Suddenly, Elon Musk of Tesla became Twitter’s biggest stakeholder

Tesla CEO Elon Musk acquired a 9% stake in Twitter to become its largest shareholder, while joining other critics who question the social media platform’s commitment to free speech and the First Amendment.

Mask’s ultimate goal in acquiring 73.5 million shares worth about $ 3 billion is unclear. However, in late March, Musk, who has 80 million Twitter followers and is active on the site, was questioned freedom of speech on Twitter and whether there is a platform undermining democracy.

In previous years, Twitter and other social platforms have chased after resolving harmful statements ranging from incitement to violence to coordinated harassment and racial abuse. More recently, these platforms have made concerted efforts to curb such behavior, often provoking criticism similar to Mask from political rights. Both Twitter and Facebook have faced a backlash after the suspension of former President Donald Trump’s accounts following an uprising in the Capitol on January 6 last year.

It is unclear when exactly Musk bought the stake. A statement from the U.S. Securities and Exchange Commission, released on Monday, said the event that prompted the filing took place on March 14. Musk also suggested that to massive and loyal Twitter subscribers he could create a competing social media network.

Special analysts and legal experts say Musk can immediately start advocating for change on Twitter if he wants. In a note to investors, CFRA analyst Angela Zino wrote that Twitter could be seen as a target for the acquisition because its stock price has been falling since early last year.

Twitter co-founder Jack Dorsey stepped down as CEO in November. Mask’s stake in Twitter is now more than four times that of Dorsey, who was the largest sole shareholder.

“Mask’s actual investment is a very small percentage of his wealth, and a full ransom cannot be ruled out,” wrote Zino, who covers Twitter and social media.

Musk could view Twitter as a high-growth investment, or he may have non-investment reasons to buy, such as a purchase, to make sure the platform doesn’t hold back his speech, said Eric Gordon, a law and business professor at the University of Michigan.

“He may be worried if enough of his tweets start to look like misinformation, that Twitter says we’re doing our job against misinformation,” Gordon said. No CEO would refuse to take a call from the company’s top shareholder, so the purchase gives Mask access to Twitter’s top management, he said.

Musk did not speak specifically about any changes to the Twitter rules that he could promote, but the history of the suspension and banning of the social networking platform is well documented.

Trump’s dismissal from Twitter and Facebook has raised difficult questions about freedom of speech in the social media industry, which is dominated by several technology giants – a problem that has captured Trump and the conservative media. On Monday in these circles there was widespread praise for Mask.

Michael Flynn, a retired general who briefly served as Donald Trump’s national security adviser and was dismissed from Twitter in January 2021, sent Mask some free advice via Telegram.

“Hey, Elon, how about all of them being expelled from Twitter for being America first and foremost for Trump, back on Twitter !!!” Flynn wrote..

Earlier this year, Twitter banned the personal account of far-right U.S. MP Marjorie Taylor Green for numerous violations of the platform’s policy regarding COVID-19 misinformation. Other people banned in recent years include Steve Bannon for proposing to behead Dr. Anthony Foci, former Ku Klux Klan leader David Duke for violating the rules of a social media site banning hate speech, and right-wing conspiracy theorist Alex Jones and his Infowars show for abusive behavior.

Musk recently called himself a “freedom of speech absolutist” on Twitter, explaining why the Starlink satellite Internet service, part of its aerospace campaign SpaceX, would not block Russian state media from spreading propaganda and disinformation in line with the Kremlin’s narrative of its war in Ukraine. .

But such absolutism would not be welcomed by advertisers, who are Twitter’s main source of revenue, said Brian Wieser, global president of business analytics at GroupM. Brands that advertise on Twitter are strongly in favor of certain content standards because the toxic platform can drive away many other users.

“Certain types of speeches, such as propaganda for insurgency or propaganda for harm to people, are not things that most advertisers want to support,” said Wieser, who analyzes the media industry for advertisers.

Twitter shares rose nearly 30% on Monday. Since March 14, the date of the application on Twitter, its shares have risen nearly 50%, meaning Mask’s investment has paid off generously – so far.

Twitter did not immediately respond to a request for comment.

In March, Musk told his millions of followers on Twitter that he “ think seriously ”To create their own social networking platform, and has repeatedly faced financial regulators over their use of Twitter.

Musk is embroiled in a tough dispute with the SEC over his ability to post on Twitter. His lawyer claimed in court that the SEC violates the rights of Tesla’s CEO under the First Amendment.

In October 2018, Musk and Tesla agreed to pay $ 40 million in civil fines and for Musk to approve his tweets to corporate attorneys after he tweeted that he had the money to make Tesla private at $ 420 per share.

Funding was far from secured, and the electric car company remains open, but Tesla’s stock price has jumped. The calculation came after the SEC was charged with securities fraud. It featured changes in governance, including Mask’s removal from the chairmanship of the board, as well as pre-approval of his tweets.

Attorney Mask is now asking a U.S. district court judge in Manhattan to waive the agreement, arguing that the SEC is prosecuting him and violating his rights to the First Amendment.

The SEC says it has the legal authority to sue Tesla and Mask over his tweets, and that Mask’s move to withdraw from the agreement is not valid.

The SEC has also revealed that it is investigating Mask’s tweets from November 6, 2021, which asked followers whether must sell 10% its share of Tesla. The commission said it had issued administrative summonses investigating whether Musk and Tesla were complying with disclosure requirements in the 2018 agreement.

As a result, Musk sold more than 15 million shares worth about $ 16.4 billion. With some sales in late December, Musk is close to selling 10%.

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Matt O’Brien and Michelle R. Smith contributed from Providence, Rhode Island. Crisher reported from Detroit.

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