Musk Buys Twitter: Passionate Consumption or Rational Calculation?

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Musk's offensive and defensive battle with Twitter

The so-called "rich willfulness", the rich Elon Musk did a very wayward thing - to buy the famous social platform Twitter (Twitter) with a huge amount of $44 billion, and the Twitter side has accepted the acquisition agreement.

Just a few weeks ago, this was just gossip. As an entrepreneur known for his mavericks, Musk is a heavy user of Twitter. For many years, he has been pointing fingers on this social platform and making all kinds of explosive remarks. However, since last year, Twitter's censorship of user speech has begun to intensify, which has led to the removal of many of Musk's outrageous remarks.

On March 25, he tweeted an inquiry: "Do you think Twitter follows the principle of free speech?" As a result, 70% of the netizens who participated in the survey said "no". Ironically, the investigation was quickly removed by Twitter, which irritated Musk even more. In the days since, Musk has continued to tweet the official, and mysteriously asked: "Do you think I should build another platform or buy Twitter?" In the face of Musk's question, many netizens believe that this is just a common complaint after an Internet addicted middle-aged post was deleted. However, the "richest man in The Horse" was not the only one who said so, and a few days later, he began buying shares in Twitter on a large scale. On April 4, documents disclosed by the U.S. Securities and Exchange Commission (SEC) showed that Musk had held 73.4869 million ordinary shares of Twitter, accounting for 9.1% of the common stock, becoming the company's largest shareholder. At this time, everyone suddenly realized that Musk was serious!

Although Twitter's stock price rose sharply after the news of Musk's acquisition of Twitter came out, Twitter's board did not welcome the billionaire who added value to the company. This seems illogical. Generally speaking, the board members of a company will hold shares in the company, and the company's stock price will rise, and their wealth will also rise. From this point of view, is Musk's acquisition not a good thing for them? That's not the case with Twitter, though.

In fact, Twitter's board members, with the exception of founder Jack Dorsey, are all very low-staked, so the benefits of rising stock prices are not obvious. At the same time, these directors have a more obvious "progressive" liberal tendency in their political stance, so in the face of Musk, whose speech is increasingly "conservative", they are very unimpressed, believing that after he becomes the majority shareholder of Twitter, it will have a lot of negative effects on Twitter's speech ecology. At first, they expressed this unwelcome attitude to Musk and tried to manage to keep Musk out of the board. But how can a group of directors with few shares compete with the world's richest man, who has become the company's largest shareholder? Soon after, Twitter's board changed its attitude, welcoming Musk to the board.

There is a bridge section in "Journey to the West" that says that Sun Wukong raised a banner and became king at Huaguo Mountain, and in the face of this kind of rebellious behavior, many immortals suggested that the Jade Emperor xingbing to fight, but Taibai Venus came out to prevent this, and suggested that the Jade Emperor give Sun Wukong an official of the Heavenly Court - the reason is very simple, when he became an official of the Heavenly Court, he entered the system of the Heavenly Court, and he could use the rules of the Heavenly Court to discipline him. Twitter's directors also seem to want to learn too platinum. In their view, as long as Musk, a restless "sun monkey", is absorbed into the board, he can be controlled by the rules of the board. However, how could Musk get on this set. Soon, the directors discovered that Musk didn't want to be a shareholder in Twitter, but to buy the entire Tweet! On April 15, Musk offered Twitter that he would buy Twitter in cash for $54.20 per share and take it private.

What to do? Twitter's directors clearly want to resist. They decided to launch the Poison Pill, a common tactic used to defend against "hostile takeovers." The so-called "poison pill plan", scientific name is called the Shareholder Rights Plan, that is, in order to maintain their control over the company, the existing controller of the company increases the acquisition cost of the "hostile acquirer" by issuing additional shares and buying them at a discount. According to Twitter's board decision, as long as Musk's shareholding exceeds 15%, the "poison pill plan" will be launched. For most acquirers, "poison pills" are a very headache. But for Musk, it's not a big deal at all. Isn't it just a little more money? He immediately announced that he had raised $46.5 billion and would accompany Twitter if it wanted to raise its offer. In the face of Musk's persistence, as well as strong funds, Twitter's board had to soften. On April 25, Twitter officially announced that Musk would buy the company for $54.20 per share in cash — the exact price Musk had originally offered. And Musk also tweeted on his own Twitter announced: "Brothers, Twitter is ours!"

Musk's arrogance to buy a large platform for the deletion of posts, the attitude of Twitter's board of directors, as if to let people watch a web drama adapted from Shuangwen. Some netizens exclaimed that this was simply a copy of Napoleon's return to Paris from Elba. In the Napoleonic era, the attitude of the newspaper changed from "the monster from Corsica landed in puerto Juan" to "the despicable and shameless thief of the country entered Gellenoble" to "His Majesty the Supreme Emperor arrived in his faithful Paris today"; for Twitter's board, its attitude from refusing to cooperate with Musk, to welcoming Musk to the board, to accepting Musk's takeover offer, also took almost the same time. Sure enough, although history is not repeated, it will always step on the rhyme!

Of course, jokes aside, after watching the hilarity, it seems that we should stop and think: Is a savvy businessman like Musk, who spends tens of billions of dollars to acquire a social platform, really just because he is dissatisfied with his own deletion? If not, then what exactly is his motivation? Is there any variable in such a huge acquisition? If the deal is done, how will it affect the United States and the world? To answer these questions, we need to first do a simple review of Twitter, and the love-hate relationship between it and Musk.

Twitter: From a cool idea to a wrestling field of public opinion

Twitter grew out of a simple idea by Jack Dorsey: to use a text message to tell people their immediate impressions. It is said that dorsey had this idea as early as around 2000, but it has not been put into practice. It wasn't until later that he joined a startup called Odeo. At first, Odeo's business was to do podcast platforms, but because of its very general product, coupled with Apple's release of iTunes with built-in music playback, this business soon became untenable. Seeing that the old business was not working, the company's founder, Noah Glass, had to brainstorm with all the staff to see if he could come up with anything to save the company's new business. It was during this brainstorming that Dorsey revived his vision from years ago and won Glass's support. In 2006, Twttr, a product based on this idea, went live. A few months later, Twttr was renamed Twitter, and the Twitter we knew was born.

Perhaps, when Dorsey came up with the idea of Twitter, he just used it as a cool idea. But it turned out that this seemingly rudimentary idea unexpectedly caught up with the tide of the mobile Internet. As people's Internet terminals shifted from bulky PCs to mobile phones, blogs that were meant to express people's opinions and opinions began to become out of place. In contrast, Twitter's application, which limits only 140 words, is more in line with people's requirements of "sending fast and seeing fast". In just a few years, it became one of the most popular social apps in the United States.

However, Twitter has not continued to grow at such a high rate. After Twitter exploded, its operations team clashed over disagreements over the direction of product development, and Dorsey and other souls of Twitter fled. This led to a serious stall in Twitter's product updates, which have been far surpassed by many of its imitators (such as Sina Weibo) in terms of functionality, so that later Twitter had to "copy" those "copycat Tweets" when improving its functionality.

Although Twitter did not seize the opportunity to take advantage of Facebook, other products such as Facebook have not been able to completely replace it, just as WeChat has never been able to completely replace Weibo. In fact, while both Facebook and Twitter are known as social platforms, the logic of the two is very different. Overall, Facebook is a bit like WeChat, its social networking emphasizes more on the interaction between acquaintances or small circles, while Twitter, like Weibo (to be precise, it should be Weibo like Twitter) is more like a public speech field, where people's speech on Twitter is more of a one-way information release, and its audience is wider and more acceptable.

It's for this reason that many celebrities are happy to use Twitter as their platform for speaking, including Obama, Trump and Musk. In 2015, Dorsey returned to Twitter as CEO, making twitter's features more popular with public figures and playing a more critical role in American political life. For example, Trump won a large number of votes by shouting to voters on Twitter, and finally defeated the big hit Hillary Clinton and successfully elected the president of the United States. After being elected, he used Twitter as his main voice channel and engaged in "Twitter governance".

More and more public figures have settled on Twitter and chosen it as the main channel of voice, which has brought great popularity to Twitter and greatly improved its performance, but at the same time, it has also brought it a lot of troubles. As American society becomes more and more torn apart, between liberals and conservatives, between Democrats and Republicans, between the rich and the poor, between whites and people of color... In short, conflicts between all different identity groups are getting worse and worse. As the most important online public place, Twitter has naturally become the place where these conflicts are most concentrated. This has led to more and more extreme remarks and lies on Twitter, and the entire speech ecology has become worse and worse.

In order to reverse this situation, Twitter had to abandon its "free speech" creed, began to censor speech on the platform, and banned and deleted users who violated the regulations, which was dissatisfied by many users. It is worth mentioning that because Most of Dorsey and Twitter's operation team are supporters of "progressivism", Twitter's review is objectively very biased, so conservatives are particularly dissatisfied with it.

On January 6, 2021, Trump's supporters stormed Congress because they were dissatisfied with the election results, and Twitter immediately blocked the account of Trump, who was still the president of the United States at the time, and announced that it would never be unblocked. Subsequently, Twitter further blocked a large number of Trump supporters. Because many of Trump's supporters are conservatives, many conservatives see this as a liberal persecution of conservatives. It is also for this reason that when Musk, who is considered to believe in conservative values, stepped forward and announced that he wanted to buy Twitter, a large number of conservatives felt that they were hoping for a savior, and the Twitter board with a distinct "progressive" tendency regarded it as a flood beast.

Buying Twitter, is it really just a passion consumption?

Musk signed up for Twitter back in 2009, but for a long time, he wasn't active on Twitter. It wasn't until 2017 that Musk didn't know why and suddenly became interested in Twitter. In order to show his love, he directly tweeted: "I really love Twitter to death!" When some netizens arched fire and said, "If you like it, buy it", he also jokingly replied with "how much". However, at that time, Tesla and Space X had not yet exerted their strength, and Musk was not the "richest man in Malaysia" now, so the acquisition of Twitter was not really put on the agenda.

On April 1, 2018, Musk tweeted a message: "Tesla is bankrupt", and also attached a "bankruptcy photo" of himself. Maybe this was originally just Musk's job on April Fool's Day, but this tweet frightened shareholders and caused Tesla's stock to drop by nearly 5%. If it is an ordinary person, it is likely to be frustrated by the damage caused by this prank, but Musk is not an ordinary person, and what he sees from this incident is more the power of Twitter in the field of public opinion. Soon after, he sent another tweet saying he was "considering taking Tesla private." As soon as this push came out, Tesla's stock price rose by 13%, and Musk's value also rose sharply. Because of this matter, the SEC also investigated Musk and fined him $20 million for "manipulating the stock market."

However, even such a large penalty did not hinder Musk's love of Twitter. Since then, he has become increasingly active on Twitter. One moment he tweeted that he was going to Mars, and the next he tweeted that everyone would buy DogeCoin together. To outsiders, Musk's performance seems to be only free and uninhibited, but as long as we look closely, we will find that after each seemingly unintentional "whole life", his value will be improved. It's really "others laugh at me for being crazy, I laugh at others can't see through it"!

So, Musk's reasons for his love of Twitter are actually very clear. With Twitter, he can easily mobilize the power of his masses and use it to make money for himself. In the industry, many people do not understand, why Tesla has very little advertising, but sales have been so good? But as long as you understand the relationship between Musk and Twitter, it is not difficult to understand the mystery - isn't Musk himself on Twitter the best advertisement for Tesla? However, as Twitter's censorship approaches, Musk's comments are often deleted, and Twitter, a free advertising channel, has become increasingly difficult to use. To turn that around, buying Twitter became an option.

Many people are curious, $44 billion, such a large amount, buy a platform to advertise themselves, is it worth it? The answer is of course yes, not to mention that in the past few years Musk has driven much market value growth for Tesla through the delivery of goods on Twitter, just that casual speculation of Dogecoin, a few weeks is a hundred million dollars into the account. Moreover, Twitter itself has a high potential value, as long as Musk improves it slightly, it may become the same "cash cow" as Facebook. How can such a deal be worthless?

There are two questions here: First, is there any additional political motivation for Musk besides economic motivation? For example, support republicans and conservatives, or pave the way for your future presidential race? Second, since Musk recognizes the importance of social platforms, why do you have to buy a tweet that has been widely criticized, instead of building another platform yourself?

For the first question, I personally don't think Musk will have much political consideration. Although many believe that Musk is now a conservative or Republican supporter, it seems to me that he may not have such strong political leanings. In fact, during the Obama administration, Musk had a good relationship with the Democratic Party, and even Tesla was promoted by the liberal promotion of new energy policies. During the Trump administration, although the Republican Party has been trying to win over the rich man, Musk is very dissatisfied with Trump and the Republican Party because Trump does not support the development of new energy. Therefore, historically, Musk has actually been closer to the Democratic Party and the liberals. It was only after Biden took office that Musk made a lot of unpleasant troubles with the US government over trade unions and other issues, so he expressed more criticism of liberals in his speech. But opposing liberals is not the same as supporting conservatives. As a businessman, Musk himself may prefer to be a neutral because it allows him to maneuver between different political factions.

As for whether Musk will pave the way for his own presidential campaign, it is even less likely. The reason is simple, because his birthplace is in South Africa and not in the United States, and according to the U.S. Constitution, he is not eligible to run at all.

For the second question, the answer is also very simple: it is very difficult to build one, not cost-effective. We know that social platforms have strong network externalities, and when there is already a successful social platform on the market, it is difficult to succeed with a new platform that is homogenized with it. Historically, we can see many examples. For example, Tencent Weibo was actually not worse than Sina Weibo in terms of function, and Tencent's financial resources were better than Sina, but Tencent Weibo not only failed, but also became the most money-losing product in Tencent's history; and for example, Trump's newly built social platform "Truth Social" (Truth Social), which is not only very similar in function to Twitter, but also Has Trump's huge popularity, but we don't seem to see the hope that it can catch up with Twitter. Even if you take 10,000 steps back, after a huge investment, the new social platform can surpass Twitter, then the resulting cost will be staggering. That being the case, wouldn't it be more affordable and safer to buy off-the-shelf Twitter?

The acquisition of Twitter may have some variables

It should be noted that although Musk and Twitter have reached an agreement, there may be some variables in whether this acquisition can be completed in the end:

The first variable comes from antitrust. According to the regulations, the merger of such transaction amounts needs to go through antitrust review by the Federal Trade Commission (FTC) or the Department of Justice (DOJ), so it is theoretically possible to be terminated.

From a purely technical point of view, this possibility should not be too great. Because from the perspective of business structure, there is no obvious business overlap between Tesla, Space X and other companies under Musk's name, and there is no obvious synergy effect, so it is difficult to say what major anti-market effects the acquisition of Twitter will trigger. By convention, similar acquisitions would easily pass.

But antitrust scrutiny has never been a purely technical issue, especially when it comes to companies like Twitter that play a vital role in the field of public opinion, and the relevant censorship is likely to be mixed with many political factors. For example, shortly after news of Musk's wholly-owned acquisition of Twitter, Democratic Senator Elizabeth Warren publicly stated that it would be a major threat to American democracy and called for a halt to the acquisition. Readers familiar with the political and legal ecology of the United States should know that Warren is not only important in the Democratic Party, but also highly prestigious in society. More importantly, a large number of antitrust officials, including lina Khan, the current FTC chair, were promoted by Warren and regarded as their spiritual leaders. Therefore, it may be worth paying attention to whether Warren's appeal will have an impact on possible antitrust review during this time period.

The second variable is the question of funding. Musk's acquisition of Twitter will cost $44 billion. Judging from the current news, the money will be paid in cash. Although Musk is now the richest man, wealth stock and cash are not the same thing. In addition to financing, investors are worried that Musk will also have to sell a part of Tesla's shares, which may cause Tesla stock price fluctuations. Interestingly, not long ago, a screenshot of Musk's text message interaction with Bill Gates came out of the Internet. It can be read from the figure that Musk is very dissatisfied with Gates' previous short-selling behavior against Tesla, and now Gates still holds a large number of short-selling Tesla positions. If Gates can short Tesla, then other American billionaires such as Bezos, Zuckerberg and others may also do the same. In fact, many rich people, such as Bezos, not only have direct competition with Musk (note: The competition between Bezos and Musk is mainly in civil aviation), but also very politically opposed. If these rich people take advantage of Musk's cash out stock to short, there may be a possibility that Musk may not be able to scrape together enough acquisition funds in time.

The third variable is whether Musk can properly handle the conflict with Twitter's board and employees. As mentioned earlier, musk and Twitter's boards have clashed fiercely over the past month. Not only that, but in the case of the overall corporate culture leaning more liberal, many employees of Twitter are dissatisfied with Musk, and even some employees have said that they will resign because of it. And Musk, on the other hand, is not a person who can compromise. Twitter isn't fully in the bag yet, and Musk is already posting about the drastic reforms he will make. For example, the board of directors' salaries will be completely abolished, and the network audit will be abolished. The speed of this rhetoric is likely to intensify the conflict between Musk and Twitter personnel. If this contradiction continues, it is not impossible that some unexpected events will occur before Musk takes over Twitter.

What will Twitter bring?

So, what impact could Musk have if he bought Twitter? I think the impact should include several aspects:

The first is the impact on Twitter's product itself.

On the one hand, although Twitter itself is an old and influential product, objectively speaking, it is inherently insufficient in product design. Coupled with Twitter's operation team is more "Buddhist", which makes it seriously lagging behind many up-and-coming stars. For example, so far, Twitter doesn't even have a recommendation feature for popular tweets (similar to Weibo's hot search). Perhaps, Twitter has its own considerations for this, such as not wanting the platform to be too centralized. But for users, the backwardness of similar functions is the poor experience effect. In response to this situation, Musk has made it clear that he wants to improve it. Musk's way of diagnosing Twitter problems is also very special, and if he feels that there is any possible problem, he directly tweets for netizens to vote. It is foreseeable that in this way, Musk will be able to understand the real needs of users better than the current Twitter operations team, which may make Twitter more in line with the needs of users.

On the other hand, Musk may make drastic adjustments to the existing Twitter ecology. According to his release, after the acquisition is completed, it will not only open source the back-office algorithm to increase external trust; it will also crack down on bots that publish spam posts and authenticate all users; at the same time, it will also reduce censorship and be more tolerant of all kinds of speech. According to Musk himself, he hopes that even the users who criticize him most fiercely can remain on the platform. Although it is very mild, the implication is also very clear: since I, the boss, can tolerate the criticism of everyone, what reason do you have not to tolerate the different opinions of others? It is worth mentioning that Twitter is now largely a public platform, and if Musk does change the censorship mechanism as he promised, there will be many people who will stand up against it and accuse it of violating the public interest. So he simply played a trick and announced that he would privatize Twitter - since it was privatized, Twitter is my own turf, and I have to listen to me in my territory, and it is difficult to control him with various constraints on listed companies.

The second is the impact on the market. At this level, the acquisition is likely to activate the entire social platform market. Although Twitter once chased Facebook at its peak, the trend was only short-lived due to its internal operations. Now, in the entire U.S. social market, Facebook is the only one. With Musk's acquisition and transformation of Twitter, Facebook's "lonely and defeating" position may be challenged, and a pool of spring water in the entire social market may also be truly stirred.

The third is the impact on politics. As mentioned earlier, Musk himself should not have the enthusiasm to take the initiative to take sides in politics, but objectively speaking, this acquisition is likely to have a profound impact on the political landscape of the United States. As mentioned earlier, in the past, Twitter was clearly inclined to the liberals represented by the Democratic Party, and the conservatives represented by the Republican Party were suppressed to a certain extent. Especially after the "Congressional Incident", a large number of conservatives have been banned or voluntarily left Twitter. If Musk really adjusts the censorship policy and achieves a bowl of water, then this is equivalent to strengthening the power of conservatives in the field of public opinion. At present, many Republican supporters have asked Musk to restore the account of Trump who was blocked by Twitter, but Trump himself said that he would not return to Twitter, and Musk has not expressed his position on this request for the time being. But despite this, many conservatives have seen Musk as hope. Just these days, several conservative big vs who had previously run away from the negative atmosphere re-announced their return to Twitter. Apparently, with their return, the volume of conservatives will increase dramatically, and the subsequent midterm elections, as well as the presidential election two years later, will likely be affected by this event. In this sense, although Musk has always wanted to make this acquisition an economic event, it is objectively a political event.

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