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Vol. 39 No. 6 — July/August 2022

So, it was big news when it was announced in April 2022 that Tesla and SpaceX billionaire Elon Musk put forward a proposal to buy Twitter and take it private, at a projected cost of $44 billion. Musk had purchased about 9% of Twitter’s outstanding shares on the open market several weeks before he made his offer to the Twitter board of directors.

IMPLICATIONS

Since the purchase was announced, the newsfeeds that I use in researching this column have been hit with almost daily articles about the Twitter buyout proposal; legal issues raised in the process of the buyout and in how Twitter may be operated going forward, as well as related business ramifications; and implications for the future of Twitter, free speech, and social media going forward.  

Twitter is one of the social media behemoths at the center of the controversy over information, misinformation, fake news, and free speech. As is well-known, Twitter users post tweets on any number of subjects, which can generate followers, be retweeted, and/or commented on by other users. Twitter does have rules in place targeting abuse, exploitation, violence, violent extremism, and other actions. The rules also prohibit people from using Twitter “for the purpose of manipulating or interfering in elections or other civic processes.” Nor can users share “synthetic or manipulated media that are likely to cause harm.”

MISINFORMATION AND BIAS

Notwithstanding these rules, Twitter has been accused of being a platform for misinformation and bias, with the accusations coming from many parts of the political spectrum. As a private entity, Twitter is not subject to the First Amendment’s free speech clause since the amendment only protects us from the government’s restriction of speech. In addition, Twitter is entitled to the safe harbor provisions of Title 47, Section 230 of the U.S. Code, which provides that services such as Twitter are not liable for the actions of people who post content on their platforms. But as a private company, Twitter can impose and enforce rules about content on the platform, including removing content or banning users. Most famously, it banned President Donald J. Trump’s Twitter account after the insurrection of Jan. 6, 2021.

Assuming the Musk deal goes through, Twitter will remain a private company with one significant difference: It will no longer be traded on the stock market, which comes with significant obligations to disclose financial and business information about the company. Instead, it will be privately held by Musk and other investors and have very few obligations to disclose information about itself.

WILL IT GO THROUGH?

Will the deal go through? And how long will it take if it does? Those were among the first questions raised in the newsfeeds by legal and other analysts. Reuters reported that the deal is already getting scrutiny from the Federal Trade Commission (FTC) on two fronts. First, the FTC is exploring whether Musk was obligated and failed to provide proper notice when he acquired his original 9% stake in the company in March 2022. If he is shown to have purchased the shares as a personal investment, then there is no reporting obligation. But if his intention was to purchase the company or otherwise influence Twitter’s management, then there may have been a notice requirement. Second, Bloomberg raises a concern about whether the FTC will consider an antitrust investigation of the deal, pointing out that with Musk’s ownership of the Starlink internet service plus Twitter, it could give him “too much control over free speech platforms.” Most commentators do not expect either consideration to scuttle the deal, however.

In addition, according to Newsweek, a pension fund in Florida is seeking to delay the deal until 2025. In a lawsuit in Delaware—where Twitter is incorporated—the fund claims that under Delaware law, Musk is an “interested shareholder” in Twitter. Under a law passed in the 1980s to protect shareholders’ voting rights, the suit claims that Musk must wait 3 years before the deal could close, or he must obtain a supermajority of support from investors who hold two-thirds of the remaining voting stock.

HEARINGS

As for what Musk might do if he is able (and willing) to complete the deal, the commentators and media are full of speculation, as are others. Both the U.S. Congress and the U.K. Parliament are reported to be considering formal hearings on Musk’s intentions for Twitter. Julian Knight, chairperson of Parliament’s digital committee, says, per U.S. News & World Report, that Parliament is “keen to learn more about how Mr. Musk will balance his clear commitment to free speech with new obligations to protect Twitter’s users from online harms.” Congress has been weighing a variety of legal issues involving social media platforms, including privacy protections, modifications to Section 230, and competition, particularly among Facebook, Alphabet (Google’s parent company), and Twitter.

Musk is on record as being a strong free speech advocate, which places him on one side of the debate over free speech versus information or misinformation control. Reports assert that among other things, he would reinstate Trump’s Twitter account. He has also proposed the use of open source algorithms and additional tools to authenticate users and reduce the use of spam bots in an effort to increase transparency.

GOOD AND ILL

How much impact this will have on the role and influence of Twitter in the social and mainstream media world is speculative at best. The time when media was controlled and disseminated by a small number of entities such as television, newspapers, and magazines is long gone. The dynamics of society have changed (or have been changed by the shifts in media distribution); it often appears that what is information to one person is misinformation to another person, regardless of political persuasion. Twitter has played a major role in those changes by giving voice to the voiceless—for both good and ill.

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