After a months-long fight over whether Elon Musk would become its new owner, Twitter appears to have entered a new chapter with the reported exit of several top executives.
Ahead of a Friday deadline for the Tesla CEO to complete his $44bn deal to buy the social media company, it was widely reported that Twitter’s CEO, Parag Agrawal, the chief financial officer, Ned Segal, and the head of legal policy, trust and safety, Vijaya Gadde, were ousted.
With Musk at Twitter’s reins, the question now turns to what he plans to do with the social media platform in the weeks and months to come.
The billionaire has not been coy about his ambitions, though he has been scarce on details on how he plans to accomplish them. Here is some of what to expect now.
Address freedom of speech concerns
One of the most contentious issues around the Twitter deal, back when the world’s richest man initially expressed interest in buying it, was Musk’s concerns around free speech. He is a self-proclaimed “free speech absolutist” who has raised concerns about the platform downplaying certain posts with its algorithms that curate what a user sees. In an interview before he agreed to buy the business, he raised concerns about “having tweets mysteriously be promoted and demoted with no insight into what’s going on”. An open-source algorithm could address this, he suggested.
A cache of texts disclosed in a filing at the end of September, when Twitter was taking Musk to court in Delaware over his attempts to try to back out of the deal, gave further evidence of his concerns. The podcaster Joe Rogan asked the Tesla chief executive in April – after his acquisition of a stake in the company had been revealed – whether he would “liberate Twitter from the censorship happy mob”. Musk replied: “I will provide advice, which they may or may not choose to follow.”
The same cache showed Mathias Döpfner, chief executive of the media group Axel Springer, which includes Politico, urging Musk to make Twitter “censorship free” and create a “marketplace for algorithms” so that “if you’re a snowflake and don’t want content that offends you, pick another algorithm”.
Another text recommended hiring a “Blake Masters type” – a reference to the Trump-backed Arizona Senate candidate – as “VP of enforcement”.
In a note on Thursday to advertisers, Musk said that he acquired Twitter because he believes it’s important for the “future of civilisation to have a common digital town square, where a wide range of beliefs can be debated in a healthy manner”. However, he conceded that the platform cannot become a “free-for-all hellscape”. “In addition to adhering to the laws of the land, our platform must be warm and welcoming to all,” he wrote.
Musk has also said he is against censorship “that goes far beyond the law”, but legislation is changing in the UK with the online safety bill (although its freedom of speech provisions might now be tweaked) and in the European Union with the digital services act.
Reinstate Donald Trump
A corollary of Musk’s free speech stance is that people banned from the platform could get their accounts back. The former US president was removed in January 2021 following the Capitol riots and Musk has said he would overturn that. Asked in May about Trump, he said: “I would reverse the permanent ban,” adding that Twitter was “left-biased”.
Other figures banned from Twitter include the US conspiracy theorist Alex Jones and, in the UK, the rightwing commentator Katie Hopkins.
Cut costs
Musk’s financing for the takeover includes $13bn of bank debt that will sit on Twitter’s balance sheet. That debt will need to be paid for and in its most recent results Twitter generated negative free cashflow (spending more cash to run the business than it takes in) of nearly $124m. Twitter will have to do better than that financially and cost cuts have featured in Musk’s thinking.
Musk told investors interested in funding his acquisition of the company that he plans to cut 75% of the workforce, according to documents seen by the Washington Post. But reports indicate the Tesla CEO told Twitter employees on his first visit to the company on 5 October that he did not plan to lay off that many workers. However, he is still expected to make some cuts. Twitter employs 7,500 people.
In June, he told Twitter employees that the company “needs to get healthy” financially and reduce costs. “Right now costs exceed revenue,” Musk reportedly said, adding: “That’s not a great situation.”
Launching the ‘everything app’
Musk tweeted to his more than 100 million followers on 4 October that buying Twitter was “an accelerant to creating X, the everything app”.
He didn’t give much more detail, other than that a Twitter takeover would accelerate X by up to five years. X, by the way, is the name for the corporate vehicles that Musk is using to buy Twitter.
Buying Twitter is an accelerant to creating X, the everything app
— Elon Musk (@elonmusk) October 4, 2022
However, this “everything app” appears to be inspired by China. In a meeting with Twitter staff in June, Musk said the platform should be more like the Chinese WeChat, an app that enables instant messaging, social media and mobile payment. According to the Verge, Musk said: “You basically live on WeChat in China. If we can recreate that with Twitter, we’ll be a great success.”
Raising revenue
Shortly after agreeing to buy the business this year, Musk had indicated he wanted to quintuple Twitter’s annual revenue to $26.4bn by 2028, according to the New York Times. Advertising accounts for 90% of Twitter’s revenue and Musk has raised a number of suggestions to generate turnover by other means.
Revenue-raising changes he has floated include: increasing the popularity of Twitter’s premium subscription service by making it ad-free; growing Twitter’s payments business; charging a “slight” fee for commercial and government users; and finding new ways to make money out of tweets that contain important information or go viral.
His financial backers will be looking for revenue growth, too. A consortium of banks is committed to raising $13bn in debt as part of the financing and the contributors to the more than $30bn in equity pledged by Musk will want the business to do well.
Tackle Twitter’s bot accounts
Musk has been adamant that the number of spam accounts on Twitter’s platform is bigger than the number stated by the company. He believes that the true number of vexatious, automated accounts on the platform is greater than the estimate given by Twitter of less than 5% of its monetisable daily active users(mDAU) – a key commercial metric for the company.
The Tesla chief cited the miscounting of spam accounts as central to his decision to walk away from the deal in July. He has promised to “authenticate” all humans on the platform, so expect some action on a problem that Twitter says he has overplayed.
Address concerns raised by whistleblower
Twitter’s former head of security, Peiter “Mudge” Zatko, made a series of allegations about the company in a whistleblower complaint in August. He alleged interference by foreign governments, multiple information security failings and poor management. Twitter has accused Zatko of spreading a “false narrative about Twitter” and has said he was fired for “ineffective leadership and poor performance”.
Nonetheless, Musk was given permission to add Zatko’s allegations to a counterclaim against Twitter. His lawyers also interviewed Zatko as part of preparations for the lawsuit, which had been due to be heard in Delaware on 17 October – along with Twitter’s suit demanding that Musk buys the company. Both were instead adjourned while the deal went ahead.
An executive shake-up is also expected, and appears to be under way if the reports of Agrawal’s firing are correct.
