There’s a common critique of Big Tech that goes like this: In the 21st century, social media platforms are the new public square, and it matters a great deal who sets the rules. Instead of allowing true free speech, unaccountable Silicon Valley elites like Mark Zuckerberg decide what can and can’t be said.
Twitter, like any other private publisher, controls what’s published on its platform. But the popular micro-blogging service governs itself more pluralistically than many other tech companies. When Twitter filed to become a publicly traded company in 2013, the company stuck out because it did not create a second, supercharged class of shares that would allow its founders, including its founder Jack Dorsey, to maintain power over the company as Zuckerberg did at Facebook.
That decision to allow a more traditionally democratic and activist playing field for Twitter investors became a fateful one this week, as it allowed Tesla CEO Elon Musk to acquire a minority stake and then launch a bid seeking sole ownership. If he overcomes Twitter’s “poison pill” defenses against a hostile takeover, Musk would control of one of the world’s most popular and important information platforms.
Behind Musk’s headline-grabbing gambit, however serious — and many question if it is serious — is a philosophical juxtaposition of two theories of how to manage and promote free speech as a social-media company in 2022. It’s a war between the public and the private, the controlled and the chaotic, the ESG investor crowd and the philosopher-troll king.
Over the years, like many publicly traded companies, Twitter’s more socialized investor structure has allowed oversight and activism by dissatisfied investors. As part of the broader movement in many industries to take environmental, social and governance factors into account, some shareholders have pushed for resolutions urging the company to, among other issues, take greater responsibility for the content on its services.
Some corporate responsibility advocates have credited efforts like these for helping push ongoing, incremental industry advances in content moderation that take into account how social media platforms can be used to interfere with other countries’ elections or even to contribute to genocide.
“Look at the transcripts of the annual meetings, where investors routinely put things on the table that ask companies like Twitter to put a human rights expert on their board,” said Jan Rydzak, a company and investor engagement manager at Ranking Digital Rights, a human rights program operated by the New America Foundation. “The fact that the people who own shares in the company are pressing harder and harder for companies to publish this kind of material and show that their commitment to human rights has teeth, that’s a huge driver of the progress we’ve seen.”
Musk’s argument is that under this method of corporate accountability, Twitter has lost its way and become censorious; that the company needs to hand power to a benevolent dictator — himself — to bring freedom back for more users.
“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” Musk said in an SEC filing. “However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”
Corporate governance experts have been watching the bid closely. Buyouts are by no means unusual: Taking a company private is typically spurred by the idea that major but possibly uncomfortable changes can make a company more financially valuable over the long run.
“This isn’t the first activist investor that’s targeted Twitter” and questioned its performance in recent years, said Dorothy Lund, an associate professor at the USC Gould School of Law, who specializes in corporate governance. Noting that some popular users rarely post on the service, Musk has asked “is Twitter dying?” and hinted in his SEC disclosure that he might sell his shares if the company doesn’t hand him control: “It’s simply not a good investment without the changes that need to be made.”
Yet despite recently calling ESG investment “the Devil Incarnate,” Musk has centered his bid on the rather ESG-like proposition that Twitter has duty to democracy that goes beyond simply earning strong profits. Part of what has made Musk’s bid fascinating to some corporate governance experts is that Musk’s immense wealth also insulates him from the consequences of the company’s value taking a nosedive if the company were to get less popular or less profitable under his watch.
“This is not a way to sort of make money,” Musk said of his Twitter bid at a TED Conference in Vancouver on Thursday. “My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important.”
Some skeptically noted that buying Twitter is one way to ensure Musk’s own voice is always reaching the public, akin to a captain of industry buying a newspaper to control the editorial pages. It’s a not insignificant question for an executive whose tweets have raised questions about violating federal security laws or violating anti-defamation laws for calling one of his critics a “pedo guy.”
“Does Elon Musk know what’s good for democracy? I’m not sure. How do we know he’s not just making these arguments to benefit himself?” Lund said. “Usually you don’t have buyers who are so immune to financial consequences.”
The responsibility for having to care what other investors think — and the duty to act responsibly on their behalf, or just responsibly in general — can be a burden to managers in the era of increasingly socially conscious investing, where some executives have faced increasing complex pressures beyond earning higher returns.
“It’s getting tougher in many respects to run a large public-facing company, because there are a lot of external factors that you have to consider and think about and be sensitive to beyond your shareholders and stock price,” said Tom C.W. Lin, law professor at Temple University and author of “The Capitalist and the Activist.” “There’s constituencies like your employees, your clients, your members, your users, the great public writ large for a company like Twitter.”
Those constituencies include agitated shareholders such as Musk. “There are market mechanisms that allow concerned constituencies to agitate for change in ways that wouldn’t exist in a privately, closely held company,” Lin said. “Because there’s a public market for shares, he was able to accumulate a significant stake.”
Musk has gestured at bringing other investors along for the ride, tweeting this week that he “will endeavor to keep as many shareholders in privatized Twitter as allowed by law.”
Jill Fisch, a securities law professor at the University of Pennsylvania law school, was skeptical. “The whole point of taking the company private is he can do what he wants,” Fisch said. “It’s like the two sides of Elon Musk’s personality. On the one hand, it’s the democratic populist, ‘I’m a man of the people.’ And then the other side is ‘I’m Elon Musk and I’ve got these strong views and I know what’s best.’”
Some media critics, like Victor Pickard, professor of media policy and political economy at the Annenberg School for Communication at the University of Pennsylvania, are critical of the idea of so much power being concentrated on a single man’s hands.
“The potential hostile takeover of this essential infrastructure by one person, who happens to be a powerful billionaire, is very troubling for democratic society, for society writ large,” said Pickard, who has called for more democratic forms of ownership or oversight of communications platforms. “Clearly his version of free speech is the bosses’ free speech.”
Rydzak shared those concerns.
“There’s an enormous irony that in doing so he would render himself unaccountable to shareholders and the broader public,” said Rydzak. “That entire vector of influence that responsible investors have over a company would completely vanish.”
But as far as everyday users are concerned, Fisch argued that the debate over control is academic when they have far less power than investors. Freedom of the printing press is a little hard when you don’t own the printing press.
“For joe schmo Twitter user, it really doesn’t matter,” Fisch said. “He or she is going to passively take whatever tweeting rights and whatever content Twitter the company provides, and whoever’s calling the shots, joe schmo Twitter user doesn’t have any control.”
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