In a deal that has sent shockwaves through both the media and technology industries, Twitter announced on Monday that it had brokered a deal to sell its popular social media platform to Elon Musk.
Details of the Deal
The Tesla and SpaceX CEO will pay approximately $44 billion for the rights to lead the platform. This impending deal will move Twitter from a publicly traded company to the private space. Musk will pay all shareholders $54.20 in cash for each share they own. This amount is what Musk had originally offered the shareholders when he set this plan in motion about one month ago. The $54.30 was the amount that the stock was valued at the day before Musk announced his intentions to purchase the company.Read More »
Timeline of Deal
While this play has been in the works for weeks, it was just last Thursday that Musk confirmed that he had secured the financial commitments worth $46.5 billion to take over Twitter. This announcement came one week after he made public his intentions to purchase the company. Included in his original financing deal were two debt commitment letters from Morgan Stanley and another unnamed financial corporation.
Although Musk is the world’s richest man, experts who raised questions about the viability of the deal pointed out that the bulk of his wealth was tied up in his own Tesla stock. As such, the biggest question was whether Musk would be able to raise debt against the stock of Tesla, a company that has been known for its volatility and instability in the markets.
What Does This Mean for Twitter?
The news of the deal raises questions about how Musk will use this new power to his advantage. Musk currently boasts about 83 million followers on the platform. Critics of Musk say that he has a motive to use this business decision to bolster his own voice on the platform.
However, Musk has repeatedly stated that his intention is to bolster free speech through the use of Twitter, working to unlock the potential that the platform delivers in this regard. At a recent TED conference, Musk said that using this public platform in a way that is inclusive is vital for the future of civilization.
Musk said that he wants to make the Twitter algorithm more transparent in an effort to build user confidence. Currently, the algorithm is not open source, meaning that the code is not available to the public to see. For example, Musk believes that users should know when and why a tweet has been emphasized or demoted in their personal feed. He also said that he would move to impose more lenient moderation policies, including being more hesitant to lay down permanent bans in addition to deleting content.
What Does This Mean for Trump?
One of the major questions surrounding the takeover is if the change will allow former President Donald Trump to use the platform once again. In what was a controversial move at the time, Twitter decided to permanently ban Trump from using the platform following the insurrection at the U.S. Capitol on January 6, 2021. However, shortly after the takeover announcement, Trump said that he would not return to Twitter if his ban was reversed under Musk’s leadership. Instead, the former president said that he is still planning to use his Truth Social network to communicate.
Support from Former Twitter CEO
Musk has the support of the company’s co-founder and former CEO Jack Dorsey. In a response to the takeover, Dorsey said that Musk is the “singular solution I trust.” Dorsey had been critical of the Twitter leadership in recent weeks. His primary criticism was that Twitter had become a public company beholden to the whims of Wall Street and advertising dollars. Musk and Dorsey have always appeared to have a friendly relationship, regularly supporting each other in the public space.
What Does This Mean for Employees?
According to CEO Parag Agrawal, employees should not expect any significant changes before the deal is finalized. Agrawal also assured employees that there were no layoffs planned at this point. Twitter’s remote work policies can also be expected to remain in place until after Musk takes charge.
The CEO also assured employees that the leadership team would create a time and space for employees to speak directly with Musk to air their concerns and ask questions. He also said that he plans to be intentional about communicating the guiding principles of Twitter to Musk prior to the deal closing. Agrawal has only been at the helm of Twitter for four months.
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