This is a download from BFM 89.9, the Business Station. BFM 89.9, the Business Station. My name is Rich Bradbury, and welcome to Matt's Blain. Well, Elon Musk is poised to buy Twitter.
That's it, that's about as much of an introduction as we need today. As I said, Elon Musk is poised to buy Twitter. Yeah, no, just a quick disclaimer here. I generally don't do these kind of breaking news type stories because, you know, with the whole sort of Matt's Blain concept, it's much nicer to put things in a capsule that people can experience, if not the full story, than as much as possible.
And we record this show on a Thursday afternoon, which gives the US pretty much an entire day to do weird stuff while we're sleeping. And so this story is, you know, it's moving so fast that it could be, or what we're saying could be completely irrelevant or updated by the time it is actually broadcast. And in fact, between preparing this show on Wednesday and doing that sleep thing, the story changed. And I had to do two rewrites this morning, according to the stuff that came in.
And that's still a day before we go to broadcast. So, you know, who knows, maybe Elon Musk will have solved World Hunger by Friday morning, or maybe invented something that turns bullets and missiles into daisies. I mean, you know, he wants to solve a flamethrower, so maybe that last one isn't on his to-do list quite yet. Yeah, maybe not there just yet.
Do you want to, as far as we can then, before any of us might change? Do you want to do a quick summary? Yeah, so we did that king trial episode a couple of weeks ago, and enormous amount of stuff has changed since then. You know, I was actually hoping that the episode was the last time I would have to talk about Twitter for quite a while.
But obviously, things have moved on. So I'll do a quick-fire summary if I can. So in March, Musk tweets about maybe starting his own social media company. That was at the end of March in an SEC filing in early April.
It turns out that while he was tweeting about starting his own social media company, he was actually already buying up Twitter stock and that he emerged in early April as the largest individual shareholder with a holding of about 9%. He indicated that his shareholding would be passive, only he changed his mind and decided to, you know, he was going to be an interactive, I guess, shareholder and was then asked to join the board, which he subsequently declined. Then he put together a group of investors or financiers and made a bid for the entire company, which would delist it and take it private. The board rejected that.
They filed a motion that would dilute his shares if he launched a hostile takeover bid. Twitter founder Jack Dorsey jumped in supporting Musk's actions. And this week, a revised offer has now been pretty much accepted by the board and subject to SEC approval that purchase could go through. Now, there are also reports that Twitter has lost hundreds of thousands of organic users since news of the takeover broke this week.
And that Tesla on the back of this news has seen its stock value plunge, wiping more than $125 billion off the value of the company, which of course is equivalent to the purchase of three Twitter's. And that Musk has been responding to tweets that could lead to harassment of some existing Twitter staff in contravention of an agreement he signed with Twitter about commenting on the company and its employees. Have I forgotten anything apart from fights with a Saudi prince and threatening to slash the board's salaries to zero? Nope, nope.
I think you've got it pretty much covered there. OK, one thing I overlooked. I did forget to mention that he tweeted about turning Twitter's HQ into a shelter for the homeless, but he later deleted that. So, you know, that joke about himself in World Hunger by the time this comes out.
It's possible. I mean, he was looking to solve homelessness. You know, I really don't want to go through the all of the minutiae of this story. You can Google it.
You can run through the details far quicker than I can explain. So I'm going to concentrate today on what it means or at least what we think it means because the story is just an endless stream of speculation. There's physically too much stuff to read in part. You know, this is created by the way that the takeover is actually unfolding.
You know, this isn't a traditional corporate buyout. This is must essentially putting up his own money and taking on debt to finance the acquisition. And we're seeing details emerge on Twitter through Musk's own account and, of course, through statements from Twitter senior management and figures like Jack Dorsey. Some details even came out last week via a recent TED talk that Musk gave.
So this isn't happening as press releases and official statements and neither is it yet hostile takeover, but there's an implicit threat that it could be if needed. So whatever the cost, Musk seems intent on owning Twitter. Now, there seems to be one really simple question here or why? Well, I wish there was a simple answer.
You know, some people are saying Musk likes Twitter. It could be as simple as that. He likes the platform. He thinks it's been mismanaged for years and he has the money to do something about it.
Others say that there's a financial aspect, you know, as some of the more business focused comment has said, Tesla has become one of the world's top valued companies in a relatively short space of time. Even though some of that value was wiped off this week. Less than 20 years, I think. Yeah, and Apple took about twice as long to get to the valuation it has now and Meta Facebook fell out of those top 10 rankings earlier this year.
Tesla is, of course, now making a lot of cars. It's making a profit, but it's still small in terms of, you know, the scale of its production compared to companies like Toyota. So that market value is still fairly speculative. There's a lot of hypothetical value there.
It rests on the assumption that Tesla is an answer to some of the problems that we have when it comes to things like fossil fuels and the future of personal transport. Do you think that's it? Well, you know, the point of this episode isn't to neg on Elon Musk. He has a lot of great ideas, but he's not unique in that.
What he is unique is the way that he's able to bring those ideas to life. Do they all work? Will they all work? Probably not.
But the hit rate with great ideas is like that. You know, ask the man that his company is named after Nikolai Tesla. A lot of people focus on the fact that it makes cool cars, but the strength of Tesla is really, you know, those batteries. It's the storage and not just for the cars.
It's about creating these small decentralized power grids for harnessing the power of renewable energy and doing the most difficult part of that job, storing the energy so that it can be used on demand. What about, you know, the boring companies, SpaceX, Hyperloop, all those? Well, that's the whole point. I mean, there are so many of these.
There's the humanoid robot. There's the neural link or whatever it's called. You know, all of these ideas have great potential. It's unlikely simply by the law of averages that all of them are going to succeed or if they do succeed, that Musk will be the one running them.
He's a man with a lot of interests. He may sell some or simply leave others in charge of them to do the running for him. Well, then that brings us back around to the original point of why would he buy Twitter? What has already got so many other projects going on?
Well, yeah, I mean, you know, we kind of digressed for a while there, but that's the other part of Elon Musk. You can kind of think of him as the Donald Trump who can. And I don't mean that as an insult, however it sounds. Donald Trump, you know, for all his faults is a great showman.
You wouldn't buy used car from him, but a building or a country, apparently, you know, people will. He's built this enormously successful brand, whether it's financials match. The brand is something that's been speculated on for years. You know, that's a lot of the lawsuits that are happening in New York.
But unlike Trump, Musk combines the creative ideation, the showmanship and the managerial ability, you know, in kind of equalish quantities. And that's where I think we get back to that point about financial value. Musk's bid values Twitter at 44 billion. Meta is still worth over $560 billion.
And that's after losing around 45% of its value this year. So in other words, he wants to do a Tesla with Twitter. Well, that's one of the lines of speculation that I've been seeing. You know, incidentally, we agreed on that question before the massive exodus from Tesla stock.
But historically, the analogy is still sound. Twitter has underperformed. It hasn't been able to make itself into that financial giant that Facebook or Meta has become. And in fact, you know, Twitter, I think, hasn't made a profit for something like 10 of the last 12 years, so it's something along those lines.
So I think Musk sees himself as being the transformational actor who can unlock the company's potential. And perhaps create some of that same sense of mystique and hypothetical value around the company. But that's one of the additional conundrums that he now faces. How is he going to increase that income?
Sure, you know, it doesn't matter as long as it's privately owned. He covers the bills. He services the debt, which again, since we started preparing the show, there may now seem to be a question mark against that because Musk's debt financing is against his Tesla stock, some of which he already has some loans against, I believe, so that lack of investor confidence and that plunge in the chef price hinges on fears that Musk may sell off some of his stock to meet calls on those loans or to fund the cash purchase component of Twitter and create a downward spiral in the stock. So the fears of him selling stock have created their own downward spiral.
I don't understand. Don't worry. Nobody expects you to understand market behavior. It's OK.
And I don't pretend to know how Elon Musk thinks or what motivates him. Either, you know, I follow his Twitter feed as infrequently as possible. I'm not somebody you would class as an Elon watcher, but I can't imagine that he would want to leave the company or perhaps even float or sell some of his stock unless it had the kind of attention grabbing valuation that Twitter has. I mean, that's that saying, you know, looking down the lines with Twitter, but I guess all of this is a really long way of saying he bought it because he likes it and because he can.
Do you think we can get a bit more clarity on what the company and the platform might look like, you know, once he does take over? Yeah. I mean, apart from replacing the current board and joking about turning their building into a homeless shelter, I don't think we really know too much about what he would do, how he would shake up the company internally. I mean, I made a joke with someone today that maybe he'd relocate the staff to Mars on SpaceX, but obviously that can't happen.
I think it's his policy direction that's key to what happens in the future. He's a free speech maximalist. He says he favors free speech to its fullest extent under the law. And he prefers the idea of timeouts rather than permanent bans from platforms like Twitter.
But from a day to day point of view, I don't think, you know, the average user is going to see an enormous amount of change or difference. And what about that long-awaited edit button we all be waiting for? Well, yeah, I mean, certainly we'll see new features. We'll see technical solutions being rolled out.
But that kind of tells you where we are with Twitter in terms of its relevance. We're talking about an edit button, you know, Facebook and Instagram are miles ahead with stories and reels in addition to the millions of other things, those apps and other social platforms like TikTok do. Twitter at this point is stuck being the kind of 21st century SMS of social media. We should have had an edit function, you know, a decade ago as an institution, it is in need of an urgent shake up.
Do you think maybe we'd see a blockchain-based payment system or something on Twitter? I mean, I'd be shocked if there wasn't something, if not already on Twitter's plans, then certainly in masks. I mean, he is a crypto king after all. And that would be something that an in-ball message-based service could be quite adept at, you know, rather than hidden under the bloat of the million tabs that Facebook seems to have these days.
But it's that irony right, that's supposed a generation gap with younger generations more adept at figuring out complicated technology. Yet those platforms with all the features are the ones that are hemorrhaging younger users or simply not attracting them. They're going to simpler, more streamlined services. So in terms of, I think, you know, those day-to-day differences, at least to begin with, I think the biggest two impacts we're going to see, and this is what we get into after the break, are the renewed commitment to free speech and an opening up of the platform's API and algorithm.
Interesting. OK, hold that thought then. And when we come back, will Twitter's doors open to Donald Trump? Will they swing back around?
And does anyone really care about Twitter anymore anyway? All that coming up here on Matt's plane on BFM 89.9, the Business Station. Breaking Financial Matters, BFM 89.9. BFM 89.9, the Business Station.
My name is Rich Bradbury. This is Matt's plane on this Friday morning. Now, Matt, before we go into the free, obviously we're talking about Elon Musk's technology, before we go into the free speech and algorithmic components. Where is Jack Dorsey in all of this?
What's he doing? Well, Dorsey, of course, despite being a major shareholder, stepped down from his position as CEO of Twitter in November last year. At the time, he said that the company had moved beyond the need for its founder's vision. He seems to have backed Musk pretty much entirely, stating that he would like to see Twitter being viewed more as a public good than a Wall Street bet.
And that the company has tried the ad funded model and it's time to do something new. Again, I'm not a Jack Dorsey watcher. Every time I see him, he looks more like Saruman for a load of the rings. And I guess that kind of makes Elon Musk Saran in that analogy, sweeping his eye of Musk door across his Kingdom of Tweets.
But, you know, digress again. Dorsey probably thinks he's Gandalf. He isn't. He's Saruman.
I'm definitely sure that Elon Musk is not a hobbit. But, you know, it's been reported that Dorsey would stand to pocket almost a billion dollars in the deal, as well as having a seemingly kindred spirit running what used to be his company. What do you mean by seemingly kindred spirit? Well, for starters, I know Dorsey hasn't had things his own way.
You know, he's even when he was CEO, he was responsible to the board. He was responsible to shareholders. But he is part of that on-screen regime that Musk deems to have failed its users. We've also seen a rush from right-wing conservative voices in the US to embrace Musk because of their perception that Twitter has a liberal bias and that its algorithm silenced them.
And also because of the banning of high-profile right-wing personalities like InfoWars, Founder Alex Jones, and of course Trump and others. But as Musk himself points out, he tends to be fiscally, you know, pretty much a libertarian and socially he's pretty progressive. Neither of these things fits comfortably into today's right-wing ideologies or narratives. But before we get into that whole freedom of speech for our go, let's talk about the algorithm.
Yeah, because nothing says stay tuned, like saying, let's talk about the algorithm. Just doing my bit for the bottom line, never say I'm a team player. You mean not a team player? Sure, you can think that.
I don't know how many of our listeners use Twitter, but you know, that's a point that we'll bookmark for later, by the way. But its algorithm is really annoying, way more annoying than Facebook. Some Facebook's is already really annoying. I'd describe Twitter's newsfeed algorithm as weedling versus the desperate and cajoling that you get from Facebook.
Now Musk has made it clear that he would like the algorithm to be opened up. In fact, Dorsey and his replacement, the current CEO, Mr. Agrawal were already working on ways to open up the API and allow people to use it the way they want. That would give people much more granular control over whose content they see and when they see it.
Speculate them. Tell me what that would look like. Well, I think it's too early to say from a general user perspective, you know, Twitter really isn't user friendly. You really need third party apps to get the feed to consistently load sequentially by time.
In its early days, you know, Twitter was good for a few years, but once it went truly mainstream and it got really busy, it was hard to keep up with your feed. So those third party apps can help, but unless your job involves using Twitter, why would you put so much effort into managing it? You know, something like Instagram Reels, it clicks me because they know I have a simple trigger, cat videos. Twitter sends me notifications about breaking news tweets from politicians.
I don't follow and don't care to follow. You know, I don't think I follow any politicians on Twitter. If I do, they're definitely on mute. It's your manifesto.
Matt Mutes. It pretty much could be, you know, bigger companies, of course, will be able to take Twitter's API and do their own custom builds on it. So I imagine we'll see more companies and media outlets running their own custom and automated Twitter feeds. And that's even before we get into the whole arena of interoperability, building new apps and services around the Twitter API that build, you know, entirely new sets of functionality and use.
We should also point out that there are also side effects in altering algorithms, part of the reason that MetaLoss, so much of its value over the past year is because of updates in Apple's privacy model that allow users to opt out tracking. This has led to increased advertising costs for small businesses because they can no longer micro target as effectively as they could before using platforms like Facebook. So that requires a larger spend and a wider net to catch the same audience. And of course, that's put a lot of people off using these kind of targeted ad services entirely.
And of course, the bigger companies were already starting to question the effectiveness of targeted ads and the static audiences of a lot of the social media platforms. Even before Apple's changes came into effect last year. So then how does that all square with the ad funded model? Sure.
I mean, if you were Toyota, you wouldn't want your custom feed to be full of Nissan ads. So, you know, Jack Dorsey sort of hinted that he thought that ad funded model wasn't working well for the company. So we would have to see how Musk intends the company to fund itself. You know, we mentioned the kind of blockchain aspects a little bit earlier.
Subscriptions, perhaps, although how many of Twitter's millions of users would be willing to pay as anyone's guess, that interoperability has a lot of potential, essentially taking a license fee or a cut of profits from companies that bake the API into their own apps and services. But as I said, you know, my bet would be those blockchain based services. Both Dorsey and Musk have previous experience with payment systems, Dorsey with Square, I think, and Musk with X.com, and of course, more notably PayPal. I'm not sure at this point how Twitter would position itself for that progression to the metaverse.
Although its short format does make it pretty viable for the kind of invisible voice based applications that we discussed on last week's show. Okay, let's move on then to the implications of that revised approach to free speech. Let's hear a minute. Yeah, so Musk sees Twitter as an open forum for discussion, a global market square where people can air grievances and share ideas.
So some of the criticisms that I've seen of this position suggest that, you know, this is a very kind of early noughties kind of position. It's kind of influenced by the color revolutions in the Middle East and Eastern Europe, where Twitter became that alternative news source and rallying point. But the world has moved on. Those same platforms have become disinformation dissemination points for the same regimes that they were once used to challenge.
And we're seeing both public and government voices calling for more regulation of social media platforms to curb, you know, hateful and unpleasant content, Harrisman, you know, all of these kind of negatives that all the things that are perceived as negative goods. So then what does that look like from a legal point of view? Well, that's where it gets muddy. You know, I'm not saying that Musk falls victim to this, but there seems to be an element of groupthink that free speech across the so called free world is based on the US model.
So the US has regulations on free speech that are actually remarkably simple. It's essentially the first amendment of the Constitution and that amendment gives great protection to companies hosting other people's speech from prosecution for what said on it. But that's not the case outside the US. The EU is, I think, implementing in the process of implementing its digital services act under this legislation.
Tech firms have to do a lot more than they're currently doing to release what the EU defines as illegal content. And they can potentially face fines of billions of euros for not doing that. The UK is preparing a more contentious piece of legislation. It's online safety bill, which detractors have decried as overreach and censorship.
So that speech is policed in very different ways outside the US, especially in countries that don't have those same constitutional or explicit policies. And that is actually a lot of the countries we know. Musk says he's an absolutist, but within the boundaries of the law. Which brings us back to the question of which laws?
Well, yes, this is where we might get spillover from Musk's involvement with other companies and his additional interests. So look at somewhere like China. Now, China tightly controlled speech uses its leverage market size to force Western companies to comply. China is a huge market for Tesla, not to mention the place where it bases some of its manufacturing companies.
Some of its manufacturing and of course where a lot of components are sourced from. So China has long had an issue with Twitter and its use by people it sees as enemies and dissidents. Now, unlike some of the comments by privacy advocates I've seen this week, and I had wanted to talk more about the privacy implications today, but I've run out the clock as usual. So we'll come back to that next week along with the intersection of Musk with John Oliver's last week tonight.
So, which at least, you know, should promise some fun, if not John Oliver's profanity. But back to today, you know, I can't imagine a scenario where Musk forces Twitter to share user data with the Chinese government. That's what I've seen from some commentators this week, because that would be the kiss of death for as I call it the truth social of Twitter. Yeah, yeah.
I was wondering when you'd get to the truth social. Well, saving the worst for last, you know, that's my modus operandi. In fact, Musk tweeted a photo of the Apple App Store this week where truth social has rocketed to the top of the downloads chart. And I'm not even going to get into the reasons for that one.
Twitter has lost, as I said earlier, a lot of users over the past week, but it's thought that many of them are progressives. And those are people who are unlikely to be looking for a solace and comfort over at Truth Social. The speculation is that Musk would allow many of the platforms banned characters back on. I mentioned Alex Jones earlier, Trump, of course, but Trump put out a statement this week saying that he wouldn't rejoin the service because of his commitment to Truth Social.
So the right wing Twitter clone has been limping along amid technical difficulties and slow user onboarding and uptake since its launch. I think in March, Trump himself has only issued a single truth as Truth Social Tweets are called. The issue here is probably a financial one rather than ideological. Trump has raised a lot of money for Truth Social.
It was taken public using one of those SPACs, those empty IPO vessels. Figures of something like a billion US dollars have been bandied around for the money that has been raised for Truth Social. So funding that would be in jeopardy if the dear leader were to jump ship and take his audience back to Twitter. In fact, if Twitter adopts an absolutist approach to free speech and makes its API open, that largely destroys the very raison d'etre, the reason for Truth Social Tweets is in the first place.
Can anybody imagine that Trump wouldn't go back to Twitter if he had the opportunity? I was speaking about that in the office earlier on today. What about users banned in other countries then? Well, that's where this issue of legality gets more complex.
So one example that I read, I think it was in the Guardian about the delightful commentator Katie Hopkins, who has been deplatformed by Twitter. That if her content continued in the same way that had deplatformed her in the first place, it could contravene those new hate speech and online behavior rules being drawn up by the UK government, leading Twitter back to looking at those principles. Does it follow those diverse global laws and restrict access? Or does it stand on principle, allow them to stay on the platform and of course take the fines that come with that behavior?
What about misinformation and bots? Yeah, we have to shoehorn this in because it's also really important. One of the most stated aims is to humanize Twitter, to identify humans and remove bots. And that's great news, but we don't know what it means for the anonymity that has previously been an integral component of Twitter.
So how will humans identify themselves? Does it mean tying your online identity to your real world one? All of these details still have to be ironed out. And that has implications for the privacy that we briefly touched on before.
For example, direct messages on Twitter are not end-to-end encrypted. So could that mean that Musk had the ability? I'm not saying that he has any incentive or wish to, but would he have the ability to look at messages between executives at companies that compete in various sectors with him? Of course, all of this is wait and see because we don't even know if the SEC is going to approve the bid because again, this isn't a business as usual type of takeover.
Final question, though. How is this, well, not final question. How is the takeover impacting the way you see Twitter? Well, it hasn't really.
I mean, in that previous episode, we called or I called rather Musk the king of the trolls, mainly because we can't use the standard phrase that describes people who post like he does. Now, I loved those early years of Twitter. You could have genuine chats with random people. Now, it's like a fire sale on Boxing Day.
You know, it's going to be unpleasant before you get there and you only go out of absolute necessity. You can't see that anything Musk is going to do is going to make Twitter a more pleasant place to be, especially with his comments on post relating to Twitter's own staff over the past couple of days. There's, as I said, speculation that he may even be in breach of the preliminary acquisition documents that he signed with the company. And there's a really heavy default clause there.
Both parties have a default clause of a billion US dollars if they don't adhere to the conditions of this deal. Okay, I do have one final question now. Despite all the news and the first two people really care about Twitter. You know, I think this is the longest show we've ever done and it's about something as awful as Twitter.
I mean, I'm on Twitter, but I don't really care about it. Is anyone under the age of Twitter of 20 on Twitter? How many people under the age of 30 are there? You know, if you're into politics, Web3, crypto, and you're in the kind of news media, maybe, but it does, you know, it's kind of starting to resemble one of those tumble down regulars pubs at closing time more than it would be.
It's just got the crazy drunk and invariably old people shouting at the walls. You know, it used to be that comedians use Twitter to test out new material, but increasingly, you know, TikTok and Reels have become the preferred kind of venue for that. And that brings us, I guess, to the biggest question of all, has Elon Musk just paid 44 billion for a platform that no one but people like him seem to care about? Very, very interesting.
Let's just see how this plays out over the next few days and weeks then, man. Okay. As I said, by the time it's broadcast, probably all of this will be irrelevant and you will just have wasted half an hour of your life. Anyway, you can find my own Instagram and Twitter at culture.
Matt or subscribe to the Culture. 89.9, the Business Station.