Musk's $44 billion acquisition of Twitter, Washington's tech war will begin?

On April 25, local time, the board of directors of the social networking site Twitter agreed to a $44 billion acquisition offer from Tesla CEO Elon Musk.

After being approved by Twitter's board of directors, the deal is also subject to shareholder and regulatory approvals. Twitter said the deal is expected to close within the year, the proposed deal would bring a substantial cash premium, and Musk's proposal is the best option for holders. The company will release its first-quarter results before the market opens on April 28, when there will be no conference call.

Musk said in a statement that he hopes to make Twitter better than ever, enhance Twitter's products through new features, increase the trust of the outside world in Twitter by making computer algorithms open source, and crack down on spam bot accounts to confirm that all user accounts are true and credible. He looks forward to working with the company and the user community to explore the huge potential.

Still, the market concerns raised by the acquisition outweighed the cheers. Twitter worries that Musk's acquisition will put the company "in the dark"; Tesla investors believe that Musk, who already owns multiple companies, may distract more energy.

The news also shocked the U.S. Capitol Hill. There was a clear partisan split between the two parties in the U.S. Congress on the news. Several Republican congressional members praised Musk's acquisition of Twitter and called on him to set off reforms to rectify the social media sector of big american technology companies; Democrats criticized Musk more, saying that if there is purchasing power to buy Twitter, it should pay more taxes.

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According to documents disclosed by the U.S. Securities and Exchange Commission (SEC) on the 4th of this month, Musk holds 73.4869 million shares of common stock on Twitter, accounting for 9.1% of the common stock, becoming the largest shareholder.

As a loyal user, Musk recently issued a series of questions in response to the general distrust of netizens on the Twitter platform as a public speech space, such as whether you need a new platform? He also asked, "Most 'head' accounts rarely tweet, is Twitter dying?" He rejected the offer to join the board and expressed strong dissatisfaction with Twitter's current situation in a letter to Twitter's CEO.

The M&A tug-of-war lasted nearly two weeks. Before the market hours on April 14, a 13D document released by the US Securities and Exchange Commission showed that Musk proposed to acquire Twitter in cash at a price of $54.2 per share on the 13th and privatize it, and the transaction amount will reach nearly $44 billion. Musk said the offer was a "one-stop price" and the best price Twitter could get.

In order to prevent Musk's acquisition, Twitter passed the "poison pill plan" - The Rights Plan on the 15th, before April 14, 2023, once Musk's shareholding reaches or exceeds 15%, Twitter will issue a large number of new shares, allowing existing shareholders to increase their holdings in the company's shares at a sharp discount, so as to dilute musk's shares and greatly increase the acquisition cost.

Musk didn't give up and raised $46.5 billion in funding, including $25.5 billion in debt financing and $21 billion in personal equity financing from Morgan Stanley, Bank of America and Barclays. In addition, after Friday's private meeting, he also called on Twitter shareholders such as Seventeen Asset Management to support its takeover plan and consider making a takeover offer directly to shareholders. Musk said that because Twitter's business problems have not been corrected for a long time, Twitter alone will never be able to raise the stock price to the level of $54.2 per share.

Twitter's attitude subsequently loosened. The company issued a statement saying it had received Musk's latest proposal and that the board of directors "is committed to careful, comprehensive and careful review to determine the course of action that best serves the interests of all shareholders of the company and Twitter."

Talks between Twitter's board and Musk reportedly continued into the early hours of Monday. The two sides discussed the details of the deal, including a timetable for reaching a potential deal, people familiar with the matter said. Sources said Twitter had previously failed to secure a "go shop" clause in its agreement with Musk that allowed it to solicit additional bids after the agreement was signed.

It is worth mentioning that after the announcement of the acquisition, the digital currency Dogecoin soared by more than 20%. Last May, Musk's post pushed Dogecoin up to an all-time high of 67 cents. Cryptocurrencies such as Bitcoin and Ethereum also stopped falling and turned up after the acquisition news was announced.

Why did Musk buy Twitter?

The acquisition also became a rare case in history of an individual acquiring a multi-billion dollar business in its own name, and the scale of the acquisition hit a new high. Why did the world's richest man, who already leads the electric car company Tesla and aerospace company SpaceX, buy the social media company?

The move could be seen as a continuation of a billionaire's desire to take control of influential media platforms. In 2013, Amazon founder Jeff Bezos bought The Washington Post for $250 million in his personal capacity; Mark Benioff, founder of Silicon Valley software giant Salesforce, also bought Time magazine for $190 million in 2018.

Although Twitter is not a traditional media and has a market capitalization of only one-tenth of Facebook's parent company, Meta, its influence in the Internet era is huge. With the acquisition of Twitter, Musk's personal influence in the media industry will be further enhanced. Musk has a strong 84 million followers on Twitter, and his comments on Twitter became an important free marketing tool for Tesla.

Musk had earlier expressed the idea of owning a media company and announced a takeover offer for Twitter shortly after. He has said publicly that Twitter is an important platform for people to share their views, and he hopes to use technology to promote social media services and promote open and free speech.

In a TED interview shortly after announcing the bid, Musk revealed some of his plans after the Twitter acquisition, for example, to prevent someone from manipulating Twitter's rhetoric behind the scenes, and would develop an open-source algorithm. But he also said the question of how content on internet platforms will be censored is unclear.

Musk reiterated that the essential purpose of acquiring Twitter is not to make money. "Having a public platform that maximizes trust and broad inclusion is extremely important for the future of civilization." "I don't care about the economics at all," he said. ”

Although it is impossible to really explore the motivation behind his acquisition of Twitter, there is no doubt that after the acquisition of Twitter, Musk has an important platform for public opinion. Some political analysts believe that after Musk's acquisition of Twitter, he will not only get a powerful social media platform, but also be closely watched by politicians, political insiders and media who speak out on this platform.

"What he's going to start is going to be a tech war in Washington." Jeff Chester, an electronics technology policy expert in Washington, said, "The war has been in a low-key phase at the moment, but Musk's acquisition will draw Twitter into a heated political debate." ”

Musk has always been known for his outspokenness on Twitter, and not only that, he often "choked" with Congress and the White House on Twitter, criticizing many of the U.S. government's policies. Other experts said that this will also make him face similar problems to Facebook CEO Zuckerberg, that is, it is likely to be questioned and investigated by Congress.

"Social media, and Twitter in particular, has been dominating the policy debate in Washington." Nu Wexler, who has worked as a communications consultant for companies like Twitter and Facebook, said, "Musk will soon find that what was previously a meeting and interview with SpaceX and Tesla will now become a Twitter-related meeting, which may not be a bad thing, but he needs to realize that the situation will change like this." ”

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Still, Musk doesn't seem to have a clear answer to Twitter's future plans. It is widely believed that he will have to wait a long time for him to change Twitter.

At the moment, it is unclear whether Musk will make any changes to Twitter's privacy policy. He hasn't announced any plans to change things, and if musk takes over Twitter and users' data becomes insecure, he could face backlash. Arguably, having Twitter will allow Musk to control more sensitive user data than Tesla and SpaceX collects.

After Musk's acquisition of Twitter, a series of questions needed to be answered about how Twitter would go private, how to reformulate its employee compensation system, who would be Twitter's CEO, and who would remain in the company. U.S. tech talent is in the midst of a relatively tight and competitive market, and a change of management could trigger a round of brain drain.

Since Musk announced his intention to buy Twitter, Tesla shares have fallen by nearly 3%. In addition to Tesla, Musk also owns space exploration company SpaceX and brain-computer interface company Neuralink, and investors are worried that Musk's acquisition of Twitter may lead to him not investing enough energy in electric vehicle companies.

The regulation of Internet platforms by global regulators is also a major challenge for Musk after he acquired Twitter. At present, countries are cracking down on the spread of fake content on the Internet by strengthening regulations.

Just before Musk's successful acquisition of Twitter, the European Union agreed over the weekend on a new digital regulation that would force tech giants such as Google, Meta and Twitter to more aggressively regulate illegal content on their platforms or face billions of dollars in fines.

The landmark piece of legislation, known as the Digital Services Act (DSA), aims to ensure the security of the online environment to constrain platforms with huge users and make them more socially responsible.

At the same time, U.S. policymakers are doing more to rein in the power of big tech companies and force them to clean up harmful content on their platforms.

According to US media reports, White House officials and Democrats are evaluating the impact of Musk's acquisition and platform management rhetoric on the midterm elections and the 2024 election, especially whether the Tesla CEO will allow former President Trump to return to the social platform.

White House press secretary Psaki declined Monday to comment on Musk's acquisition of Twitter. She said Biden has long focused on the power of large social media platforms and supported the implementation of antitrust reforms that require greater transparency.