Where to begin on Elon Musk offering to buy Twitter for $43 billion: Will Twitter’s board actually accept this offer? (Analysts are split.) Does Musk actually have the cash to make the deal? (Probably.) Is this all an elaborate pump-and-dump type of ploy? (Not likely.)
These uncertainties will get resolved in the coming days, so I’ll tackle a different question: Does Musk’s reason for buying Twitter actually make sense?
In a letter to Twitter board chair Bret Taylor on Wednesday, the Tesla CEO, who gradually accumulated a 9.2% stake in the company in recent weeks, claimed he made the initial investment because “I believe in its potential to be the platform for free speech around the globe.” In that regard, Musk said, Twitter is failing. And he’s just the anti-censorship white knight to fix the problem.
“I believe free speech is a societal imperative for a functioning democracy,” Musk wrote. “However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”
Musk attributes this failure by Twitter, at least in part, to its overreliance on ad dollars, which accounted for roughly 90% of its $5 billion in total revenue in 2021. As Musk wrote in a since-deleted tweet last week: “The power of corporations to dictate policy is greatly enhanced if Twitter depends on advertising money to survive.”
To Musk’s point, Twitter certainly has become more aggressive in policing content on its platform. In the first half of 2021, Twitter removed 5.9 million pieces of content and suspended 1.2 million accounts, according to company data. During the same six-month stretch in 2019, Twitter removed 1.9 million pieces of content and suspended 687,400 accounts. (For context, Twitter has about 217 million daily active users.)
Twitter also found itself embroiled in controversial censorship decisions. Company executives banned former President Donald Trump from the platform, incensing many on the right. The company instituted a policy prohibiting COVID-19 misinformation, squelching debate on the topic. Moderators blocked links to an election season article by the New York Post about Hunter Biden, a decision former CEO Jack Dorsey later called a mistake.
If making Twitter into an unfettered zone for free speech is worth $43 billion to Musk, then more power to him. It’s certainly not how I’d spend that much cash.
More likely, Musk sees Twitter’s censorship as an impediment to its growth, which has lagged well behind its social media rivals. And if that’s the case, the numbers just don’t add up. While some potential Twitter users certainly spurn the site because of its content moderation policies, it’s farcical to think that crowd reaches into the tens of millions, let alone hundreds of millions.
Gettr, a right-wing response to Twitter, claimed only four million total users—not even daily active users—as of January. Another competitor spawned from Twitter’s thought policing, Trump’s Truth Social platform, has tallied just 1.2 million downloads since launching in late February, according to analytics firm Sensor Tower.
Despite these other options, many vociferous Twitter critics remain active on the platform and attract huge audiences: Donald Trump Jr., Ted Cruz, Matt Gaetz, Mollie Hemingway, Ben Shapiro, Charlie Kirk, Steven Crowder, Glenn Greenwald, Benny Johnson, and on and on. Republicans and libertarians already use Twitter in droves, regardless of their frustration with the company’s censorship decisions.
Rather, Twitter’s room for growth resides with younger demographics, which have migrated to TikTok, Instagram, and Snapchat for reasons wholly unrelated to free speech policies.
Those platforms have blown past Twitter by emphasizing photo and video, helping them earn an ineffable cultural cache that drives the social media ecosystem. As Musk astutely noted last weekend, many global icons with the largest Twitter followings—Justin Bieber, Taylor Swift, Cristiano Ronaldo, Lady Gaga, to name a few—barely use Twitter anymore.
If anything, Musk risks reducing Twitter’s appeal with his free-speech crusade. While the anti-Twitter crowd focuses on political censorship, the large majority of Twitter’s content enforcement is for unrelated issues, including child sexual exploitation, false impersonation, and hateful conduct. Twitter users, especially younger and more social justice-minded ones, could flee en masse if they believe their presence enables rampant abuse.
Musk could very well turn around Twitter’s fortunes as sole owner, ushering in new leadership that refreshes the product and regains its popular appeal. If that happens, though, it won’t be because of his free-speech campaign.
Want to send thoughts or suggestions for Data Sheet? Drop me a line here.
Jacob Carpenter
NEWSWORTHY
No élan for Elon. Twitter shares rose slightly in mid-day trading Thursday following news of Tesla CEO Elon Musk’s $43 billion bid to acquire the company and take it private. The stock appeared poised for a major jump based on after-hours trading, but the share price settled at $46.71 as of early Thursday afternoon, up 2%. Musk offered Wednesday to buy all outstanding shares of Twitter for $54.70 per share, though it’s unclear whether the company’s board will accept the offer.
Prime deliveries getting pricer? Amazon plans later this month to enact a 5% fuel and inflation surcharge on third-party sellers using the company’s e-commerce platform, a move that could lead to higher prices for consumers, The Associated Press reported. Amazon officials cited rising gas and labor costs, along with high rates of inflation in the U.S., as reasons for the added fee. The surcharge, which Amazon officials called “subject to change” based on market conditions, follows a January fee increase on merchants that averaged about 5.2%.
A safer environment. Amazon CEO Andy Jassy pledged to reduce on-the-job employee injuries in a letter to shareholders, a response to growing criticism about workplace safety issues at the e-commerce giant, The Wall Street Journal reported Thursday. Jassy wrote that top executives are targeting a decline in “strains, sprains, falls, and repetitive stress injuries”—which some Amazon critics have attributed to the company’s strict demands of warehouse workers. A study released earlier this week by a union-backed coalition found Amazon warehouse staffers suffered injuries at twice the rate of their industry peers, though Jassy argued the rate is only slightly higher than industry average.
The rivalry continues. Apple officials swiped Wednesday at Meta’s plans to take a nearly 50% cut from developers’ metaverse digital asset sales, accusing the tech rival of hypocrisy given Meta’s criticism of Apple App Store fees, MarketWatch reported. In a statement, an Apple spokesman said the metaverse fee schedule, announced earlier this week, “lays bare Meta’s hypocrisy.” Apple charges commissions of 15% or 30% on all app and in-app purchases through its App Store, an amount many tech rivals, developers, and policymakers decry as excessive.
FOOD FOR THOUGHT
Disaster waiting to happen. Hackers keep getting closer to launching a major attack on American infrastructure. The Washington Post reported Wednesday that U.S. government officials and cybersecurity experts discovered “an alarmingly sophisticated and effective” system for controlling equipment in major energy facilities, raising the risk of devastating explosions and crippling energy shortages. Federal officials haven’t disclosed the identity of the hackers, but outside cybersecurity firms reviewing the system in conjunction with the government believe Russian agents likely are responsible.
From the article:
That combination makes the discovery of the system, dubbed Pipedream by industrial control security experts Dragos, the realization of the worst fears of longtime cybersecurity experts. Some compared it to Stuxnet, which the United States and Israel used more than a dozen years ago to damage equipment used in Iran’s nuclear program.
The program manipulates equipment found in virtually all complex industrial plants rather than capitalizing on unknown flaws that can be easily fixed, so almost any plant could fall victim, investigators said.
IN CASE YOU MISSED IT
Warren Buffett lieutenant Charlie Munger was the ultimate Alibaba bull. What finally changed his mind?, by Clay Chandler
China cracked down on Meituan. Now it needs the food delivery giant to feed Shanghai, by Grady McGregor
Peloton investor sticks the boot into co-founder and ex-CEO over ‘destroying $40 billion of shareholder wealth in less than a year’, by Nick Turner, Mark Gurman, and Bloomberg
Would a Musk-owned Twitter mean the return of Donald Trump?, by Chris Morris
Will Solana become the base layer of Web3?, by Jessica Mathews
BEFORE YOU GO
Moaning Sina. When cryptocurrency entrepreneur Sina Estavi bought a non-fungible token of Twitter co-founder Jack Dorsey’s tweet for $2.9 million last year, he compared its value to the Mona Lisa. Like the painting’s famous subject, Estavi surely isn’t smiling today. In another potential sign of a quickly cooling NFT market, the well-known token barely drew interest from the blockchain market this week as Estavi hilariously tried to flip it for $48 million. The top bid as of early Thursday afternoon reached $10,053, up from about $6,000 in the morning. Fortunately for Estavi, he can choose not to sell to the highest bidder.
Data Sheet will be off tomorrow for Good Friday. We will return Monday.
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