Elon Musk, billionaire CEO of Tesla and SpaceX, first expressed interest in acquiring Twitter in April 2022, and after nearly seven months filled with controversy and lawsuits, he officially purchased the social media site for around $44 billion Oct. 28.
The acquisition was postponed after Twitter tried to thwart Musk’s plans to buy the company. In early April, SEC filings showed Musk owned 9.1% of Twitter, making him the largest individual shareholder. Top executives feared that he would eventually purchase enough shares to control a majority of the company, so the company adopted a “poison pill” to try to dilute Elon Musk’s ownership, according to Chris Harris, chair of Elon University's Department of Finance.
“The company actually came out and put in place what’s called a poison pill. A poison pill means they then have the ability to issue tons of new shares of stock so that it can dilute the ownership of any one person,” Harris said. “They were actually trying to dilute the ownership of Elon Musk to prevent him from being able to buy this stock.”
Despite this, Musk reached a deal to purchase Twitter for $54.20 per share. Harris said Musk’s acquisition could potentially start a trend for the privatization of social media companies.
Public companies offer shares of stock for sale to all investors in the general public, while private companies do not — meaning the ownership and decision making power of private companies is often restricted to individual owners. This type of private control across social media could potentially create a divide that spreads misinformation and strictens content moderation. However, no other large social media platforms are currently in the middle of a buyout.
“I think it will depend on how it goes,” Harris said. “If companies are starting to have financial problems, this could be a trend.”
With over 200 million active users as of Nov. 4, ,Twitter consistently ranks within the top 15 most popular social media apps globally. Elon freshman Jennifer Bove said Twitter’s buyout will have negative political consequences.
“I don’t really think it is a good thing because he is limiting people’s freedom of speech. It’s going to divide even more in politics because he could favor people more now,” Bove said.
Musk has enhanced the idea of free speech on Twitter by reinstating banned accounts and removing Covid misinformation policies, but drew the line when Kanye West made a tweet featuring a Swastika. West’s account was suspended, an action that shows Musk is working to prevent the spread of hate speech.
Within his first weeks as owner, Musk already cut nearly half of Twitter’s employees, a move that is expected to cut costs and increase profits for Twitter. Musk even claimed in a Nov. 26 Tweet that Twitter is actually working better after the layoffs.
Musk also reportedly changed Twitter’s work environment by telling employees to either expect long, intense work hours or quit, a move that prompted thousands of employees to resign. Elon freshman Ryan Conover said the lack of Twitter employees could be a problem because many of them have important roles in the company.
“Elon Musk laying off half of Twitter’s employees is risky because many of those employees help monitor harmful content as well as platform safety on the site,” Conover said.
Musk said he has plans to hire more workers, but the exodus of many Twitter employees might indicate that Musk will have a problem attracting potential employees.