The Elon Musk / Twitter Thing is Good For Twitter’s Business And Bad For Our Democracy
As you probably know, Elon Musk, aka Iron Man, has been furtively stockpiling Twitter stock. He has amassed over 9% of the common / voting shares, making him the largest single shareholder in Twitter with 4x the stock of Founder, Jack Dorsey.
Let me start by saying what should be an obvious statement: Twitter and its shareholders will benefit from having Musk on the Board.
He has done things simply no other person in business has ever done. Even just one of his accomplishments would put him in contention for business person G.O.A.T. status.
He’s successfully entered one of the most regulated and profitless industries and created a car company with 20x the market cap of General Motors. That was after he revolutionized P2P payments and while he created the most successful space program the private world has ever seen. A Musk fan boy would go on, but that’s not the point of this post.
Musk taking center stage at Twitter is horrible for our democracy and what we commonly refer to as “free speech.”
Before I explain, let’s take a step back and look at two inherent problems with our current moment with social media.
The “Twitter as Town Square” myth.
CEOs of social media companies like to profess that the platonic ideal for their platforms is not to be the arbitrators of free speech, but rather a town square that allows anyone to participate in public discourse.
This is, of course, disingenuous. While yes, one can post what they want (assuming it is within their user guidelines), the intrinsic nature of a for-profit business model favors speech that drives profits. This has been well documented. Twitter has an incentive not to publish a “healthy debate” or even to ensure free speech. Advertising business models demand eyeballs and eyeballs prefer scandal, vilification of enemies and hyperbole. For example, researchers have found that negative political posts about rivals drive twice the engagement of positive messages from one’s own party or tribe. Is this the best way to foster discourse?
If the true intention were to create a town square, would the platform be better served by offering equal space for all opinions and not rely on an algorithm that prioritizes engagement?. It might look more like CSPAN. And everyone knows CSPAN is boring.
Free speech is fundamental right of the governed (not a publicly-traded commodity)
How is it that we have something as fundamental as our First Amendment rights up for arbitration by a company that has a fiduciary responsibility to shareholders?
These things never should have been conflated. If Twitter, Facebook and the rest are this powerful, then they should rightfully be broken up, because our rights as citizens are compromised when a company can buy and sell them.
Of course, no one social media company has a monopoly on information and speech. But the trends are disturbing. Indeed, in the case of Facebook, the FTC has already taken an official complaint against them. It should be noted that FB rejects these claims of unfair competition.
All of that brings me to the problem of Mr. Musk.
Musk has long used Twitter as a tool to provoke, troll and test ideas. All of this is within his rights (except apparently claiming he had the funds to take Tesla private, costing him a $40MM fine from the SEC. Ouch!).
The problem is that by entering this pool he is already changing the temperature of the water.
There was Twitter CEO, Parag Agrawal, tweeting this week about how “excited” he was to have Musk join the board.
Excited or threatened?
Just ten days after the SEC filing revealing Musk’s stock position, Musk tweeted the following:
“Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?”
Then the next day, he followed up with, ““Is a new platform needed?”
If you are the Twitter management and your largest shareholder asks his 80MM followers if Twitter is failing democracy, do you think you would listen? Would you listen regardless of whether the ideas made sense? Please note, that I am not commenting on the validity of his ideas. I’m simply saying that Twitter is moving in for a full bear hug and they have no real alternative, but to do so.
Think about what we know about Elon Musk. Does anyone honestly believe that Musk would hesitate to destroy Twitter rather than bend it to his will? With a net worth of $260B, he can do what he wants. He also strikes me as someone who would enjoy taking down Twitter for sport. I mean, the guy has had little problem sending Tesla’s own stock price down 10% with a single tweet. Why wouldn’t he do it to Twitter?
I’d argue that Musk is someone that would be open to acting against his financial interests to get what he wants. But what does he want?
Musk says he wants to protect free speech. I’ll take him at his word. But it’s his version of free speech. Maybe his version is my version or even yours. That’s not the point. The point is that we are now allowing a company to take a position it should not be allowed to have and allowing a person to take a role in that company that he should not have. It’s just too much power.
Here is UC Irvine Law Professor, David Kaye, (as quoted in the New York Times) explaining the problem:
“The risk is that (Musk’s) individual and personal business preferences, which are sometimes idiosyncratic, are going to influence rule-making and enforcement in a way that is inappropriate for a company that, in his words, is a version of a public square,”
So as Musk flexes on the board, be prepared for the algorithms to reflect his interests. Hopefully, he uses this new role for good, but I personally wish we didn’t have to take that gamble.
Stephen Lehtonen
(This is all 100% Stephen Lehtonen’s opinion. It’s his attempt to process business and think about the bounds and opportunities entrepreneurship and leadership provide. He welcomes your comments and thoughts and is always open for a chat to discuss your business and career.)
