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  • On April 25, Twitter accepted a 44-billion-dollar bid from Elon Musk to take over the company.

  • Should the deal go through, It would mark one of the biggest tech takeovers in history.

  • Musk shared his reasons for making the offer at a TED conference in April.

  • Well, I think it's very important for there to be an inclusive arena for free speech.

  • Twitter has become, kind of, the de facto town square.

  • Leading up to the bid, Musk outlined a number of sweeping changes he plans to make to the platform, including removing its reliance on ads, adding an edit button, and changing the content moderation policy.

  • So, what are the challenges Musk faces in making his proposed changes?

  • And could his decision to buy the company make it harder to enact these plans?

  • Musk's bid for Twitter started in mid-April when he made an initial offer of 43 billion dollars.

  • He hasn't liked a lot of facets about Twitter.

  • He hasn't liked the things that theythey do moderate content.

  • I think he hahe has some different views on where those bars should be.

  • The deal means that Musk would buy out shareholders for 54 dollars and 20 cents a share, amounting to a 44-billion-dollar valuation.

  • But Musk won't pay that amount out of pocket.

  • Keep in mind that the way Musk is paying for Twitter is he's taking out a lot of loans.

  • Some of those are backed by his Tesla stock, others are coming from other institutions, and loans have to be paid back.

  • Musk disclosed that he had secured 46.5 billion in funding before the deal closed.

  • According to a regulatory filing, 25 billion will come from debt to financial institutions like Barclays, Bank of America, and Morgan Stanley.

  • Musk will pay about 20 billion in equity, likely by selling Tesla stock or whittling down his in other companies.

  • The deal still must go through shareholders and legal processes.

  • But if it is approved, Twitter will become a privately-held company, which will remove roadblocks from Musk to make changes to the site.

  • If the deal gets totally cleared and he owns Twitter, he... he pretty much does what he wants.

  • Ultimately, he's accountable to himself, but he is going to be accountable in a financial sense to the institutions and people who have supported and backed this.

  • Musk plans to use the private status of the company to make a number of changes to the site.

  • Technical changes that Musk has tweeted about are things like adding an edit button, making tweets longer, and stopping spambots.

  • But he also has broader changes he wants to make that could change how the platform operates.

  • These would at least include reducing Twitter's reliance on ad revenue, making the platform's algorithm open source, and softening the company's strict content moderation policy, which Musk has criticized in the past.

  • In a TED conference interview after he initially put in the bid, he said he wanted Twitter to be an arena for free speech.

  • I do think that we want to be just very reluctant to delete things, just be very cautious with permanent bans.

  • And a good sign as to whether there is free speech: Is someone you don't like allowed to say something you don't like?

  • But how many of these changes could Musk actually make?

  • Some are more feasible than others, but all are likely to come with challenges.

  • Adding an edit button might sound easy to do, but does present technical issues.

  • If somebody tweets out something and two minutes later they decide, "Oh, maybe I should've said that differently or not said that" and tried to change it...

  • If somebody saw that in that interim and, like, captured it, that original tweet can still live.

  • And, so, it... it's kind of hard to get around that part of Twitter.

  • And, so, I think, technically speaking, a lot of the things that he said he wants to do that sound kind of simple, I think will probably prove to be not quite so much.

  • Musk may hit the most roadblocks in maintaining the company's profitability.

  • Ads make up roughly 90% of Twitter's revenue, and removing them could leave the company scrambling for money.

  • Fast, broad changes to the content moderation policy off the bat could also scare away advertisers.

  • I think the important qualification to consider is that the content moderation policies that are supposed to keep Twitter, you know, a safer and friendly place, a big plus to those is that it's what makes it an attractive platform for advertisers.

  • Advertisers don't want to use platforms where all kinds of harmful stuff for those kinds of things go on.

  • And while Musk is free to make changes to Twitter without much oversight, he'll still be accountable for the loans he borrowed to make the bid, making it difficult to eliminate the company's reliance on ads.

  • He needs the cash flow from Twitter, and he'll probably need more of it; he'll need to come up with other ways Twitter can make money, but I don't think he can really afford, right now, to do away with advertising.

  • He needs to pay for this deal.

  • So, I think that's gonna, kind of, limit how many changes he could make or how drastic he could make them.

  • Neither Musk or Twitter immediately responded to requests for comment on the potential changes.

  • The deal won't be fully confirmed until later this year, and users likely won't see any major changes to Twitter until then.

On April 25, Twitter accepted a 44-billion-dollar bid from Elon Musk to take over the company.

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How Elon Musk Plans to Change Twitter | WSJ

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    Elise Chuang posted on 2022/01/24
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