It is unclear, however, how Twitter’s board will react after evaluating the offer. He will likely negotiate, seeking a higher price per share or may want provisions to ensure the board remains independent of Musk, said John Coffee, a professor at Columbia University Law School and head of the Center for Corporate Governance. The board could adopt provisions for the “poison pill” to offer more shares and reduce the value of Musk’s shares if Musk’s share rises to 10% or 15%, Coffee said. Even then, Musk could take over the company with a power of attorney contest by voting for the current directors. At the TED conference, Musk said he had the money. “I could technically afford it,” he said with a laugh. Should Musk make the acquisition attempt, he could likely raise the estimated $ 43 billion he needs, possibly by lending billions using his shares in Tesla and SpaceX as collateral. Most of Musk’s fortune, valued at nearly $ 265 billion by Forbes, is tied to Tesla shares. The company allows executives to use shares as collateral for loans, but limits borrowing to 25% of the value of the pledged shares. FactSet says Musk owns 172.6 million shares worth $ 176.47 billion. Just over 51% of its stake has already been pledged as collateral, according to a Tesla power of attorney statement. This means that Musk could use the remaining share to borrow about $ 21.5 billion. He could also borrow his stake in the private SpaceX. Musk has revealed in regulatory deposits in recent weeks that he has been buying shares of Twitter in near-daily batches since Jan. 31, ending with a share of about 9%. Only Vanguard Group controls more Twitter notifications. A lawsuit filed in federal court in New York on Tuesday alleges that Musk was late in revealing his stake in the social networking company so he could buy more shares at lower prices. The U.S. Securities and Exchange Commission could punish Musk for hurting other investors by delaying revealing the Twitter stock market, but is unlikely to do anything to stop the takeover, said Chester Spat, a former chief SEC economist. “This is going to happen pretty quickly,” said Spat, now a professor of economics at Carnegie Mellon University. Jacob Frenkel, a former SEC law enforcement lawyer now at Dickinson Wright Law Firm in Washington, D.C., said it was difficult to prove the intent of an investor in disclosure cases. “The mere fact that the revelation was violated does not mean that there was fraud,” Frenkel said. However, there is “a lot of food for research” into whether anyone familiar with Musk’s stock markets traded the stock before Musk’s public revelations, Frenkel said. After Musk announced his stake, Twitter quickly offered him a seat on his board, provided he owns no more than 14.9% of the company. But the company said five days later that it had refused. The decision coincided with a barrage of deleted and not always serious tweets from Musk proposing major changes to the company, such as the removal of advertising – its main source of revenue – and the conversion of its San Francisco headquarters into a homeless shelter. The shift prompted CEO Parag Agrawal to warn employees earlier this week that “there will be distractions ahead” and “to adjust the noise and stay focused on work”. Twitter did not do as well as its social media competitors and lost money last year. The company reported a net loss of $ 221 million for 2021, which is largely linked to the settlement of a shareholder lawsuit that said the company misled investors about how much its user base was growing and how much users were interacting with its platform. Jack Dorsey’s co-founder resigned as CEO in late November and was replaced by Agrawal. “I’m not saying I have all the answers here, but I think we want to be very reluctant to delete things and just be very careful with permanent bans,” Musk said. “It will not be perfect,” he said, “but there must be a perception and reality that speech is ‘as free as possible.’
