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By- Maulika Desai and Navjoth Deepak (Columnists)
The most tumultuous deal of recent times between the social media giant, Twitter and the world’s richest man, Elon Musk reveals a new angle each day. The 10-month-long saga of corporate cat-calling traces back to January, when the Tesla CEO started buying shares of the American social media company. By April 4, he went on to become the company’s largest shareholder with a 9.1% ownership stake. The next day, Twitter informed the SEC that it intended to bring Musk onto its official board of directors.
The then-CEO of Twitter, Parag Agarwal, communicated that Musk had declined the offer. Soon after, the latter made an unsolicited bid to purchase Twitter at $54.20 per share. This move made the company draw up a poison pill approach, to stop the billionaire's hostile-takeover attempt. However, the board unanimously accepted this 44 billion dollar buyout offer, with Twitter ready to be taken private. Set out with the motto “help humanity”, the SpaceX founder said he wanted to introduce new features, outsource Twitter’s algorithms, combat spambot accounts and promote free speech, by lifting Donald Trump’s ban for instance. In July however, Musk decided to terminate his acquisition of Twitter.
The billionaire accused Twitter of not providing him with exact details regarding the number of spam and fake accounts. This was the ultimate deal-breaker as Musk wanted a platform free from automated bots that interfered with its free speech policy. Musk, a self-proclaimed rationalist who is always ears for both sides of a problem, felt that 5% of the total Twitter population (almost 15 million users) was detrimental to his objective of autarchy. Another ironic reason Musk gave for backing out was Twitter’s decision to fire its senior executives and a third of its talent acquisition team.
Although these were the official rationales given by Musk to the SEC, several industry insiders gave various external factors as to why he actually withdrew from the initial agreement. The first was the trend of regression in the stock quotations of tech Goliaths post-decision of Musk to purchase the social media platform. Prices plummeted from $51.70 on April 25, 2022, to $36.81 on April 29, 2022. This was the result of regular sponsors and investors getting cold feet after the Tony Stark-esque decision-making of Musk.
Another looming question was how Musk would finance the magnanimous $44 billion transaction. Despite raising funds by selling Tesla Stocks, securing investments from the Crown Prince of Saudi Arabia and also retaining Co-founder Jack Dorsey as a majority stakeholder, many felt it was inadequate to pull off this mammoth deal. This battle between Musk and Twitter was the talk of the town for over a month, while financially disrupting all parties involved.
Twitter appealed to the Delaware Court of Chancery, a place which Musk is no stranger to. Previously sued for using compensation packages in Tesla to increase his wealth, Musk now had to give up his wealth to honour the contract of purchasing Twitter. He was given a deadline to either go through with the deal on the agreed terms or pay the company compensation package. However an unforeseen turn of events ensued soon after.
Musk decided to revive his bid for Twitter at the original offer price of $54.20 a share on October 4. Potentially to avoid a courtroom battle, the U-turn came two days before his trial. Both parties were given until 5 pm on October 28 to complete the deal. Despite overpaying, Musk eagerly looked forward to the impending acquisition. He visited the Twitter headquarters in San Francisco to shun rumours about laying off 75% of the employees. The new ‘Chief Twit’ confirmed his takeover on October 28 by penning a note on what motivated him. The ‘bird’ (implying Twitter’s blue logo) had been freed, he tweeted.
Just two weeks into assuming ownership of Twitter, Mr. Musk has strained the company with mass layoffs, leadership changes and policy shifts. Top management leaders including CEO Parag Agrawal, CFO Ned Segal, and legal affairs and policy chief Vijaya Gadde have been shown the door. Half the workforce (3,700 employees) has also been discharged, owing to losses of over $4 million a day.
A new ‘Twitter Blue’ service was introduced, wherein a user could pay $7.99 per month for a verified account. It aimed to combat spam account operators while generating revenue from subscriptions. However, this paid service is on halt now due to impersonating accounts of companies and celebrities.
In his first interaction post the layoff, Mr Musk informed employees of tough times ahead where they would have to work for 80 hours a week, with no work-from-home or free food facilities. Twitter may go bankrupt soon if it is unable to generate more revenue, as major corporate advertisers are pulling back over concerns about content moderation. With great power comes great responsibility, and only time will tell how the billionaire revolutionises the way we communicate online in the future.
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