Column: Elon Musk’s stake in Twitter is just not excellent news for Twitter — or its customers

Through the years, Elon Musk has used Twitter to flout securities legal guidelines, smear his critics and promote useless treatments for COVID-19.

So in fact Twitter judged that Musk “would convey nice worth to our Board.”

That’s how Twitter Chief Government Parag Agrawal justified the corporate’s appointing Musk to its board of directors Tuesday.

Agrawal additional described Musk as “each a passionate believer and intense critic of the service which is strictly what we’d like on Twitter, and within the boardroom, to make us stronger within the long-term.”

Talking as a loyal and long-term consumer of Twitter, I can solely reply, “that relies upon.” One may be an intense critic of an organization but have solely concepts that can make it worse, and weaker.

Agrawal’s announcement glossed over what’s most likely the actual cause he invited Musk onto the Twitter board: A day earlier, Musk disclosed that he had gathered a 9.2% stake within the firm’s inventory. That made Musk, who already was amongst Twitter’s largest customers, with greater than 80 million followers, Twitter’s largest shareholder.

Any shareholder with that a lot heft goes to make his views recognized to administration in a means that might be unattainable to disregard, so from Agrawal’s vantage level, it was most likely simply as effectively that Musk be on the within than on the surface wanting in.

It’s correct to watch that Musk might not have been solely candid about his intentions for Twitter.

He disclosed his possession stake on the Safety and Alternate Fee’s schedule 13G, which is usually utilized by shareholders aspiring to play a passive position within the topic firm; buyers shopping for stakes to play an energetic position, reminiscent of in search of management, typically disclose on schedule 13D, which is extra detailed and requires extra immediate disclosures of adjustments in shareholdings and intentions.

Musk additionally checked a field on the 13G type designating himself as a “passive investor.”

It’s attainable that Musk by no means supposed to be greater than a passive investor, however Agrawal provided him a board set unbidden.

Agrawal did disclose, nonetheless, that he had held discussions with Musk, apparently about his becoming a member of the Twitter board, for “weeks.” It’s additionally value noting that Agrawal did extract a written dedication from Musk to not enhance his holdings past 14.9% so long as he’s on the board and for 90 days after he leaves.

It’s additionally attainable that Musk is testing the SEC’s willpower to power him to adjust to its laws, a follow that has made him a thorn within the company’s facet for years.

Even when Musk posed as a passive investor in Twitter earlier than, he’s now not claiming to be passive about adjustments he needs to see in Twitter: Following the announcement of the board appointment, he tweeted that he’s “wanting ahead to working with Parag & Twitter board to make significant improvements to Twitter in coming months!”

However his outsized following, not a lot in Musk’s historical past with Twitter means that his concepts are sure to make it stronger. As a social media platform, Twitter has some notable flaws. As a result of Twitter’s policing of its customers’ tweets has been detached and ineffectual, the platform usually resembles a web-based model of an open sewer line.

It appears to take a big circulate of hateful and noxious content material to get a consumer suspended or banned, particularly a outstanding consumer reminiscent of a nationwide politician. Donald Trump exploited Twitter to broadcast lies and different offensive materials for years till he lastly bought permanently banned following the Jan. 6, 2021, rebellion for violating the service’s strictures in opposition to the “glorification of violence.”

On a extra constructive stage, the attribute that makes Twitter helpful to subscribers is that one’s Twitter feed may be curated. Customers can designate accounts they want to observe.

That doesn’t assure that obnoxious tweets gained’t present up in a single’s feed, since trusted customers generally retweet offensive tweets for the aim of commenting on or ridiculing them, and people tweets can infiltrate one’s feed in different methods. Nevertheless it does give customers some measure of management over what they see.

Twitter has acknowledged its duty to train its personal duty to attempt to stamp out hate and threatening speech, abusive tweets or exhortations to violence, amongst different infractions of its rules.

Musk has focused these insurance policies prior to now, partially by implying that Twitter’s content material moderation practices infringe on free speech. Final month, after he assembled his shareholding stake however earlier than it was disclosed, he tweeted a ballot studying: “Free speech is crucial to a functioning democracy. Do you imagine Twitter rigorously adheres to this precept?” Amongst his followers who responded, 70.4% said “No.”

That means that as a board member, Musk would possibly press for a loosening of content material moderation requirements. Making Twitter extra malodorous may not be good for “a functioning democracy.”

Musk has additionally advocated permitting customers to edit their tweets after posting. The “edit button” thought has all the time been controversial — co-founder and former Chief Government Jack Dorsey as soon as stated it might most likely by no means be applied — as a result of it’s unclear that it might be an unalloyed enchancment. Though it might enable customers to take away typos of their posted tweets, it may also enable them to edit tweets in misleading methods.

To position Musk’s new position at Twitter in perspective, it’s helpful to look at how he has used it prior to now. Musk has been such an assiduous tweeter that Twitter has been accepted as a proper supply of public disclosures about his firms, together with Tesla Motors and SpaceX, of which he’s chief government.

His tweeting, nonetheless, has introduced him into battle with the SEC, which has charged that a few of his tweets are materially deceptive to buyers. Essentially the most notable case issues a tweet on Aug. 7, 2018, by which Musk claimed to have “funding secured” to take Tesla personal at $420 a share. The inventory opened that day at $68.77 and closed at $75.91. Because it occurred, Musk had not secured funding for the transaction.

The SEC finally compelled Musk to surrender his chairmanship of Tesla and for Musk and the corporate to every pay a $20-million penalty. The corporate additionally agreed to require Musk to hunt its approval earlier than issuing any tweets about Tesla’s enterprise.

Musk and the SEC have since engaged in a prolonged combat over that settlement. Final month, Musk asserted in a authorized submitting that he entered into the settlement below duress due to the SEC’s implicit menace to break Tesla’s monetary well being. The SEC replied that Musk attested on the time in writing that he had settled the case “voluntarily” and that “no threats … of any variety” had been made by the company.

Musk additionally has contended that the settlement infringes on his 1st Modification proper to free speech and that the company has been engaged in a prolonged marketing campaign of harassment. The SEC says the subpoenas for Tesla and Musk information that Musk finds objectionable mirror “official inquiries as to new doubtlessly violative conduct by Tesla and Musk.”

All that factors to the final word — and at the moment unanswerable — query of whether or not, in the event you’re a Twitter consumer, you actually need its insurance policies to be influenced, a lot much less dictated, by somebody like Elon Musk. The worth of his Tesla shares make him the richest man on the earth, and even when he wasn’t the richest earthling, he wasn’t generally known as somebody who was particularly welcoming to criticism.

Some wealthy, controlling executives, reminiscent of Meta Platform’s Mark Zuckerberg, have led their firms into thickets of issue, exactly as a result of they couldn’t be challenged. Even with 14.9% of its inventory, Musk gained’t have sufficient management of Twitter to make certain of getting his means. However he positive gained’t be a silent accomplice.