Takeover for 44 billion dollars: what does Musk do with Twitter?


Status: 04/26/2022 10:26 am

The fact that tweet king Elon Musk is buying Twitter seems logical to many observers. Now it is puzzling what the Tesla boss intends to do with the short message service.

By Marcus Schuler, ARD Studio Los Angeles, z. Currently in Las Vegas

Elon Musk is buying the only moderately successful short message service Twitter for around 44 billion dollars. The social network has been lagging behind other platforms such as Facebook, Instagram or TikTok for years. While Facebook has almost two billion daily users, Twitter has just 230 million. Why did Musk have such a crush on the San Francisco service and what does he intend to do with the hitherto unprofitable platform?

Resilient financing model

What looked like an extremely unlikely deal just a few days ago has now become a reality. Negotiations between Musk and the company’s board of directors dragged on until the early hours of Monday morning. The turning point in the negotiations was apparently that the 50-year-old was able to make a reliable financing commitment.

After that, Musk will pay $54.20 per share, totaling around $44 billion. Musk wants to raise this huge sum with the help of the financial service provider Morgan Stanley and other lenders, among others. They contribute 13 billion in debt capital. Musk financed another $ 12.5 billion by lending his Tesla shares. Ultimately, he wants to raise another $21 billion from his cash wealth.

Twitter as the ideal stage for Musk?

In Silicon Valley, people aren’t quite sure whether to applaud or condemn the takeover. In the tech world, the 50-year-old, whose fortune is estimated at almost $270 billion, is universally admired. At the same time, however, he stands for a new type of CEO who wants to be much more than just a pure company manager who dutifully reports to his shareholders every three months. Musk has a different goal: He wants to influence public discourse. For him, his companies are platforms for what is close to his heart. Twitter is the ideal stage for him here.

There is definitely a trend here: Silicon Valley investor Marc Andreesen controls the audio platform “Clubhouse”, Amazon founder Jeff Bezos owns the newspaper “Washington Post”, tech investor Peter Thiel supports political candidates on the right spectrum and is considered a confidant of the ex-US -President Donald Trump.

What does Musk mean by freedom of speech?

Although he repeatedly emphasizes how important freedom of expression and democracy are to him, very few in the tech industry believe him. For many observers, the best evidence is a tweet from Musk that he posted last week after learning that Microsoft founder Bill Gates had reduced his Tesla shares. Musk then tweeted an unflattering picture of Gates and wrote: “If you want to lose a boner fast”

For many in the tech industry, Musk’s tweets like this are a testament to how little the future owner of Twitter understands about content moderation in times of hate speech and fake news, like other companies like Facebook, Snap or YouTube apply.

Many questions still unclear

But what’s next for the Twitter workforce? Still CEO Parag Agrawal met some of the 7,500 Twitter employees in the afternoon and informed them about the latest developments. According to the participants, there will be no layoffs. However, one comment made by Agrawal was obvious: once the takeover by Musk has been completed, it is not known in which direction the company will go.

Many employees are concerned that they will lose their jobs under the new owner or that the company could relocate its headquarters to Texas, as Musk did with the carmaker Tesla.

Musk also aired the idea of ​​closing down the company’s headquarters in the middle of San Francisco, laying off employees and no longer paying the company’s board of directors salaries. This could save $3 million a year. It seems certain that the current CEO, Parag Agrawal, will have to go. Musk had publicly stated several times that he did not trust the company’s management team.

Coffee grounds reading from Musk tweets

Musk had raised more questions than answered in the past few weeks with his tweets about what he would do differently on Twitter. He had stated several times that he wanted to convert the offer into a global platform for freedom of speech. He accused the 500 or so content moderators of interfering too often and too much. Musk says he wants to eliminate most of the existing moderation policies that prohibit threats of violence, harassment or spamming.

He sees Twitter as a marketplace where everyone can voice their opinion. Musk wants to make public the algorithm that determines which tweets are displayed preferentially in the user accounts. An edit button should ensure that users can subsequently change their tweets without having to delete the entire tweet. Musk could also remove the 280 character limit per tweet.

He is also critical of Twitter’s advertising-financed business model. Last year, 90 percent of Twitter’s revenue came from advertising. Instead, he could imagine a subscription model, such as the additional Twitter service “Blue”, which costs $2.99 ​​a month and offers premium functions such as “undo a tweet”.

Is TheRealDonaldTrump Coming Back?

Another question that has come up again and again over the past few days: What is happening to ex-US President Donald Trump’s Twitter account? He was blocked from the platform after the violent riots on January 6, 2021. Facebook also blocked Trump.

Musk could have the Trump account reactivated, who had tried unsuccessfully to set up his own social media platform several times in the past few months. Much like Musk, Trump sees Twitter as his mouthpiece through which he has insulted and defamed people in the past. However, it is not certain that Trump will return, if only because the person concerned had rejected exactly that in an interview in mid-April.

Analysts and Wall Street are concerned

Analysts did not erupt in celebration of the entry. They worry Musk might neglect his other businesses. The 50-year-old is the boss of both the car manufacturer Tesla and the rocket company SpaceX. He also owns the biotech company Neuralink and the tunneling company Boring Company.

Twitter will release its quarterly results on Thursday. There will be no questions from analysts or the press this time. As a precaution, the company canceled the press conference. Too much is currently in the vague for the former social media shooting star.

What does Elon Musk want with Twitter?

Marcus Schuler, ARD Los Angeles, April 26, 2022 8:18 a.m

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