Twitter lags behind its rivals. Heres why Elon Musk bought it anyway

Tuesday, April 26, 2022
author picture Lucas Simon
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Why Elon Musk Wants to Buy Twitter

While it's true that Facebook's core app rakes in nearly $70 billion in annual advertising revenue‚ Twitter's earnings are still less than half that amount. According to Insider Intelligence‚ Facebook's core app earned nearly twice as much revenue as Twitter did last year. But that's not what's driving Musk to buy Twitter. According to Musk‚ the deal is not about making money‚ but is more about building a better company.

Elon Musk's Twitter lags behind rivals

Tesla CEO Elon Musk is stepping down from the board of directors‚ which could signal acrimony between Musk and Twitter. The company's shares soared nearly 30 percent last week when Musk made his stake public‚ and they were up 2.8% on Monday. Musk is Musk's most prominent shareholder‚ having invested $43 billion in it. But Twitter has lagged behind rivals‚ mainly due to its algorithmic feed and lack of editing tools. Musk's attempts to take Twitter private have raised controversy and triggered hostile takeover talks. Many have questioned whether Musk has the right motive to pursue such a move. While Tesla is a multi-trillion-dollar company‚ Twitter is only worth a few billion dollars. The company has been hit with a series of scandals over its controversies. And as Twitter has fallen behind‚ Musk hasn't made clear what his motivation is for taking the company private. Twitter has seen slow growth recently‚ as users complain about the moderated posts. This has turned off some potential users. The right-wing-oriented alternative Gettr has claimed four million users in January. Even Trump's Truth Social platform has reached 1.2 million downloads since its launch. Musk has not yet replied to requests for comment. And as for the future of Twitter‚ the billionaire has no plans of slowing down. The latest news about Twitter's valuation is likely to lead to more negative headlines about the company. While the Twitter value remains relatively high‚ its growth prospects are not strong enough to make it a contender for a top spot on the Fortune 500 list. While it remains to be seen how the company will do‚ the company's CEO's decision to acquire Twitter has sparked public criticism.

Elon Musk wants to transform Twitter by taking it private

Elon Musk wants to transform his beloved Twitter‚ but will he be able to do so? The billionaire self-proclaimed free speech absolutist said as much in a letter to the board of directors earlier this month. Although Twitter declined to comment‚ it was unclear what Musk intended by the move. The idea was supported by 74 percent of Musk's followers. But one thing is certain: the future of Twitter depends on free speech. Taking Twitter private isn't the best idea‚ but it's a necessary step if the mercurial entrepreneur really wants to transform it. Twitter's CEO‚ who is stepping down soon‚ could end up being the next CEO of the company. Agrawal would be eligible for a $39 million payout if Musk replaces him. However‚ it's unclear whether Musk will take Twitter private. The deal could be worth about $250 billion. Musk's fortune is largely in Tesla stock‚ so he'd have to use that as collateral to take Twitter private. His comments may have a negative impact on Twitter's share price. But he has said that taking the social network private will help it fulfill its societal imperative. However‚ his willingness to be accountable for his plans is in question. One potential solution would be to make Twitter decentralized. Twitter could then sell API access to developers and let them create different front-end experiences. Different users could use different content moderation styles‚ turning a core service into an enterprise software product. That way‚ users could edit their tweets and take control of their own information. However‚ this solution won't work if Twitter's leadership wants to maintain its position.

He is not a competitor of Twitter

One might wonder: why would Elon Musk want to buy Twitter? After all‚ he's already a billionaire and has an outsize influence on the world. And he could even be able to afford it. And what if Musk were willing to take a bigger stake in the company? He'd have to act in the best interests of shareholders. If Twitter wanted him on its inside‚ they would have offered him a board seat. But Musk is a hugely powerful‚ potentially profitable‚ and potentially dangerous investor. While he's right to build his own platform‚ he has also raised concerns about Twitter's free speech policies. Musk has repeatedly criticized Twitter for censorship and said he would like to have free speech. In fact‚ he once sought to have an account banned for tracking his private jet because it violated his rights to free speech. And he even offered to pay off the college student who ran the account. But his concerns about Twitter stem from his role within the company. There's no question that Musk is not a direct competitor of Twitter‚ but he has stated that he wants to have more influence over the social network. By taking the platform private‚ Musk would gain more control over its future. Then‚ he'd be able to focus on his other businesses and would be able to get more control over Twitter. In the meantime‚ he could use Twitter as a means to reach more people and make more money. The proposed transaction will deliver a substantial cash premium for Twitter stockholders. But there's a big catch: Twitter's board took a poison pill plan the day after Musk's offer‚ making it harder for Musk to buy the company. The plan also aims to protect Musk's influence on Twitter. And while the deal isn't final‚ Twitter's board will have to vote on whether to accept the offer or not.

He is not a competitor of Facebook

If Facebook and SpaceX are competitors‚ then Elon Musk is not a competitor. Elon Musk‚ the CEO of SpaceX‚ is an active social media user. But he's not a Facebook fan. In November 2014‚ he invited Musk to dinner in Palo Alto‚ along with some of the company's top researchers. Zuckerberg was concerned about Musk's repeated warnings about the dangers of artificial intelligence. Musk and Zuckerberg did not agree on the issues surrounding AI‚ which caused the Facebook CEO to call Musk's views 'irresponsible' in July 2017. Musk's massive troll against Facebook came after Facebook's recent data scandal. Cambridge Analytica‚ a company that used Facebook data to target ads‚ illegally gathered information on 50 million users. Facebook users expressed their displeasure and government officials demanded answers. Musk's tweet sparked a heated exchange with Facebook CEO Mark Zuckerberg‚ and he also deleted the Tesla and SpaceX Facebook pages. Zuckerberg responded by writing on Twitter that Musk's actions on Facebook gave him the 'willies.' While Facebook has the largest market share‚ SpaceX is the biggest. The company has grown rapidly since then. Musk's business model has been remarkably successful‚ making it a worthy competitor. Facebook has a stronghold on social media‚ with its reputation for skepticism over its business model. Musk's trolls aren't the only ones who don't have a clue about the future of Facebook. Although he may not be a direct competitor of Facebook‚ he has invested in Twitter and has criticized its content moderation policies. He'll be pitching ideas to the board of directors of Twitter‚ and his billion-dollar investment in Twitter has a hefty following. However‚ he will not join Twitter's board of directors. Further‚ his partnership with Twitter will not bind him by its previous agreement.

He is not a competitor of Google

Tesla shareholders may be displeased by Elon Musk's acquisition of Twitter. However‚ his move to improve the social media site's image is not a direct competitor of Google‚ which Musk has claimed to be a fierce opponent. Trump's dislike for Amazon was largely due to coverage from The Washington Post‚ which Bezos owns. Elon Musk also has a history with PayPal and has an interest in cryptocurrency. In a recent tweet‚ Musk explained that he wanted to make the social networking site better than ever‚ including getting rid of automated spam accounts‚ making the algorithms more transparent‚ and boosting its user base. The billionaire investor has also expressed his support for Twitter's goal of increasing its user base‚ and his tweets were filled with emojis. Although his comments aren't definitive‚ they are indicative of Musk's intentions. The acquisition of Twitter is highly controversial‚ and Musk has been involved in an intense feud with the U.S. securities regulators over his use of Twitter. In October 2018‚ he agreed to pay $40 million in fines and have his tweets approved by a corporate lawyer. These events are unlikely to affect Tesla's acquisition by Musk‚ but they could prevent his Twitter investment from going through. Elon Musk's acquisition of Twitter will likely be the subject of campaign and political commentary‚ as well as criticism of big tech companies. It also highlights the power of wealthy executives to control platforms‚ which has implications for our democracy. Indeed‚ Senator Elizabeth Warren called Musk's purchase of Twitter a dangerous move.