Twitter enters an unchartered territory after signing a definitive agreement on April 25 to be acquired by an entity wholly owned by Tesla CEO Elon Musk in a $44-billion deal.
The company, which went public in 2013, is set to become private once the deal closes later this year, subject to Twitter shareholders and regulatory approvals.
The deal caps turbulent two weeks at the social-media company after it disclosed that Musk had approximately 9.1 percent stake in the firm, built over since January 2022.
"Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated," said Musk, a prolific user who has nearly 85 million followers on the micro-blogging site.
"I want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential–I look forward to working with the company and the community of users to unlock it," he said.
While the details on what Musk plans to do with Twitter are sparse, the deal will have a bearing on Twitter’s operations in India.
Moneycontrol recently spoke to experts to understand the impact of a potential acquisition on the platform and what it would mean for India.
Musk's takeover offer
Musk, who is the world's richest man, had on April 14 made an unsolicited take-it-or-leave-it takeover offer for $54.20 a share, including a 420 reference to the use of cannabis, that is often used by Musk.
The deal initially seemed an improbable effort by the mercurial entrepreneur with the Twitter board speculated to reject the offer.
Subsequently, it adopted a corporate defence manoeuvre, popularly known as "the poison pill", to prevent Musk from accumulating more of the company's stock.
Also read: What is 'Poison Pill' defence?
Twitter's board, however, started examining Musk's proposal more seriously after he unveiled a $46.5- billion financing package to fund the acquisition and reportedly started meeting several of the company's shareholders to garner support for his bid.
The continued global market correction also helped Musk's proposal also likely tilted the board in Musk's favour.
Musk had previously noted that his offer represented a 54% premium to Twitter's share price prior to the day before his investment in Twitter began, and a 38% premium to the day before his investment in Twitter was announced.
"Since that time, the attractiveness of my proposal has only increased given the market’s continued correction. Had your stock traded inline with comparable social media companies, my offer would represent approximately 90% and 70% premiums to those times" Musk said in a letter to Twitter board chairman Bret Taylor on April 24, a day prior to the deal announcement.
It's not clear whether Twitter co-founder Jack Dorsey, who is still on the company's board, had a role in the board accepting the deal.
In a series of tweets on April 26, he said Twitter was the closest thing to a global consciousness and Musk was "the singular solution I trust".
"In principle, I don’t believe anyone should own or run Twitter. It wants to be a public good at a protocol level, not a company. Twitter as a company has always been my sole issue and my biggest regret. It has been owned by Wall Street and the ad model. Taking it back from Wall Street is the correct first step" Dorsey said.
Twitter in India, Musk’s run-ins
India is one of the largest markets for social media companies and Twitter is no exception.
Twitter had 23.6 million users in India as of January 2022, according to market intelligence firm Statista, and the country is likely one of the key markets for the company's growth.
According to Neil Shah, vice president of research at Counterpoint Research, India was a huge potential market for all internet giants in terms of scale and just sheer advertising perspective.
But with Musk in the picture, it was not clear how it could pan out for Twitter.
“Someone like Parag being a CEO and an Indian understands fairly well how important and strategic market India is but Elon might have a different vision,” he added.
Musk has already said he doesn’t “have confidence in the management” of Twitter, indicating a likely change at the top.
However, it's not clear how hands-on Musk would be with the company's operations and how much time would he be able to devote to Twitter, amid his full-time CEO roles in Tesla and SpaceX and his other initiatives such as Neuralink and The Boring Company.
Dorsey had endorsed Agarwal's appointment as Twitter's CEO in November 2021.
"Elon’s goal of creating a platform that is “maximally trusted and broadly inclusive” is the right one. This is also Parag Agarwal’s goal, and why I chose him. Thank you both for getting the company out of an impossible situation. This is the right path...I believe it with all my heart" Dorsey said on April 26.
"Twitter has a purpose and relevance that impacts the entire world. Deeply proud of our teams and inspired by the work that has never been more important." Agarwal said while announcing the deal on April 25.
Agarwal and Twitter board chairman Bret Taylor told employees that the company was entering a period of uncertainty, though it would be business as usual until the deal closed.
As Nick Bilton, author of Hatching Twitter: A True Story of Money, Power, Friendship, and Betrayal, recently mentioned in a Vanity Fair article “whenever the company has gotten a new CEO and tried to focus on anything, a distraction rears its head and knocks the company off course”.
Run-ins with the Indian government
Twitter and the Indian government don't see eye-to-eye on several matters, the most recent being compliance with the new IT rules. Musk’s track record with India hardly helps.
Tesla, the $54-billion electric vehicle company headed by Musk, has long been involved in a standoff with the government over import duties.
The company wants higher import duties slashed, a move opposed by local companies. Musk said in January 2022 that the company was still working through “a lot of challenges” to launch its cars in India.
Starlink, a part of Musk’s SpaceX, was barred in November 2021 from accepting pre-orders for its satellite broadband services in India without a licence.
The department of telecommunications also ordered the company to refund all pre-orders . Starlink’s India head Sanjay Bhargava quit in January of this year.
Absolute free speech
Another challenge in the India-Twitter equation is Musk’s free-speech claims.
Social media platforms—from Facebook to Twitter— have been struggling with balancing free speech and moderation.
Despite Musk’s claim of allowing free speech on the platform, experts have raised concerns over what it would mean.
“Many had termed Twitter as more supportive of the Left with its attempts to curb fake news and hate speech on the platform,” said a social media founder, who did not want to be identified. “We need to see which side of the coin Musk is on. Either way, it will be biased.”
“At least at this point, Musk does not really need to pander to anybody or any government at all, unlike a Twitter board since it is a public company,” said Karthik Srinivasan, a communications strategy consultant. “This is in consideration of geopolitical ramifications.”
Twitter is home to several government handles that use the platform as a distribution medium. Twitter, which is a public firm, will need to take a more guarded stance in public even as it works in the background to appease governments.
But Musk, experts said, would have no such compulsions and would do whatever he wants.
“If he chooses to, he can just shut off India operations of Twitter in one day, literally. He can do it and he’s the kind of guy who will be willing to do things like that,” Srinivasan said.
That puts a very different spin on the ramifications it can have from the perspective of geopolitics.
For instance, Nigeria banned Twitter from June 5, 2021, to January 13, 2022 after Twitter deleted certain tweets by the Nigerian president and temporarily suspended his account.
While Musk’s claims are yet to be tested, concern also stems from the cult status that he enjoys on Twitter.
During a TED interview, Musk said Twitter should match the laws of the country and there’s an obligation to do that. He also said Twitter should open-source its algorithm and if changes were made to people’s tweets, or if they’re emphasised or de-emphasised, that action should be made apparent.
Significant clout
With more than 85 million followers, Musk has a significant influence on the platform, which he hardly fails to leverage.
Dogecoin and Shiba Inu, two cryptocurrencies, gained popularity thanks to a single tweet from Musk. Last year’s crypto-crash was triggered after his tweet on suspending Bitcoin as a payment option at Tesla.
And there lies the problem.
“In any organisation, boards need to be powerful and authority needs to be distributed. With Elon, this will not matter,” said the social media founder cited earlier.
A social media executive, who describes Musk as the "Wild West Cowboy", said an influential platform like Twitter should be handled with thought and care and Musk was not known for that.
“He tries things and if they don’t work, he just pays the price for it and moves on because they can afford the entire price in the world quite literally,” the executive, who didn’t wish to be identified, said.
The way Musk uses Twitter creates an additional layer of challenge.
In 2018, Musk called a British caver who was involved in the rescue of Thai schools a "paedo guy". Later, he backtracked and while defending himself against a defamation suit in court claimed that "paedo guy" does not mean "paedophile".
Still, some analysts said Musk could help turn the company around.
Business positives
Prabhu Ram, head–industry intelligence group, Cybermedia Research, said Musk at the helm would be good for the firm’s financial health.
Musk has turned around businesses such as SpaceX, Tesla and PayPal. This could well be the case for Twitter, too.
The company faces the daunting task of achieving its target of reaching 315 million monetisable daily active users (mDAUs) and revenue of $7.5 billion by the end of 2023. It had reported 217 million mDAUs as of Q4 2021 and an annual revenue of $5.08 billion at the end of 2021.
Industry experts said Twitter Blue, the premium subscription service, could likely see accelerated deployment, something Musk has long talked about.
“When it comes to its revenue, Twitter Blue and other initiatives will get bolstered,” Ram said.
But are these reasons enough to hand over control of the platform to Musk? Only time will tell.
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