What Elon Musk's Twitter takeover means for India

Vijaya Gadde, Twitter head of legal policy, trust, and safety whom Musk had publicly criticised over the company's content moderation decisions earlier this year, has also been ousted. Gadde has updated her Twitter bio to confirm her exit.

Twitter takeover: The India impact

While the details of Musk's vision for Twitter are sparse at the moment, the acquisition will likely have a bearing on the social media firm's operations in India.

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.

The government's initial reaction was lukewarm. Rajeev Chandrasekhar, the minister of state for electronics and information technology, said he expects Twitter to comply with the country's local rules.

"Our rules and laws for Intermediaries remain the same regardless of who owns the platforms. So, the expectation of compliance with Indian laws and rules remains," he said.

The India saga

Musk had argued about India's importance for the firm in July 2022, stating that it is the social media firm's third largest market, in his counterclaims submitted to the US court as a response to Twitter's July 12 lawsuit that had sought to enforce the $44-billion merger agreement, a claim that was denied by Twitter.

That's not to say it's been smooth sailing in the country. Twitter's relationship with the Indian government has been turbulent.

In 2021, it tussled with the Union government over takedown orders, with Twitter authorities even facing the possibility of arrest. At the time, a statement by the Ministry of Electronics and Information Technology (Meity) said, “freedom of expression is not absolute and it is subject to reasonable restriction.”

In July this year, Twitter filed a petition in the Karnataka High Court, seeking relief from some of the blocking orders issued by Meity under Section 69A of the IT Act.

Twitter had mentioned in their petition that the blocking orders did not meet the requirements of Section 69A, and that Meity was disproportionately using its power by asking Twitter to block accounts in its entirety.

In reference to this, Musk, in the counterclaims filing, had stated that Twitter "initiated risky litigation" against the Indian government, without obtaining consent, which constitutes a material breach of the merger agreement. Twitter had subsequently denied these claims.

The case is currently being heard in the court with the next hearing slated for November 16. It's currently not clear whether Musk-led Twitter will continue to pursue this case.

Prateek Waghre, Policy Director at the Internet Freedom Foundation, told Moneycontrol that it's hard to say if the takeover will have a short-term impact on the case itself, since it is effectively one person's decision to make, and Musk can decide that it no longer makes sense.

A ‘free speech absolutist' and content moderation

Since the time he had announced his intention to take over Twitter, Musk has flip-flopped on his stand on free speech.

Musk, who describes himself as "free speech absolutist", in a US court filing, submitted that while he is a ‘proponent of free speech', he believes that moderation on Twitter should "hew close to the laws of countries in which Twitter operates".

He has also previously said Twitter should open-source its algorithm and if changes were made to people's tweets, or if they're emphasized or de-emphasised, that action should be made apparent.

Musk is said to take over as Twitter's new chief executive in addition to his current roles at Tesla and SpaceX, and with this, plans to reverse permanent bans on users, as per Bloomberg. This could restore the accounts of those who were booted off the platform like former US president Donald Trump or closer home, that of actor Kangana Ranaut, among others.

In an open note to advertisers, Musk said that Twitter must be "warm and welcoming" to everyone where people can choose their desired experience as per their preference. "Twitter obviously cannot become a free-for-all hellscape, where anything can be said with no consequences.”

Content moderation

This brings us to content moderation — tricky territory for all social media platforms in the country.

Twitter occupies “a very significant place in the public square in India”, says Waghre, despite having relatively fewer users as compared to the other platforms.

Analysts have raised concerns over what Musk's stance on free speech would mean.

Faisal Kawoosa, founder of market research firm techARC also stressed that content moderation will be an area of concern “because we have seen how the government has been tough in this area.”

“We know Twitter has been in the midst of so many controversies with high-profile politicians and media people using it for engagement. I see more issues coming up with Twitter going forward,” he said.

A founder of a social media firm, who did not want to be identified, said many had termed Twitter as more supportive of the Left with its attempts to curb fake news and hate speech on the platform. “We need to see which side of the coin Musk is on. Either way, it will be biased.”

IFF's Waghre said the move adds an extra later unpredictability at a time when the Union government is looking to exert greater control over speech on social media.

Kazim Rizvi, the founding director at policy think tank ​The Dialogue, however, noted that it is too early to speculate on what Musk will do with Twitter India.

"I don't think it will have an impact on anything because Indian laws are very clear and companies comply as well. I don't see the fallout of that impacting India at all as long as Indian tech companies comply with the laws, which they do. I see this going on as business as usual," he said.

Musk's run-ins with the Indian government

Musk's track record with the Indian authorities has also not been great in the recent past.

Tesla, the 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. The Indian government however wants the manufacturing of cars to happen in the country.

"Tesla is welcome in India, we don't have any problem. Now his (Elon Musk's) interest is to manufacture Tesla cars in China and sell them in India. We request him that you can start your own plant here. But manufacturing in China and selling in India is not a digestible concept to all of us," Union minister Nitin Gadkari told News18 in an interview earlier this year.

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 while the company's India head Sanjay Bhargava quit in January this year. Earlier this month, Starlink applied for a licence with the Department of Telecommunications (DoT), according to an Economic Times report.

"Musk is not a person to readily budge. Whatever the differences are between the Indian government and Twitter, they will only widen going forward. With Musk at the helm of Twitter, they are unlikely to show some flexibility to align with the governments. We saw the same with Tesla also," said TechARC's Kawoosa.

Another business turnover?

This acquisition also comes amid a sharp slowdown in the online advertising market due to the global economic downturn.

Rising inflation and fears of an impending recession along with other macro environment challenges have resulted in advertisers cutting back their ad spends. This has severely impacted the revenue growth of internet firms that are dependent on digital advertising such as Twitter, Meta, Alphabet, and Snap.

In July, Twitter had reported a one percent year-on-year (YoY) drop in its revenues to $1.18 billion in Q2 2022. The company had attributed the weakening digital advertising market amid macro environment challenges as a key reason for the decline besides the uncertainty surrounding this acquisition.

While Twitter has not reported its Q3 numbers, the revenue numbers of larger peers such as Google parent Alphabet and Facebook parent Meta indicate the continued slowdown of the digital advertising market.

That said, Musk mentioned earlier this month that buying Twitter was an "accelerant" for a larger vision to create something he referred to as "X, the everything app". While Musk didn't elaborate on what X could eventually look like, many believe he was referring to the so-called super apps that are extremely popular in China and other Asian markets.

During his first town hall with Twitter employees in June, the Tesla CEO has mentioned that there is no equivalent to apps such as WeChat outside China.

"I think that there's a real opportunity to create that. You basically live on WeChat in China because it's so useful and so helpful to your daily life. And I think if we could achieve that, or even close to that with Twitter, it would be an immense success," he said.

Prabhu Ram, head–industry intelligence group, Cybermedia Research, had earlier said that Musk being at the helm would bode well for the firm's financial health. Industry experts also point out that Musk has been able to turn around businesses such as SpaceX, Tesla and PayPal before.

But will that be enough and will Musk be able to pull off another turnaround? Time will tell.