The headlines of all media platforms went buzzing on October 28th, 2022, with Elon Musk completing the takeover of Twitter. To make things more interesting, Musk’s first course of action was to fire important executives of Twitter, including CEO Parag Agarwal, legal affairs and policy chief Vijaya Gadde, and CFO Ned Segal.
This has been a roller coaster of an event in the tech world, with Musk first trying to make Twitter a private corporation and then backing out of the deal for several reasons. And the next thing you know, he owns Twitter. Now, as everything in this case looks astray, let us try to break it down into segments to understand the course of the events and how they unfolded.
When Did Elon Musk Start Buying Shares Of Twitter?
In January 2022, Elon Musk started buying shares of Twitter Inc., and by the end of March, he had already accumulated a 5% stake in the company. Two important events already took place in this time frame. The first is Musk’s poll on Twitter itself, asking its users about the open-source algorithm of Twitter. And secondly, his discussions about the future of social media and open-source protocols with Jack Dorsey, former CEO and co-founder of Twitter.
By early April, the business magnet acquired a 9.2% stake in the company and was even asked by Parag Agarwal to join the board of directors. At 9.2%, he was already the largest individual shareholder of the company, and to everyone’s surprise, he rejected Agarwal’s offer and made a counteroffer to buy Twitter for $44 billion.
How Did Elon Musk Amass $44 Billion?
With a net worth of over $200 billion, you may have thought that he shelled out the whole amount to buy Twitter from his own pocket. But that was not the case. He strategically used several financial tools, ranging from his own assets to bank loans, in order to amass $44 billion.
From his personal assets, a total of $27 billion in cash was used, of which $15.5 billion came from selling his precious Tesla shares. $5.2 billion came from multiple investment groups, and several large funds came from Qatar Holding, Larry Ellison (co-founder of Oracle), and Prince Alwaleed bin Talal of Saudi Arabia, among many others.
Barclays, Morgan Stanley, Mizuho, Societe Generale, Bank of America, BNP Paribas, and Mitsubishi UFJ Financial Group also backed Musk with a $13 billion loan amount. The financial responsibility to pay back the loan amount has been guaranteed by Twitter and not by the billionaire himself, which is not only an interesting point but a shrewd move.
What Stalled The Buyout?
Initially, Twitter had agreed with Musk on this deal, but soon chaos followed. Twitter was unable to back up its claim that spam and fake accounts comprised less than 5% of their users. Things became more complicated with the whistleblower report of the former head of security at Twitter, Peter “Mudge” Zatko.
Zatko, a well-known voice in the security and hacker communities, claimed in his report that Twitter has many flaws, including an inaccurate estimate of bot counts. Soon after this, Musk terminated the contract of $44 billion on account of misinformation, while Twitter sued Musk for violating the business agreement and tainting the company’s reputation.
Why Buy Twitter After Such Mayhem?
After making the water muddy, it is quite hard to gauge what could be the real reason behind Musk buying Twitter on October 28th. One obvious reason that comes to mind is the massive amount of interest that the billionaire would have to pay if the trial did not end in his favor. Another could be his burning sense of justice and longing for free speech, which he has articulated multiple times. It could also be his desire to change Twitter into a super app, which he had earlier expressed in meetings.
Promises Made By Elon Musk
Elon Musk has made some lofty promises, and in order to keep them, he has a lot of high terrain to climb. Breaking the promise down into points:
- Considered to be the fulcrum of democracy and civilization, “free speech” has become an extremely rare commodity in today’s world. The tech billionaire highlighted the idea of free speech for the masses without resorting to violence, which can be achieved via Twitter. He wants to make this social platform a place where people can exchange ideas within the boundaries of the law. Musk has also been critical of the ban policy on Twitter, and some reports speculate that he might restore some of those banned accounts, one of which is that of former US President Donald Trump.
- Tencent-owned WeChat is a go-to app for millions of Chinese users and caters to their everyday needs. WeChat charges a portion of the payment for transactions made for food, rent, clothes, tickets, and everything else. Musk also plans to model Twitter on WeChat and make it a super app. However, such a venture has already been in the books of Mark Zuckerberg for WhatsApp and Evan Spiegel for Snapchat.
- Musk has been very vocal about spam bots and fake accounts, and it was one of the reasons that made him turn down the deal at first. He pledges to make this platform free of this issue, which he believes has hampered free speech and escalated hate speech, among many other problems.
- Twitter is not a creator-friendly platform when compared to YouTube, TikTok, Instagram, and Facebook. This is an important reason why the customer base and revenue of Twitter are not as massive as any of these platforms. Musk wants to harness both the crowd and the creators to make Twitter a profitable and lively venture.
The Elon Musk era on Twitter started on a bleak note with the sacking of top executives, and it is expected that more layoffs will follow in the coming months. The blue tick verification, which was once free, has to be bought on a monthly subscription now. Ideally, Musk is trying to revamp the working model of this platform and make it more user-friendly, profitable, and accessible, which would benefit everybody.