Reality of Elon Musk Twitter Takeover

The world's richest man, Elon Musk, paid $44 Billion, to buy one of the most famous social media platforms in the world. The first thing Musk did after the purchase, was to fire CEO Parag Agarwal. Along with him, a large number of Twitter employees have been fired.

Elon Musk has claimed, that Twitter has now been set free. People will have more freedom of speech on it. In his own words, his biggest agenda is to allow free speech. He wants to bring a revolution of freedom to Twitter and end all biases. This might make you think that Elon Musk loves Twitter. This might be true to some extent but do you know Twitter sued Elon Musk After which, eventually, Elon Musk was forced to acquire Twitter? The backstory is quite interesting. Come, let's find out more in today's blog. And let us understand what Twitter's future looks like.

Our story begins on 31st January 2022, when Elon Musk purchased shares on Twitter for the first time. Over the next couple of months, he steadily kept buying more shares and increasing his stake in Twitter. But at this point, the people didn't know he had a stake in Twitter. This was a secret. By 14th March, his stake had crossed 5%. According to America's Securities and Exchange Commission (SEC), when the stake in a company exceeds 5%, this needs to be disclosed to the SEC, and the public comes to be aware of it. The SEC gives a deadline of 10 days, but Elon Musk missed the deadline. On 24th March, Elon Musk criticise Twitter on Twitter. He tweets to ask his followers, about their opinion of freedom on Twitter. Whether it supports free speech and democracy. At this point, Elon Musk was discussing his ideas with Twitter's former CEO Jack Dorsey. Initially, Jack Dorsey was seen in support of Elon Musk, because he liked his idea.

His passion for Free Speech. Even though Jack Dorsey wasn't the CEO then, Parag Agarwal had already become the new CEO. On 3rd April, Elon Musk shared his ideas with the then Twitter CEO Parag Agarwal and discussed this with the rest of the Board Members. He asked them to either change Twitter to a Private Company or he'll create a new 'rival' social media platform to compete against Twitter. The next day, on 4th April the world got to know that Elon Musk already had a significant stake in Twitter. He had purchased a 9.2% stake in Twitter and had already become the largest shareholder in the company. After this announcement, the stock price of Twitter went up rapidly.

Twitter's Board Members considered the impact on their company if they made it a Private Company. Or if Elon Musk started a rival social media platform to compete against it. The Board Members offered Musk a seat on the Board on 5th April, and Elon Musk accepted. 4 days later, on 9th April Elon Musk Tweeted, "Is Twitter Dying?" Concerned, Parag Agarwal messaged Elon Musk asking him about the tweet. As the largest shareholder of Twitter, one who was offered a seat as the Board Member, he was still writing against Twitter on Twitter. Within the hour, Elon Musk replied that he would not join the Board. Since it was a waste of his time. "I'm not joining the Board, this is a waste of time." By 11th April, he clarified that he wanted to make Twitter a Private Company.

Here, you'll wonder how the text messages between Elon Musk and Parag Agarwal were revealed to the public. Were they leaked? Twitter had filed a case against Elon Musk that we'll discuss later, and during the court filings, Elon Musk's texts had to be made public. Basically, due to the court proceedings, we can see these text messages. On 14th April 2022, Elon Musk shocked everyone. He announced his offer to buy the whole company. He offers $43 Billion to buy the company. Why though? Experts argue that Elon Musk is attached to Twitter. But that as a Board Member or a stakeholder, participating in discussions and wasting time, didn't interest him. He wanted to take over full control of the platform so that he could shape Twitter as he wants to.

Taking the Company private is an extension of this. The public companies that are listed on the Stock Market, have to be quite transparent and undergo much scrutiny, because as per the law if a company is listed on the stock market, they will have to share significant details with the public. But these rules do not apply to private companies. If Private companies want, they can hide a lot of things from the public. One thing that you might be wondering, is when a public company becomes private what happens to the public shareholders? In such a case, the entity buying the company has to pay the shareholders. The $43 Billion being offered is calculated to be approximately $54.20 per share. It means that if you had invested in Twitter, you would get $54.20 for each of the shares you held if the the company became private.

What was Twitter's response to Elon Musk's offer? Jack Dorsey was elated. The text messages revealed to the public between Musk and Dorsey show that Dorsey was pleased and supported the notion of Musk purchasing the company. But the texts between the then Twitter CEO Parag Agarwal and Elon Musk weren't on a happy note. Elon Musk felt frustrated with Parag Agarwal. He was moving slowly with the offer and trying to please people but Musk wanted fast results. Tensions between Elon and Parag kept growing. Musk wrote to Twitter's Chief of Board Taylor "Fixing Twitter by chatting with Parag won't work." 20th April 2022. Elon disclosed his financial sources. The sources of the funds for buying Twitter.

It was found that of the $43 Billion, $7 billion was to come from senior secured bank loans. Banks like Morgan Stanley, and Bank of America, we're ready to give out loans. $6 billion were to come from subordinated debt. $6.25 billion from personal bank loans to Elon Musk, and $20 billion would be in cash equity of Elon Musk, which would be in exchange for Tesla stock. And $7.1 billion would be in form of equity from 19 independent investors. Twitter's advisors, Goldman Sachs and JP Morgan Chase, both agreed to the deal. On 25th April 2022, Twitter's Board accepted the offer. For $44 Billion. But while accepting this offer, they had some conditions. Elon Musk couldn't say anything negative about Twitter or Twitter employees publicly, till the deal was being processed. And if he couldn't secure the deal, a $1 billion termination fee would be levied on him. It meant that if Elon Musk rescinded his offer after the discussion he would have to pay a fine of $1 billion.

According to this deal, Parag Agarwal would get $39 million, and Jack Dorsey would get $978 million. This might sound like a happy ending, Elon Musk's offer was accepted, Elon Musk would get Twitter, and the other Twitter stakeholders would be happy too. But on 13th May, Elon Musk suffered Buyer's remorse. The feeling you get when you go to buy a new smartphone, and after the purchase, you feel like you even need it? Did you just waste your money? Perhaps you shouldn't have bought it. This causes you much discomfort. Perhaps Elon Musk was suffering the same. He put this deal on hold. And what was the reason he gave for this? Elon Musk said that some reports claimed only 5% of Twitter users were bots. While he believed this to be as high as 20%. He claimed that he was being cheated. People asked him why he didn't consider it previously.

He said that Twitter would have to bring in proof that their estimations were correct regarding the bots. People believed that Elon Musk was facing buyer's remorse, that he wanted to bring down the price or was looking for excuses to back out from this deal. At this point, Elon Musk and Parag Agarwal got into a feud on Twitter. Parag Agarwal was tweeting that the company couldn't get an external review about the bots as it was a threat to users' privacy. And he listed out the reasons for this. And Elon Musk replied with a poop emoji. It's interesting to see the world's richest person talking like how you talk to your friends. On 17th May, Twitter files new documents with the SEC. They claimed that they had a deal with Elon Musk and that he will not say anything negative about the company or its employees, as long as the negotiations of the deal were underway. But what was is he doing here?
They claimed that to be a breach of contract. In June, the SEC directed Twitter to provide the data requested by Elon Musk. To provide an estimate of the spam accounts on Twitter. On 7th July, Twitter revealed to the public that every day, 1 million bots were removed from the platform. But at the same time, this couldn't be investigated by an external agency and they couldn't reveal the exact date because if outsiders mine this information in the company, it will be a threat to the privacy of the users. The next day, Elon Musk announced that he would terminate this deal. He backed out of the deal. In response, Twitter filed a court case against Elon Musk on 12th July. Twitter claims that the way Elon Musk was showing uncertainty to the public, affected the performance of the company. That their revenues were decreasing. Friends, at this point, the $1 Billion fee, that Elon Musk had to pay for backing out of the deal, Twitter wanted not only that, but instead, Twitter wanted that Elon Musk should execute the deal. He should go through with buying offers.

Since he had already breached the contract, by badmouthing the company. This was the beginning of the court case. On 29th July 2022, Elon Musk filed a court case against Twitter claiming that Twitter didn't publicise the details. That Twitter misled its investors but floated a false number of spam and bot accounts. 23rd August 2022, a new player enters the story and Elon Musk found a new excuse. Peter "Mudge" Zatko's whistleblower report was revealed to the world. Who is Peiter "Mudge" Zatko? He was Twitter's previous Head of Security. He was fired in January 2022, for poor performance. On 6th July, After teaming up with a Non-Profit Organisation Whistleblower Aid, complained to Twitter with the US Justice Department of Federal Trading Commission, He claimed that Twitter followed unethical safety practices and their content moderation policies do not align with the laws of the country. And that Twitter had misled Elon Musk by showing him fake bot numbers.

Zatko also claimed that Twitter has to look out for a threat from foreign agents. A Chinese agent was mentioned and how the company was under pressure to employ an Indian. Twitter responded to it by saying that Zatko was a furious ex-employee angered over being fired. And that he was trying to create a false narrative, by making false accusations against them. Elon Musk saw an opportunity and sent the second termination letter to Twitter. Elon Musk said that the first termination letter sent to him and the reasons mentioned therein about the irregularities in the bot numbers remain valid and that in addition to it, was the second termination letter with the reasons being the allegations made by Zatko. Due to this, he didn't want to go through with the deal. During this time, messages from Elon Musk were leaked revealing that Elon Musk was trying to back out of the deal due to the concerns about World War III.

He was worried that World War III might erupt. The Senate Judiciary Committee of America agreed to listen to Zatko's allegations on September 13th. 4 days before that, on 9th September Elon Musk sent his third termination letter. Citing the third reason why he didn't want to go through with the deal with Twitter. Once again, he referenced the 2 previous termination letters but just in case, that wasn't enough to convince people, he wanted to show the third reason why he didn't want the deal. On one side, Elon Musk tried to distance himself from Twitter, and on the other, Zatko was coming up with accusations, one after the other.

This might sound like bad news for Twitter. But legally, Twitter was in a better position. 3rd October 2022, Elon Musk's legal team informed him that it would be difficult for them to contest the case. There were no unfavourable changes on Twitter in terms of their business, financial condition, or their valuation. So they didn't have any concrete reason to reject the deal. After this conversation, the next day on 4th October, Elon Musk took a U-turn and informed Twitter through a letter that the $44 billion offer for buying Twitter was still applicable. It was interesting that Elon Musk had to appear in court merely 2 days later. Twitter's lawyers were slated to question Elon Musk. Before that could happen, Elon Musk agreed that his previous offer was valid. 20th October 2022, the employees working at Twitter listed their worries.

The Washington Post reported that 75% of the employees working at Twitter might be fired by Elon Musk. But these employees claimed that before Elon Musk, the Board Members anyhow wanted to fire 25% of the employees by the end of 2023. So they didn't object to selling the company to Elon Musk. Twitter's employees wrote an open letter protesting Elon Musk's takeover of Twitter. They show their disagreement by claiming that it wouldn't help Twitter in the future. But on 27th October 2022, this deal was finally closed. Elon Musk officially bought Twitter. The news of his firing CEO Parag Agarwal broke out instantly. Additionally, the CFO, Chief Legal Officer and the General Council were also fired. Security came and escorted them out. Elon Musk became the new CEO of Twitter. And put his plans for Twitter in front of the public.

They were truly shocking. First, he shared his idea that he wants to make Twitter like the Chinese app WeChat. Not only can people Tweet on it, but also people would be able to chat on it, video call each other, play video games, and even make payments. One app for it all. The second plan that he revealed was the blue tick marks that you see on Twitter, which are normally given to famous and notable people, he said that he would give the tick marks to everyone at the cost of $8 per month. That's right. He is trying to sell the blue tick marks. Elon Musk claims that this will be a new source of revenue for Twitter. But the critics claim that since Elon Musk spent a large amount on Twitter, he wants to recover it somehow. He is left with no other source, so he's trying to draw money from anywhere he can, by making any feature 'paid'. By trying to include a payment system on it, adding video games to the app. As a public company, since 28th October Twitter was delisted from the New York Stock Exchange.

Since then, Twitter is now a private company. Musk said that he will create a new Content Moderation Council, which will work to handle free speech. As I told you at the beginning of this article. Elon Musk feels passionate about Free Speech. The people who had their accounts suspended permanently such as Donald Trump, want to revoke the suspension. Even though Donald Trump approves of Elon Musk's efforts, he said that he wouldn't rejoin Twitter. Because he has his social media platform. Truth Social. Interestingly, when Elon Musk was backing out of the deal to buy Twitter, Donald Trump criticised his accusation by calling it rotten. Elon Musk replied, "Time for Trump to hang up his hat and sail into the sunset." We will have to wait and see what Twitter's future looks like. One thing that's being reported for sure, is that Twitter will fire at least half of its employees to cut costs. Apart from this, the issue of the Freedom of Speech will not be an easy the task for Musk.

Where should the line be drawn between Free Speech and Hate Speech? After Elon Musk's takeover, there has been an increase in the number of tweets that are hateful, pro-Nazi, and discriminatory against women. Basketball star LeBron James expressed concern over this saying that "unfit people saying hate speech is free speech." Strictly from the business aspect, Elon Musk plans to take Twitter's revenue to $26 Billion by 2028. Whereas, as of last year, it was at $5 Billion. He claims that his goal is to have 931 million users by 2028, whereas there are 217 million users on Twitter now. To enable an expansion of this scale, he may try to shape Twitter like TikTok. On 31st October, he tweeted a poll, to see if people wanted to bring back Vine to Twitter. Vine used to be a social media platform that was integrated similarly to Twitter. On it, people could post video clips of up to 6 seconds. After getting to know these, What do you think about it.

Will Elon Musk's outlandish ideas make Twitter better? Or will it worsen? Comment below!