Why does Musk, a tech madman holding a sink, insist on acquiring social media Twitter?

Musk and Twitter logo. Figure/IC photo

“The bird is free,” Musk tweeted after he took to Twitter. Twitter’s logo is a blue bird.

On October 28, according to CCTV news reports, Musk has taken control 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 twists and turns. After Twitter accepted Musk’s $44 billion acquisition plan on April 25, the two sides “talked down” several times in the summer. Due to the inability to reach an agreement on the proportion of false users, Musk and Twitter even sue each other.

Musk has had a lot of dissatisfaction with Twitter before. On March 25, Musk held an investigation on Twitter, publicly questioning Twitter’s free speech rules. “Based on Twitter being the de facto public square, not abiding by the principles of free speech is fundamentally undermining democracy.” Musk also said he was seriously considering whether to build a new social media platform.

On October 27, the US stock market closed, and Twitter closed up 0.66% at $53.70 per share.

Holding the sink into the Twitter headquarters, what was Musk thinking?

“If I buy Twitter and something goes wrong, everyone will blame me”, in April 2022, Elon Musk sat in the center of the huge stage, explaining to people why he wanted to buy Twitter in the first place Hesitant mind.

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 in his hand.

Sink means sink, sink. “let that sink in,” Musk’s pun on the sink, led people to speculate whether he was implying “Let me think twice (how to acquire)” or “let it sink (layoffs).”

Things seem to be resolved. According to media reports on October 28, Twitter CEO Parag Agrawal, CFO Ned Segal and head of legal policy, trust and security Vijaya Gadde were all fired.

Although he has become the richest man in the world and often seems to tweet “golden sentences” at will, in fact, Musk’s investment road has never been smooth. It was a hell of three years for Musk, at least 2017 to 2019.

In the TED2022 interview, he repeatedly refused to be interrupted by the host, repeating the word “pain” repeatedly. From 2017 to 2019, when his company was on the brink of bankruptcy, he lived in a factory and even slept on the floor for three years, which he called “the longest painful period of his life.”

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

And this time, when faced with the host’s question, “If acquiring Twitter will bring pain, why would you do it,” he joked, “I hope it won’t be too painful.”

The acquisition of Twitter has twists and turns, and the two sides have sued each other

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

Back half a year ago, on March 25, Musk tweeted that he was seriously considering building a new social media platform and questioned Twitter’s current restrictions on free speech.

On the evening of April 4, Twitter’s filing with the U.S. Securities and Exchange Commission (SEC) showed that Tesla founder Elon Musk purchased about 9.2% of Twitter’s shares on March 14, becoming the social media company. largest shareholder in the media.

On April 12, a Twitter shareholder named Marc Bain Rasella announced that he was suing Musk, saying that Musk delayed disclosing his shareholding ratio in Twitter, thereby keeping Twitter’s stock price low, while Musk could sell at a low price. Keep buying stocks. Marc Bain Rasella has sued Musk in federal court in Manhattan for securities fraud, arguing that Musk should have disclosed his holdings to the SEC by March 24.

On the evening of April 14, Beijing time, Musk submitted a document to the SEC, announcing that he had issued an offer to Twitter to acquire all Twitter shares 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 buy Twitter for $54.20 per share, or about $44 billion in total.

But things took a turn for the worse on June 6. Musk filed documents with the U.S. Securities and Exchange Commission (SEC) saying Twitter violated a merger agreement between Musk and Twitter by refusing to provide data on spam accounts. Musk said he reserves the right to terminate the deal if Twitter breaches the deal.

According to the acquisition agreement between Musk and Twitter, if Musk cannot acquire Twitter due to certain circumstances (such as unable to raise sufficient funds), he needs to pay Twitter a “breakup fee” of $1 billion. But Twitter would have to pay Musk $1 billion if it finds another competing offer or if the takeover cannot be approved by a shareholder meeting.

On July 8, Musk said it would terminate the acquisition of Twitter, citing Twitter’s serious violations of various terms of the agreement. On July 12, Twitter formally sued Musk, asking him to continue the acquisition for $44 billion. On July 29, Musk filed a countersuit against Twitter.

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

However, the events were full of drama, and Musk again proposed to buy Twitter for the original price in early October.

On October 28, according to CCTV news reports, Musk has taken charge of the social media Twitter company.

Musk has questioned Twitter’s free speech rules after repeatedly “getting into trouble” on Twitter

Musk often shares his daily life and news about companies such as Tesla and Space X on Twitter, but he has also repeatedly tweeted “disasters”.

On March 25, Musk held an investigation on Twitter, publicly questioning Twitter’s free speech rules. “Based on the fact that Twitter is the de facto public square, failure to abide by the principles of free speech fundamentally undermines democracy.” Free speech was also a phrase that Musk repeatedly mentioned during his acquisition of Twitter.

When 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 a TED2022 interview, Musk likened Twitter to a city square, and he wants to ensure that the square is inclusive.

“I don’t care about economics at all,” Musk said when referring to the $44 billion acquisition of Twitter, saying he believed that having a “public platform with the greatest level of trust and broad inclusivity” was extremely important to human civilization. And he believes that Twitter is currently unable to serve the needs of society.

In short, for the sake of human civilization and to transform Twitter as a private company, Musk is buying Twitter.

One of the things Musk wants to do if Twitter is acquired is to open source the algorithm. According to his idea, both “pushing” and “limiting” should be made public, not behind the scenes.

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 holds about 4% of Twitter, was dissatisfied with Twitter CEO Jack Dorsey and asked Twitter to remove Dorsey and replace board members. Dorsey announced his resignation in November 2021, and his position was replaced by Chief Technology Officer (CTO) Parag Agrawal.

However, Musk has been supporting Dorsey. During his push by investors, Musk tweeted, “I just want to say I support Jack Dorsey as CEO of Twitter because he has a good heart.”

After the acquisition, Musk has said he will reconsider Twitter’s approach to content moderation, as well as some permanent bans from the platform. Musk also expressed his desire to eliminate machine accounts. This has also been the main point of contention between him and Twitter over the acquisition.

However, Musk has not fully liberalized the idea of ​​free speech on Twitter. On the evening of October 27th, Musk released the “About Twitter Advertiser’s Book” on Twitter. Musk said that Twitter “obviously cannot be a free hell for everyone, reckless about what they want to say and say”, but “enthusiastically. Yes, all are welcome.”

Second, Musk affirmed the importance of advertising, saying that low-relevance ads are spam, but high-relevance ads are actually content, and if done right, can make people happy, entertaining, and informative. “Fundamentally, Twitter aspires to be the most respected advertising platform in the world, strengthening your brand and growing your business.”

After becoming a shareholder, the floating profit exceeds 50%. What else can Musk do to Twitter?

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

According to the disclosure of investment institutions, as of the end of last year, the institutions that held 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, with a 9.2% stake, has become Twitter’s largest single shareholder.

Twitter’s operating performance has been poor in recent years. Last year, Twitter achieved revenue of $5.08 billion and a net loss of $220 million. It has failed to achieve profitability in five of the past seven years. According to Twitter’s financial report for the second quarter of 2022, revenue was $1.17 billion and a net loss of $270 million was the first year-on-year decline since the second quarter of 2020, which was less than market expectations.

Despite this, Twitter is still one of the most important social media platforms in the world. Political celebrities such as former US President Barack Obama and Trump are all Twitter users, and Musk has 80 million followers on Twitter.

At the closing price on March 14, Musk bought Twitter at just $33. As of October 28, Twitter’s share price has risen to $53.7, with a floating profit of more than 50%.

However, the stock float is obviously not the main purpose of Musk’s acquisition of Twitter. It was previously reported that Musk had taken a fancy to China’s WeChat and wanted to create a super app where “everything” happens to people. And Twitter could be an important part of that goal.

Regarding 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. , In the future, Twitter will copy many of its competitors’ social products. It is conceivable that in the future, there will be acquaintances socializing like Facebook, and there will be short video content socializing like Tik Tok. Push rules will also change. But if Musk will innovate on the existing basis, it is still unknown.

Pan and Lin analyzed that for Musk, it has gained some political points, and social media will be more friendly to Musk in the future, while for Tesla and SpaceX, it is actually only beneficial to the marketing of these companies, but not It will not have much impact on these enterprises, after all, they belong to different industrial fields. However, in the future, Twitter may become the standard APP of Tesla’s central control, and it may also be combined with Starlink to realize satellite transmission of Twitter information. It is unknown whether these behaviors will take place.

Beijing News Shell Finance reporter Lin Zi editor Xu Chao