Why did Musk, a technology madman, insist on acquiring social media Twitter?

Musk and Twitter logo. Photo/IC photo

"The bird is free." Musk sent a message after entering Twitter. Twitter's logo is a blue bird.

On October 28, according to CCTV news reports, Musk was already in charge of social media Twitter. Several executives, including the former CEO of Twitter, have left the company.

Musk's acquisition of Twitter can be described as a twist and turn. After Twitter accepted Musk's $44 billion acquisition plan on April 25, the two sides "collapsed" several times in the summer, and Musk and Twitter even sued each other due to the inability to agree on the proportion of fake users.

Musk has previously had a lot of dissatisfaction with Twitter. On March 25, Musk held an investigation on Twitter to publicly question Twitter's free speech rules. "Based on the fact that Twitter is a de facto public square, failure to respect the principle of freedom of expression is fundamentally undermining democracy." Musk also said he was seriously considering whether to build a new social media platform.

At the close of U.S. stocks on October 27, Twitter closed up 0.66% at $53.70 per share.

Holding the sink into the main Twitter headquarters, what is Musk thinking?

"If I buy Twitter and something goes wrong, everyone blames me," Elon Musk sat in the center of a huge stage in April 2022, explaining why he wanted to buy Twitter but hesitated.

After half a year, Musk still made this decision. On October 27, Musk changed his Twitter profile to "Chief Twit" and then entered Twitter headquarters with a sink sink.

Sink means sink, sink. "Let that sink in," Musk used the sink pun, raising speculation about whether he was suggesting "let me think twice (how to buy)" or "let it sink (layoff)."

Things seem to have answered. On October 28, media reported that Twitter CEO Parag Agrawal, CFO Ned Segal and head of legal policy, trust and security Vijaya Gadde were all fired.

Despite becoming the richest man in the world and often seemingly casually tweeting "golden sentences", in fact, Musk's investment path has never been smooth. At least 2017 to 2019, three hellish years for Musk.

In the TED 2022 interview, he repeatedly refused to be interrupted by the moderator, repeating the word "pain" repeatedly. From 2017 to 2019, when his company was on the verge of bankruptcy, he lived in factories at one point and even slept on the floor, calling these three years "the longest painful period of my life."

His other space company, SpaceX, has also had a bumpy history. In an interview with CBS, Musk recalled that SpaceX had been questioned many times and choked up at one point. He said some of them were once his heroes, but now they question him.

And this time, when the host asked, "If the acquisition of Twitter is painful, why would you do it?" he joked, "I hope it won't be too painful."

The acquisition of Twitter has been a flurry and the two sides have sued each other

Musk once said that he hoped that the acquisition of Twitter would not be too painful, and now it seems that it may be a proverb.

Back six months ago, on March 25, Musk tweeted that he was seriously considering building a new social media platform and questioned the current restrictions on freedom of expression.

On the evening of April 4, Twitter filed with the US Securities and Exchange Commission (SEC) showing that Tesla founder Elon Musk bought about 9.2% of Twitter's shares on March 14, becoming the largest shareholder of the social media.

On April 12, a Twitter shareholder named Marc Bain Rasella announced a lawsuit against Musk, saying that Musk delayed disclosing his shareholding in Twitter, thereby keeping Twitter's share price low, and Musk could continue to buy shares at low prices. Marc Bain Rasella has filed a federal court in Manhattan against Musk for securities fraud, arguing that Musk should disclose his holdings to the SEC by March 24.

On the evening of April 14, Beijing time, Musk submitted documents to the SEC of the US Securities and Exchange Commission, announcing that he had issued an invitation to Twitter to acquire all shares of Twitter at a price of $54.2 per share, making Twitter a private company.

On April 25, local time, Twitter accepted Musk's acquisition agreement. Under the agreement, Musk will acquire Twitter for $54.2 per share, for a total of about $44 billion.

But things turned around again on June 6. Musk filed documents with the U.S. Securities and Exchange Commission (SEC), saying Twitter violated the merger agreement between Musk and Twitter by refusing to provide data about spam accounts. Musk said he reserves the right to terminate the acquisition agreement if Twitter violates it.

According to Musk's acquisition agreement with Twitter, if Musk is unable to acquire Twitter due to certain circumstances (such as being unable to raise enough funds), he needs to pay Twitter a $1 billion "breakup fee". But if Twitter finds another competitive offer or acquisition that cannot be approved by the shareholders' meeting, Twitter will need to pay Musk $1 billion in compensation.

On July 8, Musk said he would terminate the acquisition of Twitter on the grounds that Twitter had seriously violated several terms of the agreement. On July 12, Twitter formally sued Musk, demanding that he continue the acquisition for $44 billion. On July 29, Musk launched a counterclaim against Twitter.

By August 30, Musk's advisers sent a notice to Twitter officially announcing that Musk would terminate the acquisition of Twitter. Lawyers for both sides issued numerous subpoenas to each other, and the case was scheduled to go to trial on October 27.

However, the event was full of drama, and Musk again proposed to buy Twitter at the original price in early October.

On October 28, according to CCTV news reports, Musk was already in charge of the social media Twitter company.

Having repeatedly "run into trouble" on Twitter, Musk has questioned Twitter's rules of freedom of speech

Musk often shares his daily life and news about Tesla, Space X and other companies on Twitter, but he has also repeatedly "woe out" on Twitter.

On March 25, Musk held an investigation on Twitter to publicly question Twitter's free speech rules. "Based on the fact that Twitter is a de facto public square, failure to respect the principle of freedom of expression is fundamentally undermining democracy." Freedom of speech is also a phrase Musk has repeatedly mentioned during the acquisition of Twitter.

In writing an offer letter to Twitter's chairman on April 13, Musk said he invested in Twitter because he believed it had the potential to become a platform for free speech around the world. In the TED2022 interview, Musk likened Twitter to a city square, and he wants to ensure that the square is inclusive.

"I don't care about the economy at all," Musk said when referring to the $44 billion acquisition of Twitter, saying he believes having a "public platform with maximum trust and broad inclusiveness" is extremely important for human civilization. And he believes that Twitter is currently struggling to serve the needs of society.

In short, for the sake of human civilization, in order for Twitter to transform as a private company, Musk wants to acquire Twitter.

If Twitter is acquired, one of the things Musk wants to do is open source algorithms. According to his idea, both "pushing" and "throttling" should be made public, not behind-the-scenes operations.

It is worth noting that Musk has been supporting the replaced former Twitter CEO Jack Dorsey.

In February 2020, Elliott Management, an investment firm that owns about 4% of Twitter, became unhappy with Twitter CEO Jack Dorsey and demanded that Twitter remove Dorsey and replace its board members. Dorsey announced his resignation in November 2021 and was replaced by Chief Technology Officer (CTO) Parag Agrawal.

However, Musk has always supported Dorsey. While being pressed into the palace by investors, Musk tweeted, "I just want to say that I support Jack Dorsey as CEO of Twitter because he has a kind heart." ”

Musk has said he will reconsider Twitter's approach to content moderation after the acquisition is completed, as well as some permanent bans on the platform. Musk also said he wants to eliminate machine accounts. This was also the main point of contention between him and Twitter over the acquisition.

However, Musk did not fully liberalize the idea of free speech on Twitter. On the evening of October 27, Musk released the "Notice to Twitter Advertisers" on Twitter, Musk said that Twitter "obviously cannot become a hell of freedom for everyone, recklessly trying to say what you want", but "warm and welcoming to all".

Second, Musk affirmed the importance of advertising, saying that low-relevance ads are spam, but high-relevance ads are actually content, and if ads are done correctly, they can make people happy, get entertaining experiences and information. "Fundamentally, Twitter aspires to be the world's most respected advertising platform, strengthening your brand and growing your business."

After the shares, the floating profit is more than 50%, what else can Musk do to Twitter?

Twitter currently has 192 million daily active users, two-thirds of whom are male.

According to investment institutions, as of the end of last year, the institutions holding the most shares of Twitter were Vanguard Group and Morgan Stanley, which held 8.79% and 8.76% of Twitter, respectively.

As a result, Musk, who holds 9.2%, has become Twitter's largest single shareholder.

Twitter's business performance in recent years has been poor, with revenue of $5.08 billion and a net loss of $220 million last year, and has failed to turn a profit in five of the past seven years. According to Twitter's Q2 2022 financial report, revenue of US$1.17 billion and net loss of US$270 million is the first year-on-year decline since the second quarter of 2020 and is lower than market expectations.

Despite this, Twitter remains one of the most important social media platforms in the world, with former US President Barack Obama, Trump and other political celebrities being Twitter users, while Musk has 80 million followers on Twitter.

At the closing price on March 14, Musk's share price for Twitter was only $33. As of October 28, Twitter's share price has risen to $53.7, with a floating profit of more than 50%.

However, stock floating profits are clearly not Musk's main purpose in acquiring Twitter. It was previously reported that Musk took a fancy to China's WeChat and wanted to create a super APP that would make "everything" happen to people. And Twitter could be an important part of that goal.

For Musk's acquisition of Twitter, Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center of Zhejiang University International Business School, said that Musk's acquisition of Twitter may diversify Twitter's business and will continue to extend to the social field. Push rules will also change. But if Musk will innovate on the existing basis, this is actually unknown.

Pan and Lin analysis said that for Musk, it has gained some political points, social media will be more friendly to Musk in the future, and for Tesla, SpaceX, in fact, it is only conducive to the marketing of these companies, but it will not have much impact on these companies, after all, they belong to different industrial fields. However, in the future, Twitter may become the standard APP of Tesla Central Control, or it may be combined with Starlink to realize satellite transmission of Twitter information, and whether these behaviors will occur is unknown.

Beijing News shell financial reporter Lin Zi editor Xu Chao