The Chief Twit takes over, but why should any of us care?

There's nothing in this deal to cause anyone who believed the world's richest man was an untalented amateur to change their mind

The title of the “world’s richest man” is not necessarily a tribute to anything more than the credulous nature of some investors. At no point has that seemed truer than during the tenure of the current incumbent of the post, Elon Musk. Mr Musk’s career has been distinguished mainly by his ability to successfully promote companies other people founded, such as PayPal and Tesla. Given Mr Musk’s propensity to share many of his half-formed thoughts with the public, it is easy to think of him as hard-working but oddly amateurish.

One more company somebody else founded is now part of Mr Musk’s stable: Twitter. And there is nothing in this long and convoluted purchase that would cause anyone who believed the world’s richest man was an untalented amateur to change their mind. Mr Musk first offered $44 billion for Twitter: Nobody was sure how much he was overpaying by — $10 billion? $30 billion — but it was generally accepted that he was, indeed, overpaying. At some point Mr Musk also figured that out, and then spent a few months trying to get out of an ironclad legal agreement. When that failed, he made a virtue of necessity and went ahead with the deal, making it sound like that was what he intended all along.

The high price tag for Twitter is a burden on the company. This is because part of the acquisition had to be funded by debt: Almost $13 billion of it, in fact.

A consortium led by Morgan Stanley, the Bank of America, and Barclays Bank, and including Japanese and French banks, signed up to provide this debt. I return to my original point about credulous investors, since it is far from clear why the banks did so; the Financial Times has reported that they “have conceded that they will be stuck holding the debt on their books for months or even longer” and that they now expect “huge losses on the financing package”.

Either way, Twitter has to provide almost a billion dollars a year as annual interest expense on this debt. That’s not a small amount to add to the expenses of a company that does not really provide all that many marketable services. Reasonable expectations of Twitter’s 2022 revenue are between $5 billion and $6 billion, after all.

Some believe that, like the great takeover artists of old, Mr Musk will discover the flab in Twitter and cut it away expertly. I’m sure there’s excess payroll at Twitter: One thing one can say for Silicon Valley companies is that they have, over the past decade, over-hired and over-paid. (Other tech companies are also beginning layoffs, with Stripe and Lyft both planning to axe thousands.) That said, even Twitter’s layoffs process seems to be amateurish, with emails asking employees to get in touch about their work status if they have not received a message about their firing by 9 am in the morning Pacific time.

The problem is that it is far from clear why layoffs are coming before Mr Musk has a vision for the company’s future other than calling himself “Chief Twit”. Why, for example, he has spent so much time over the past week discussing a subscription model for Twitter, since that can at most add a quarter of a billion or so to revenue in the near term? (Mr Musk, however, imagines that it could reach $10 billion by 2028, though the maths behind that aspiration is deeply opaque.)

Meanwhile Mr Musk’s other claims for the company — as a location with far less content moderation — have far more significant revenue implications that he does not seem to have thought through. Advertisers have become understandably deeply concerned about their ads appearing alongside unmoderated and sometimes hateful content. At least one large global advertising agency has recommended that all its clients pause Twitter ads till clarity about new content rules emerges. Mr Musk was forced to promise that his vision for Twitter did not intend it to be a “free-for-all hellscape”, which no doubt came as a surprise to his most fervent supporters.

In the end, why should any of us care? If a man who has grown rich off clever public relations and government e-vehicle subsidies decides to overspend on a tech company and run it into the ground, what difference does it make in the larger scheme of things?

The problem is that Twitter is not merely any tech company. Twitter and one or two others — Meta, certainly, and Alphabet — are the arteries of modern politics and culture. How Twitter operates, its algorithms, its content policies, and even its subscription model, are of vital public importance not just in the country where it is registered but across the world. The world can ignore some companies being turned into playthings for the “world’s richest man”. It will find it cannot overlook what may or may not be done to Twitter.