Elon Musk wants to buy Twitter and make it “maximum reliable” – Silicon Valley

Michel Chapman, Matt O’Brien, Tom Chrischer

In 10 days, Tesla CEO Elon Musk has gone from being a popular Twitter contributor and the company’s largest individual shareholder, a critic, to becoming the owner of a social platform. Identification as an absolutist of free speech.

In a securities filing Thursday, Mask said it “needs to transform its social media platform as a private company” in order to build trust with its users, offering to acquire the company altogether for more than $ 43 billion. It revealed that.

“I believe that freedom of speech is a social obligation for democracy to work,” Musk said in a filing. “I now understand that the company does not prosper or serve this social demand in its current form.”

Later that day, an on-stage interview at the TED 2022 conference made him even more extensive. “It is very important for the future of civilization to have a public platform that is maximally trusted, broad and inclusive.”

Since its introduction in 2006, Twitter has had a lot of discussion about social and political commentary, shared news, scandal gossip, cat memes, and dress colors. But it’s also a platform for troll gangs who can shout out posters against by unleashing false alarms and lies of the virus, bullying and hate speech, and tsunamis, threats, and similar online attacks on vulgar images. Provided.

Twitter has put a lot of effort into keeping the former and blocking the latter, but it’s not always the way to satisfy most users. Like other platforms, it puts restrictions on tweets that threaten violence, fuel hatred, bully others, and disseminate false information. Such rules prompted Twitter’s decision to ban former President Donald Trump following the 2021 Parliamentary rebellion.

Twitter has become a destination for brands and advertisers who prefer tighter content restrictions, as well as a megaphone for celebrities such as playing cards and masks used to attract supporters and promote business ventures.

Mask, who described Twitter as a “de facto town square,” elaborated on some specific potential changes on Thursday.

He hopes to open up a “black box” of artificial intelligence technology that drives Twitter feeds, giving people more transparency as to why some tweets are infected with the virus and others disappear. I said there is. “I don’t edit tweets personally, but I know if anything was done to promote, demote, or otherwise influence the tweet,” he said.

The billionaire is a critic of Twitter’s voice and goes beyond his expressed belief that he has largely fallen short of the principles of free speech. Social media platforms have offended Trump and other right-wing politician followers whose accounts have been suspended for violence, hatred, or violating content standards for harmful false alarms. Musk describes himself as an “absolutist of free speech,” but is also known to block other Twitter users who ask or disagree with him.

While Twitter’s user base remains much smaller than its rivals such as Facebook and TikTok, the service is popular with celebrities, world leaders, journalists and intellectuals. Mask himself has more than 81 million followers, comparable to pop stars such as Lady Gaga.

Twitter’s share price closed at just under 2% at $ 45.08, well below $ 54.20 per mask. This is generally a sign that some investors are suspicious of closing a deal. Shares remain down from their 52-week high of around $ 73.

Musk called the price his final offer, but he didn’t provide funding details. This offer is non-binding and subject to funding and other terms.

Twitter said it would determine whether accepting the offer would be in the best interests of shareholders. However, it’s unclear how Twitter’s board will react after evaluating the offer. John Coffee, a professor at Columbia University’s Law School and head of the Corporate Governance Center, said to negotiate to raise the price per share or to ensure that the board is independent of Musk. He said it is likely that provisions will be needed.

According to Coffee, if Mask’s shares increase to 10% or 15%, the board could adopt a “poison pill” clause to offer more shares and dilute the value of Mask’s holdings. There is. Still, Musk was able to take over the company in a proxy dispute by voting for his current board of directors.

At the TED conference, Musk said he had money. “I could technically afford it,” he laughed.

If Musk succeeds in the acquisition attempt, it could raise the required $ 43 billion, perhaps by borrowing billions of dollars backed by Tesla and SpaceX shares.

Most of Mask’s property, estimated by Forbes to be close to $ 265 billion, is bound by Tesla’s stock. The company allows executive officers to use shares as collateral for loans, but borrowing is limited to 25% of the value of pledged shares.

According to data provider FactSet, Musk owns 172.6 million shares worth $ 176.47 billion. According to Tesla’s mandate, over 51% of his stake has already been pledged as collateral. This means that Musk can borrow about $ 21.5 billion with his remaining shares. He could also borrow a private SpaceX stake.

Musk has been submitting regulatory filings for the past few weeks, revealing that he has been buying Twitter shares in batches almost every day since January 31st, eventually acquiring about 9% of the shares. I made it. Only the Vanguard Group manages more Twitter shares. A lawsuit filed in New York federal court on Tuesday alleged that Musk illegally delayed disclosure of shares in social media companies, allowing more shares to be purchased at lower prices.

The U.S. Securities and Exchange Commission could punish Musk for taking too long to disclose the acquisition of Twitter shares and hurt other investors, but could do something to thwart the acquisition. Is low, said former SEC Chief Economist Chesterspat.

“This will be done pretty quickly,” said Spatt, now a professor of finance at Carnegie Mellon University.

Jacob Frenkel, a former SEC executive lawyer at Dickinson Wright’s law firm in Washington, said it would be difficult to prove the investor’s intentions in the disclosure case. “The mere fact of a disclosure breach does not mean that there was fraud,” Frenkel said.

But “there’s a lot of feed to investigate,” Frenkel said, as to whether anyone who knew about buying Musk’s stock traded the stock before the mask went public.

After Musk announced his shares, Twitter immediately offered him a seat on the board, provided he owned less than 14.9% of the company’s outstanding shares. But the company said he declined five days later. This decision was in line with a barrage of tweets that were removed from the mask, proposing major changes to the company, such as removing ads, which are the main source of revenue, and switching to a homeless shelter at San Francisco headquarters. ..

With a turnabout, CEO Parag Agrawal warned employees earlier this week that they could be “distracting” and urged them to “control noise and stay focused on their work.”

Twitter isn’t working as well as its social media rivals and lost money last year. The company reported a net loss of $ 221 million in 2021. This is primarily related to the resolution of proceedings by shareholders, and the company states that it has misleaded investors about the expansion of its user base and the amount of interaction with the platform. Co-founder Jack Dorsey resigned as CEO in late November and replaced Agrawal.

“I’m not saying that all the answers are here, but we are very reluctant to remove things and want to be very cautious about permanent bans,” Musk says. I did. “It wouldn’t be perfect,” he said, but there should be a perception and reality that the speech is “reasonably as free as possible.” Elon Musk wants to buy Twitter and make it “maximum reliable” – Silicon Valley

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