How Musk could use the free speech leverage afforded by his Twitter stock buy

Jesla founder Elon Musk gained leverage by influencing Twitter’s controversial handling of speech on his platform after suddenly becoming the company’s largest shareholder.

Musk, the world’s richest person and critic of Twitter’s speech management, looks set to shake up the massive social media network after buying 9.2% of the company.

“The bottom line of all of this is that if you feel like companies are doing a poor job of moderating content or doing it in a way that’s not appropriate, you have options,” he said. Ari Cohn, free speech attorney at TechFreedom. Washington Examiner. “You can either create your own or try to put some sort of pressure on companies to do things differently.”

Musk’s purchase, revealed in a Securities and Exchange Commission filing released Monday, likely cost the Tesla and SpaceX founder nearly $3 billion.

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The move was heralded by a Twitter poll last month when Musk asked his 79 million Twitter followers if they thought the social media giant facilitates free speech. As of Monday afternoon, more than 2 million people had responded to the survey, with a large majority, more than 70%, disputing this notion.

“The consequences of this election will be significant. Please vote carefully, Musk added.

“Given that Twitter serves as the city’s de facto public square, failure to uphold the principles of free speech fundamentally undermines democracy. What should be done?” Musk asked. “Is a new platform needed?”

Mark Weinstein, founder of social media service MeWe and an expert on privacy and free speech, told the Washington Examiner that Musk’s decision to buy such a large stake in the company is a major one and “meaningful, not symbolic.”

Musk’s stake now far dwarfs that of other individual investors, including the stake held by Twitter co-founder and former CEO Jack Dorsey, who owns 2.25% of the company.

It should be noted that the form used by Musk to disclose the holdings is the one that indicates that he does not plan to engage in activism or join the board, although he could possibly pass its “passive” position to an active position in the next deposits.

However, Musk hopes to see a social media platform where free speech is abundant, according to Weinstein.

“There’s an old philosophy: the best way to change something is from within,” Weinstein said. “So he comes in, he becomes the biggest shareholder, he now has influence over the future of Twitter… He’s clearly got a philosophy, he’s clearly made what he thinks is a decision very intelligent, it is clear that he will certainly have an influence on Twitter.”

Weinstein predicted that it wouldn’t be long before Musk found himself in a seat on Twitter’s board of directors, which would allow him to further push the company to conform to a model that promotes increased expression of freedom of expression and transparency with its algorithms.

Twitter has faced backlash, particularly in conservative circles, for its measures to censor or add context to certain posts. Social media banned former President Donald Trump after the January 6 riot and temporarily blocked a New York Post story of Hunter Biden being shared just before the 2020 election. Even more recently, Twitter suspended accounts for referring to US Undersecretary of Health Rachel Levine, who identifies as a transgender woman, as a man.

Twitter faces three main competitors: Gettr, Parler and former President Donald Trump’s Truth Social, according to Weinstein. Musk’s decision to invest in Twitter and avoid investing in the other companies further strengthens Twitter’s position among the competition and is, overall, a net negative for other social media networks.

Musk’s thoughts and statements on Twitter provide a guide to the changes he might seek.

Last month, the billionaire posted another survey asking his followers if Twitter’s algorithm should be open-source. Over 82% of respondents agreed it should, and Dorsey even joined in the conversation.

“The choice of which algorithm to use (or not) should be open to everyone,” said Dorsey, who announced his resignation in November.

Weinstein described Musk as a “dancer” and said the investor might do a dance move and then immediately move on to another move or approach.

It’s likely the board will invite Musk to sit, as it would make more business sense to keep the company’s biggest investor on the inside rather than kicking mud on Twitter. , did he declare.

“I think it’s most likely going to happen quickly, I think Musk’s philosophy is going to impact the platform,” Weinstein said.

Musk now has upward and downward leverage on the company’s finances in that he can choose to buy even more shares of the company or sell its shares.

If he buys more shares, it would boost Twitter’s share price and benefit shareholders, to whom the board answers. Alternatively, Musk could get angry and dump some of his holdings and hurt the company financially.

“He now has tremendous leverage as an investor, and I think we’ll see him use that leverage,” Weinstein said.

Musk has also used the Twitter platform to express his seemingly libertarian political views. Earlier this year, he tweeted that President Joe Biden was “treating the American public like fools.”

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As Biden attempted to implement his now dead Build Back Better tax and spending plan, Musk lambasted the bill’s “trickery”, channeling the words of liberal economist Milton Friedman.

“Nothing is more permanent than a ‘temporary’ government program,” said the billionaire, which is an almost exact quote from Friedman, known for his advocacy of free-market capitalism and one of the school’s leaders. Chicago economy.

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