E2215
Elon Musk offers to buy 100% of Twitter
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Elon offers to buy Twitter
After acquiring a 9% stake in the company last week, Elon offered to buy the rest of Twitter this morning. I wrote about Elon’s motivations for acquiring a stake in Twitter last week (E2214). Specifically…
Now, if Elon is in fact attempting to use his money and power to promote free speech on Twitter, I don’t think it is completely borne of altruism. Elon likely gets more value from Twitter than anyone else in the world. As such he has the most consumer surplus, and therefore the most economic interest in Twitter’s ability to continue as a going concern.
Now that we know Elon intends to take Twitter private, we can think through the ways he might consider creating value for himself and the world.
Elon will addressing company culture, structural issues, and conflicting incentives that currently interfere with free speech principles
Elon will ensure that Twitter remains a good place for him to engage with the world, protecting his ability to generate ‘consumer surplus’ from the product
Over time, Elon will donate the company to not-for-profit / trust of some sort, that will essentially act as utility, for the benefit of the public. Coincidentally, this will obviously provide a much needed future tax break for Elon, but also provide some level of assurance that his vision for free speech is maintained for posterity
Or, in short…
The concept of social media as a public utility is not a new one - in fact, back in 2017 a group of shareholders proposed converting Twitter into a co-op. While unsuccessful, the concept undergirds the sentiment that information wants to be free, and the for-profit nature of a public corporation is often at odds with those principles. This was extremely acute during the 2020 election cycle as big brands reduced advertising spend on social media platforms due to chaos during the election cycle. This affected Twitter far more than Facebook as most of Twitter’s advertising spend is ‘top of funnel’ awareness advertising, while Facebook’s advertising solution provides options for the full range of advertising, most importantly, conversion. As a result when big advertisers pulled back, it affected Twitter more than it affected Facebook. As a result, Twitter was under far more pressure to kowtow to external pressures that collided with both companies CEO’s publicly stated adherence to free speech. Both companies attempted to balance these conflicting perspectives, though few stakeholders have been satisfied with the results.
Where this goes from here? Time will tell…
Supplemental Data
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