Conflicting businesses

Elon Musk's other interests may affect Twitter

Can Elon Musk deliver higher standards of free expression and better content moderation on Twitter and turn it into “a digital town square where a wide range of beliefs can be debated” as he claims? Or, will he be subject to intolerable pressure to remove content critical of various governments, for fear of punitive action targeting Tesla, Starlink, and SpaceX — the larger businesses he also controls? While Mr Musk has talked about free speech, his interests will make it hard to sequester the social media platform from his other businesses, and to resist governmental pressures to selectively censor Twitter. Moreover, if there is substance to claims that he intends big layoffs, the platform might be hard put to take on potential competition from newcomers like Bluesky, the decentralised social network recently launched by Twitter founder, Jack Dorsey. Bluesky has functionalities somewhat similar to Twitter while being decentralised.

Several other interesting developments happened last week as Mr Musk took charge as “Chief Twit” (as his Twitter bio describes him). Some senior managers including chief executive Parag Agrawal have unceremoniously left. The US press is citing documents claiming Mr Musk told investors about plans to cut Twitter’s workforce by 75 per cent. Mr Musk was ultimately forced to acquire Twitter for $44 billion, the price he offered in April. He seemed reluctant to follow through after making the offer, accusing Twitter of understating the number of “bots” masquerading as humans. Complicated legal manoeuvres followed. It is unusual for the target company to force the acquirer to buy it, as happened in this instance. The deal mechanics are complicated and may in themselves set up conflicts of interest. Mr Musk has invested $27-28 billion of his own cash. He sold Tesla shares worth $15.5 billion to part-fund the stake. That’s roughly 12 per cent of his net worth. He also raised money from an investor list including Oracle founder Larry Ellison, Qatar’s sovereign wealth fund, and multiple investment banks. Saudi Arabia’s sovereign wealth fund is the second-largest shareholder.
 

Mr Musk claims to be a free-speech absolutist and he’s proposed a Twitter “content moderation council” with “widely diverse viewpoints”. But Twitter must live with local rules and regulations everywhere. India, for example, has just released the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2022, which significantly tightens rules for social media. Whatever Mr Musk’s personal inclinations, Twitter cannot afford to get confrontationist if governments do selectively crack down on content since his other businesses are hostages to fortune. Tesla has factories in multiple locations, including China, where Twitter is banned. It sells cars in at least 30 countries, with China as its second-largest market. It is also looking to set up a manufacturing facility in India. SpaceX launches satellites for any interested party, and offers satellite broadband services on Starlink to at least 40 countries. Both SpaceX and Tesla have multiple government customers.

Close to 90 per cent of Mr Musk’s net worth is tied to Tesla and SpaceX. Those two companies reported revenues of $55 billion in 2021, dwarfing Twitter’s revenues of $5 billion. Both Tesla and SpaceX also have long, complex supply chains, sourcing from all over the world. Their business models are thus vulnerable to punitive government actions. Therefore, it remains to be seen if Mr Musk is able to resist pressure on free expression, given everything else at stake.