Musk & Twitter
Much as this sounds like an English pub, it isn’t. This is about Elon Musk who can’t stay out of the news. His ideas have both disrupted and ignited the business world. With 85 million followers, the world pays attention when he speaks.
On 25th April, the Twitter board, which had been repelling his advances, commenced discussions, and shortly after, the world’s richest man with a net worth exceeding $260 bn – with interests in EVs (Tesla), space travel (SpaceX), tunnelling for utilities, pedestrians and freight services (The Boring Co), and ultra-high bandwidth human-computer implantable interfaces (Neuralink) – added a social media giant to his empire. Arguably, his wealth seems linked to his embrace of this platform.
Intent and reality
Musk’s stated position is that he’s buying Twitter to uphold free speech. With 500 million tweets going out per day, Twitter is the ‘de facto public town square’ and ‘essential to a functioning democracy’ in his words. He’s made it clear that he doesn’t like Twitter’s content moderation. And he’s taken on Twitter for suspending accounts including that of a major news organisation. His $6m donation to the American Civil Liberties Union over 5 years reinforces his stance as a self-proclaimed free speech ‘absolutist.’
Musk has been on Twitter since 2009. He’s tweeted 3,113 times last year and 15,000 times over the last few years. Every now and then, he’s been very controversial. In August 2018, he tweeted that he was considering taking Tesla private at $420 a share, an oblique reference to April 20th, the official marijuana holiday. The Securities & Exchange Commission (SEC) fined him $20 million for that. In 2020, a tweet that Tesla’s stock price was too high shrank Tesla’s value by $14 billion. He promised Tesla vehicles for payment in bitcoin and then retracted. For the record, he’s also talked about nuking Mars.
He's shown very little patience for opposing views or criticism from authority, employees or the public. He called Vernon Unsworth a ‘pedo guy’ when he ridiculed Musk’s plan to rescue children stuck in a cave in Thailand, and then faced trial for defamation. Martin Tripp, a Tesla worker who wanted to improve operations at the company’s Nevada battery plant, had to contend with the false rumours from Tesla PR that he was homicidal. He tweeted and then deleted a meme comparing Justin Trudeau with Hitler, over the vaccination mandates he opposed.
What lies ahead
So, what’s the play likely to be under an audacious, mercurial leader?
Social media platforms, particularly Twitter, have been at the core of uprisings like the Arab Spring protests that ushered in new regimes in Tunisia, Yemen, Egypt and Libya; and movements that have had a global impact like #MeToo and #BlacklivesMatter. It’s reshaped several institutions and industries. Will owning the ‘little blue bird’ exponentially increase his ability to control the narrative? What if he succumbs to using the platform for his own benefit? There are allegations already about Musk being soft on China because Tesla has big stakes there.
He opposes censorship even the grey areas. In an age of disinformation, disingenuity and prurience, wouldn’t relaxation beyond a point encourage harassment, abuse, threats and rampant misinformation?
Each country would have its view about what rules should apply. Irrespective of the change in operating philosophy, won’t Twitter have to fulfil the country’s expectations relating to safety, security, accountability and trust if it wishes to operate there? Expectedly, India’s minister of state for IT has reiterated this unambiguously. And US senator Elizabeth Warren has already called for new rules to govern social media after Musk’s takeover because she feels giving Musk power over how millions communicate is in itself dangerous for democracy.
The business model
There’s no discounting the business angle. Twitter’s shares, not very long ago, traded higher than Musk’s offer. Musk’s skill is differentiating his companies from the crowd and he will seek to do that again. The fact that Twitter has 220 million subscribers to Facebook/WhatsApp’s 3 billion and Google’s 4 billion, is indicative of where a marketer like Musk could take it.
Ad revenue is critical for the company currently. One would’ve assumed that would be central to Twitter’s prospective plans. But Musk doesn’t want Twitter to run ads to prevent any bias. Well, companies don’t want to run ads alongside unregulated, offensive content either. Going by his tweets, he’ll rely on subscription revenue. The fact that many prominent business leaders, sports stars, entertainers, media people and politicians broadcast their views on Twitter should encourage users to stay. Musk is also on record about offering anonymity on the platform for a premium. And will explore ways of monetising tweets.
Musk will have to enrich the platform and offer more value for money to retain and grow subscribers. It’s likely we’ll soon see an edit feature, the weeding out of fake accounts and the whittling down of automated accounts (bots). He’s also suggested that Twitter’s algorithm should be open source to increase transparency and allow customising of feeds.
Cutting costs significantly will be an unavoidable consequence of stopping ad revenues. He already told funders that he will crack down on board emoluments and executive pay. He will have to optimise the other big-ticket spends too – on infra, R&D, sales, marketing, administrative - and people.
The Twitter takeover appears a high-risk bet. Not to the world’s richest man who’s very confident of creating a democratic pulpit and a business model that works, despite the daunting economics. Clearly, Musk knows a lot that we don’t.