What does Elon Musk’s takeover of Twitter mean for free speech?

Macquarie University/The Lighthouse
Will the world’s richest man appoint himself the new CEO of the social media giant? Will he end the ban on Donald Trump? What does it mean for investors? Macquarie Business School lecturer Farida Akhtar tackles questions triggered by the $61 billion deal.

Elon Musk’s $US44 billion ($61 billion) takeover of Twitter leaves many questions unanswered as both the social media giant and the entrepreneur’s own companies – Tesla and SpaceX – have struggled in recent months.

Elon Musk Twitter takeover

This has raised concerns among some investors about the profit margins of Twitter once the acquisition is complete.

A significant portion of the takeover will be financed by borrowing against the 50-year-old magnate’s stake in clean energy car company Tesla and aerospace venture SpaceX as collateral in the deal.

This could adversely impact Twitter’s future prospects if the market values of Tesla and SpaceX continue to tumble.

As a private company, it will be difficult for Twitter to raise capital externally to finance new projects or investments which it cannot fund from within.

Observers and Twitter users have expressed fears about Musk’s intention to introduce new innovations such as less moderation.

Furthermore, attracting new investors will be difficult, putting further pressure on Twitter to outperform market expectations in the coming months.

Away from market concerns, observers and Twitter users have expressed fears about Musk’s intention to introduce new innovations such as an “edit feature, an open-source algorithm, less moderation and a higher bar for removing offending tweets”.

Twitter has confirmed it will start testing an edit button – allowing users to change tweets after posting – in the coming months. The move came after Musk asked his followers in a Twitter poll whether they wanted the new feature.

Musk has also pledged to introduce greater transparency around the algorithms that determine how tweets are promoted.

But if these changes can restore confidence among investors and users that “free speech” does not cause social harm through hate speech and derogatory tweets then we can expect a turnaround in Twitter’s performance in the post-acquisition period.

However this must happen quickly in order to build investor confidence.

Extraordinary power

Musk is a noted visionary with a creative mind, who takes a hands on approach in all his ventures.

Elon Musk

Multi-tasking: Investors will be concerned that Elon Musk is too busy if he is CEO of Twitter as well as Tesla and SpaceX.

He is currently CEO at both SpaceX and Tesla but the burning question is will he also be Twitter’s CEO post-acquisition?

Holding this position is vital for Musk to be able to wield the necessary power to significantly change Twitter.

But if he does become Twitter’s CEO, investors will be concerned that the man estimated by Forbes in April 2022 to be worth more than $US250 billion is going to be too busy to effectively make the informed investment and operational decisions necessary to reverse Twitter’s recent financial woes.

Given Musk is now the largest shareholder in Twitter, he will have extraordinary power to make significant changes in the selection of the board of directors.

But this may result in high employee turnover and uncertainty about business changes – with many Twitter staff already voicing their concerns on the platform.

Any resultant decline in employee confidence in the leadership skills of the company’s new CEO will have a knock-on effect on employee satisfaction levels and could impact Twitter’s performance post acquisition.

Another intriguing question the takeover raises is whether former US president Donald Trump – or other individuals whose Twitter accounts have been suspended – will be allowed back onto the platform.

Any ensuing debate among investors, politicians and other individuals will create negative tensions which could adversely impact Twitter in the coming months.

These are questions only Elon Musk can now decide. But whatever he decides to do with Twitter – you can be sure he’ll keep us posted.

Dr Farida Akhtar

Dr Farida Akhtar (pictured) is a Senior Lecturer in the Department of Actuarial Studies and Business Analytics.

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