This week, Elon Musk bought a 9.2% stake in Twitter and immediately sent the microblogger's shares soaring by nearly 27%. Musk's investment may be precisely what the doctor ordered for the troubled social-media platform, struggling to enforce its confusing, ever-evolving moderating standards most people find unfair or biased.
Musk does not control Twitter and went to great pains to file regulatory paperwork with the SEC to say that he will be a passive investor. But, as the largest shareholder now, with more than four times the stake of founder Jack Dorsey, Musk has an indirect influence that could change Twitter's direction for the better. With the company’s latest announcement that he would join the 11-member board, this expectation just strengthened.
While Musk has been coy about his political beliefs, there is little doubt that he is libertarian-leaning. A prolific tweeter, Musk recently teased his 80 million followers with a Twitter poll.
"Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?" Over two million votes poured in. The results overwhelmingly showed no confidence in Twitter's moderating policies when over 70% answered "No." The unscientific poll was a shocker considering that, according to a TIPP Poll conducted in October 2021, Democrats outnumber Republicans by over ten points on the platform.
That Twitter is not perceived as fair in its moderation is evident to anyone who follows the company's struggles abroad. Last week, the Delhi High Court in India issued a scathing decision ordering Twitter to clarify its policy on blocking users from posting objectionable content. At issue was a Twitter user, @AthiestRepublic, who had allegedly repeatedly posted offensive content relating to a Hindu goddess. A devotee brought a lawsuit seeking relief from the High Court to block the account.
Arguing before two senior judges, including the Chief Justice, Twitter dishonestly asserted that it does not block accounts unless there's a court order. The bench retorted: "If this is the logic, why have you blocked Mr. Trump?"
According to the Times of India, the judges didn't stop there. They delivered a sharp rebuke similar to what conservatives have felt for years. "It is ultimately boiling down to this - that people you feel sensitive about ...the content, you will block them."
In the United States, Twitter suffers from a trust deficit. In an IBD/TIPP Poll from October 2021, only 27% of Americans held a favorable opinion of the service. The distrust is high across the board.
38% of Democrats hold a favorable view compared to 25% of Democrats who don't. Among liberals, 37% favor Twitter, while 28% don't.
The scenario is worse on the other hand. 38% of Republicans have an unfavorable opinion of Twitter, while 21% are favorably disposed. 39% expressed mistrust among conservatives, while 27% trusted the service. Similarly, negative attitudes are more prevalent among independents (37% vs. 19%) and moderates (31% vs. 23%).
Musk is an international businessman whose brand does not invite the same kind of charge anywhere globally. His projects do not differentiate among the world's people and are 100% nonpartisan. In SpaceX, he is living every person's dreams about technology and space exploration. As founder of Tesla, he is seen as the sole icon who challenged the world to adopt electric vehicles, just as Gottlieb Daimler did with his internal combustion engine in Germany 150 years ago. Today, auto companies are out-competing each other to catch up with Tesla, a company in which proponents of the Green New Deal see a promise to advance their climate change proposals.
Unlike Mark Zuckerberg of Meta, who placed his thumb on the scale in 2020 to donate hundreds of millions of dollars to Democrat constituencies and swing elections in close races, Musk is non-partisan. He is against senseless government mandates, evidenced by his feud with a municipal government in California about Covid protocols. When he moved his companies from California to Texas and settled down in Austin, he gave cover to others to abandon high-tax, high-regulatory environments in favor of more business-friendly states.
Investors drove up Twitter's stock, seeing hope for a company that is stalling and becoming too woke. They hoped that with Musk as an influential shareholder, Twitter would slowly welcome back conservative voices that have been unceremoniously shut off since the 2020 election, thereby increasing the user base. Musk has advocated using open-source algorithms to moderate tweets rather than an army of left-leaning humans.
Tesla and SpaceX are the gold standards in their respective industries, even in countries run by authoritarian regimes such as China, Iran, Myanmar, North Korea, Russia, and Turkmenistan. Each of these countries is notable for having blocked access to Twitter. Not enormously profitable by Big Tech industry benchmarks, Twitter, under Musk's influence, could make inroads into these nations over time and increase membership by millions of eager users.
As the world's wealthiest person, Musk had the abilities and resources to launch his own social media platform. But he understands the power of the network effect. Rather than create an ecosystem from scratch, Musk was wise in recognizing that it makes sense to go where everyone else is already engaged.
Musk's investment was a win-win and had no downsides to any constituency, a rare feat on Wall Street. Most importantly, Twitter badly needed a shot in the arm and got one.
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