So obviously Twitter felt that Musk “would bring great value to our board.”
This is how Twitter CEO Parag Agrawal justified the company appointing Musk to its board of directors Tuesday.
Through conversations with Elon over the past few weeks, it became clear to us that he would bring great value to our advice.
– Twitter CEO Parag Agrawal
Agrawal further described Musk as “both a passionate believer and an intense critic of the service, which is exactly what we need on Twitter and in the boardroom to make us stronger in the long run.”
Speaking as a devoted and longtime Twitter user, I can only reply: “it depends”. You can be an intense critic of a company but only have ideas that will make it worse and weaker.
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Agrawal’s announcement hid what is probably the real reason he invited Musk to the Twitter board: the day before, Musk revealed that he had amassed a 9.2% stake in the company. This made Musk, who was already among the largest Twitter users, with over 80 million followers, the largest shareholder of Twitter.
Any shareholder with that much weight will make his views known to management in a way that would be impossible to ignore, so from Agrawal’s point of view, it was probably better for Musk to be inside rather than outside looking in.
It is fair to note that Musk may not have been entirely honest about his intentions for Twitter.
It disclosed its ownership stake on the Securities and Exchange Commission Table 13G, which is typically used by shareholders who intend to play a passive role in the company in question; Investors who buy holdings to play an active role, such as seeking control, generally report in Table 13D, which is more detailed and requires more timely disclosure of changes in holdings and intentions.
Musk also checked a box on the 13G form calling himself a “passive investor”.
It’s possible that Musk never wanted to be anything more than a passive investor, but Agrawal offered him an unsolicited board seat.
Agrawal revealed, however, that he had been arguing with Musk, ostensibly about joining the Twitter board, for “weeks”. It’s also worth noting that Agrawal pulled a written pledge from Musk not to increase its holdings by more than 14.9% as long as he is on the board and for 90 days after his departure.
It’s also possible that Musk is testing the SEC’s determination to force him to comply with its regulations, a practice that has made him a thorn in the agency’s side for years.
Although Musk previously presented himself as a passive investor on Twitter, he no longer claims to be passive about the changes he wishes to see on Twitter: following the announcement of the board’s appointment, he tweeted that “he is looking forward to work. with the advice of Parag and Twitter a make significant improvements on Twitter in the coming months! “
Despite his huge following, not much in Musk’s history with Twitter suggests his ideas are sure to make him stronger. As a social media platform, Twitter has some notable flaws. Because Twitter’s surveillance of its users’ tweets has been indifferent and ineffective, the platform often resembles an online version of an open sewer line.
It seems like it takes a large stream of hateful and harmful content to get a user suspended or banned, especially a prominent user like a national politician. Donald Trump used Twitter to broadcast lies and other offensive material for years until he was permanently banned after the insurrection of January 6, 2021 for violating service restrictions against the “glorification of violence”.
On a more positive level, the feature that makes Twitter useful to subscribers is that one’s Twitter feed can be curated. Users can designate the accounts they want to follow.
This doesn’t guarantee that hateful tweets won’t show up in your feed, as trusted users sometimes retweet offensive tweets for the purpose of commenting on or ridiculing them, and those tweets can infiltrate your feed in other ways. But it gives users some measure of control over what they see.
Twitter has recognized its responsibility in trying to eliminate hatred and threatening speech, offensive tweets or exhortations to violence, among others infringements of its rules.
Musk has targeted these policies in the past, in part implying that Twitter’s content moderation practices violate free speech. Last month, after assembling his stake but before it was disclosed, he tweeted a poll that read: “Free speech is essential for a functioning democracy. Do you believe that Twitter adheres strictly to this principle? “Among its followers who responded, 70.4% said “No”.
This suggests that, as a board member, Musk may be pushing for a relaxation of content moderation standards. Making Twitter smelly may not be good for “a functioning democracy”.
Musk also claimed to allow users to do this edit their tweets after publication. The “edit button” idea has always been controversial: co-founder and former CEO Jack Dorsey once said it would. it will probably never be implemented – because it is not clear whether this would be an absolute improvement. While it would allow users to remove typos in posted tweets, it could also allow them to edit tweets in deceptive ways.
To put Musk’s new role on Twitter into perspective, it’s useful to examine how he has used it in the past. Musk has been such an assiduous tweeter that Twitter has been accepted as a formal source of public disclosure about his companies, including Tesla and SpaceX, of which he is CEO.
His tweet, however, brought him into conflict with the SEC, which he accused some of his tweets are materially misleading to investors. The most notable case involves a tweet from August 7, 2018, in which Musk claimed to have it Secured funding to take Tesla privately to $ 420 per share. The stock opened that day at $ 68.77 and closed at $ 75.91. As it happened, Musk had not secured funding for the transaction.
The SEC eventually forced Musk to relinquish his presidency of Tesla and Musk and the company to pay a $ 20 million fine each. The company also agreed to require Musk to seek his approval before posting any tweets about Tesla’s business.
Musk and the SEC have since engaged in a long struggle over that deal. Last month, Musk claimed this in a legal filing entered the settlement under duress due to the SEC’s implicit threat to harm Tesla’s financial health. The SEC responded that Musk at that time attested in writing that he had resolved the case “voluntarily” and that “no threats … of any kind” had been made by the agency.
Musk also claimed that the settlement violates his first amendment right to free speech and that the agency has been engaged in a long campaign of harassment. The SEC says the subpoenas for Tesla and Musk documents that Musk finds questionable reflect “legitimate inquiries about new potentially violent conduct by Tesla and Musk.”
All of which points to the latest – and currently unanswered – question whether, if you’re a Twitter user, you really want its policies to be influenced, much less dictated, by someone like Elon Musk. The value of his Tesla shares makes him the richest man in the world, and even when he wasn’t the richest Earthman, he wasn’t known as someone particularly welcoming to criticism.
Some wealthy, controlling executives, such as Meta Platform’s Mark Zuckerberg, have run their companies into a tangle of trouble precisely because they couldn’t be challenged. Even with 14.9% of his shares, Musk won’t have enough control over Twitter to be sure he gets what he wants. But he sure won’t be a silent partner.