This analysis was first published in SvD Näringsliv, in Swedish, on April 25th, 2022. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
Elon Musk is taking Twitter private in a historic deal worth SEK 430 billion. SvD’s tech analyst Björn Jeffery answers five questions about why the Tesla boss is so interested in Twitter — and what happens to the competitors now.
Why does Elon Musk want to buy Twitter?
He says he wants to safeguard free speech, which he feels has taken damage under Twitter’s current guidelines. The company has drawn plenty of criticism for suspending individual accounts and removing information that later turned out to be accurate. By taking the company off the stock market, Musk can more easily make sweeping changes to how the product works, and shape how his new rulebook is enforced.
Will Twitter change now?
Yes, and almost certainly more than it has in several years. But Musk does not appear — as some free-speech advocates seem to believe and hope — to intend to let anyone say absolutely anything. Last week Musk tweeted that “social media policies are good if the most extreme 10 percent on the right and left are equally unhappy.” That suggests there will be rules and guidelines, but that they will likely be different from the ones in place today. He has also said he wants to authenticate every human being behind every Twitter account, which could affect the ability to be anonymous.
Why did it take so long for Twitter’s board to accept the bid?
Several of Twitter’s largest shareholders expressed hesitation when Musk’s bid was presented about two weeks ago. The Saudi prince Alwaleed bin Talal, one of the major shareholders, said the bid “doesn’t come close to the intrinsic value of Twitter given its growth prospects.” Twitter’s board also voted for a so-called “poison pill,” which would activate if any single shareholder crossed 15 percent ownership. The poison pill would let remaining shareholders buy newly issued shares at a lower price, but it was seen by many as a way to buy time rather than something that could stop the deal outright.
Since then there has been feverish activity behind the scenes — both from Musk’s side regarding the financing of the bid, and from the board, which has likely been speaking to all of the major shareholders and bringing in price assessments from experts. In the end they decided that the bid was acceptable and, as Twitter’s chairman Bret Taylor put it, “the best path forward for Twitter’s stockholders.”
How can Elon Musk afford this?
According to Forbes magazine, he is the richest person in the world, which is a decent start. That said, much of his wealth is in shares in companies like Tesla and SpaceX, where he is also CEO. One component of financing this bid is that he is borrowing against some of his shares. Talks are also under way with potential partners that could help fund the deal. Even for a billionaire like Musk, this is a very large transaction to pull off as a private individual. The bid is close to $44 billion, roughly SEK 430 billion, which has to be set against Musk’s estimated net worth of $266 billion — around SEK 2,587 billion.
How does this affect competitors like Facebook and TikTok?
Elon Musk is a magnet for attention, and maybe the buyout — combined with product and policy changes — can give a boost to the slightly numbed existence Twitter has lived in for years. In terms of users and revenue, Twitter is significantly smaller than competitors like Facebook and TikTok, but it has managed to stay relevant through its strong foothold among politicians and media.
Musk himself says he isn’t especially interested in the financial side of Twitter, but it too would likely benefit from the increased attention. Even though he hasn’t built social networks before, Musk is a highly respected entrepreneur and not someone you’d want to have working against you. That applies even if your name is Mark Zuckerberg and you run Meta, Facebook’s parent company. If you can pull off both electric cars and rockets, maybe you can bring Twitter back to life — and create a new heavyweight in social media.
