Since claiming the digital spotlight, Elon Musk’s entrepreneurial journey has been one characterized by innovation. From spearheading the transition towards sustainable technology and establishing a human settlement on Mars, Musk is looking to shake up the online space with his latest venture… a potential acquisition of Twitter, the popular social media platform. In late July 2020, the tech billionaire fueled speculation of a potential deal after tweeting that he was “considering” buying the website; he was also supported by close friend MattNavarra, who added that his own sources had confirmed the news.
According to experts, the move would make perfect sense for Musk, given Twitter’s financial performance and global reach. “The platform has characteristically been considered a safe bet, delivering consistent returns and a sector-leading user base of over 330 million monthly active users” says Emily Pierce, research analyst at Forrester. Indeed, it is estimated that the platform generated over $1.65 billion in revenue in the first quarter of 2020, a 14% year-over-year increase and 22% year-over-year operating income growth. Therefore, an acquisition of Twitter could strengthen Musk’s existing digital portfolio, for example, due to the increased reach it could bring to his other ventures such as Tesla, SpaceX, and the Boring Company.
Additionally, some industry stakeholders are claiming that the primary motivating factor behind Musk’s acquisition plan is to combat the array of ‘fake news’ that is often prevalent on the platform. This claim is largely supported by the magnate’s recent tweet, in which he stated that ‘The fate of the world”s and the truth-depends on it.” Musk believes that if the right steps are taken, the platform can become a powerful tool in the fight against mis- and dis-information, by taking a higher degree of responsibility and ensuring that information being shared is credible and trustworthy. “Consumers now want technology platforms to be actively engaged in the fight against misinformation” says Susan Wright, professor of Digital Education Studies at Harvard. “Therefore, what Musk seems to be proposing with his potential acquisition of Twitter is that it is the media’s responsibility to combat the spread of ‘fake news,’ and if monetization is required for that, he is willing to take the risk.
Order order Musk acknowledged that an acquisition of Twitter would be extremely risky and that he may end up “owning a few percent of nothing” – this move would be very different to his usual approach of creating his own ventures. Some commentators have also questioned whether he has the capacity to take on this additional challenge. However, at the end of the day, the decision is ultimately in the lap of the gods. If a deal goes ahead, it could set the tone for how tech magnates approach the future of social media, technology, and their responsibility to their users – and many will be watching closely.
Twitter’s Financial Performance
In recent years, Twitter has experienced marked success in terms of financial performance. In its most recent report, the platform reported a 2% year-over-year increase in revenue to $1.01 billion and a 5% year-over-year increase in operating income to $356 million. Additionally, since 2017, the platform’s monthly active users have grown from 326 million to an impressive 336 million.
Ultimately, these financial developments demonstrate why Musk would be interested in an acquisition of the platform. It could potentially offer a valuable revenue boost to his other ventures, whilst providing Twitter access to the funding it needs to become even more competitive in the online sector.
Furthermore, analysts at Forrester believe that the social media sector as a whole is set to experience even further investment in upcoming years. As a result, tech giants like Musk are likely to keep an eye on opportunities for expansion into new markets. “As more companies increase their digital presence and explore new acquisition opportunities, the possibility of Twitter becoming the focus of a takeover is an attractive proposition” says Pierce.
Fight Against Fake News
As previously mentioned, Musk is believed to be interested in an acquisition of Twitter primarily to combat the threat of ‘fake news’ that often circulates on the platform. The magnate has already attempted to take more responsibility for the content disseminated through his other ventures, including the implementation of censorship policies on Tesla’s in-car streaming services and tightening of the rules on SpaceX’s satellite-based internet service.
Although Musk has acknowledged that the potential acquisition carries a multitude of risks, analysts believe that the potential rewards in terms of the fight against ‘fake news’ far outweigh these. “From an ethical standpoint, it’s difficult to ignore the beneficial impact an acquisition of Twitter could have” Wright says. “It could provide an opportunity to prevent the spread of false or misleading information, ultimately curbing its mass dissemination and reducing trust in the media as a whole.”
Ultimately, critics of the proposal suggest that even though there are huge potential benefits, tech behemoths are not in the most secure of positions to take on this additional responsibility. However, Silicon Valley’s leaders have generally worked tirelessly to stay ahead of the curve, setting new standards for technological and economic progress.
Potential Challenges for Musk
That being said, the decision to proceed with the acquisition would likely be expensive and bring with it a high degree of uncertainty. This highlights why Musk himself admitted that the potential venture could turn out to be a failure, and that he may end up “owning a few percent of nothing”. This is indicative of why Twitter-acquisition rumors have been circulating for years without a full-fledged deal ever materializing.
Further to this, there are a whole host of stakeholders who would need to be convinced of the project’s worth. These include skeptical shareholders, members of the public who worry about ethics and responsibility, and other tech giants who stand to lose from such a move. Therefore, much like any project, the success of an acquisition of Twitter by Musk is dependent on how effectively he can market and lobby to persuade the relevant stakeholders.
The Fate of the Acquisition
At the end of the day, the acquisition by Elon Musk is far from certain. Certainly, the potential rewards and benefits may be huge, but the challenges involved in the process are immense. Current and potential shareholders will be wary of the risks of investing in an online sector which is largely unpredictable. Therefore, it is likely that a potential acquisition of Twitter by Musk will be met with some degree of skepticism.
Nevertheless, much still remains unknown about the proposal. With no official confirmation from Musk himself, we are still in the dark as to whether such an acquisition will go ahead and what impact it will have – and only time will tell.
The Impact of a Potential Acquisition
As previously mentioned, many commentators are questioning the potential ripple effects of an acquisition from Musk. Will it force other tech behemoths to take on similar responsibilities in the fight against ‘fake news’? Or will it simply mean more control and censorship?
These are questions which remain unanswered; however, if the acquisition were to take place, experts suggest that it would represent a move towards greater transparency and responsibility in the online space. Many commentators believe that this would not only benefit users, but also businesses operating in the sector, who will gain access to more accurate and reliable customer data collected from social media.
Moreover, considering the current state of the economy, the venture could also prove to be beneficial in terms of job creation. The social media sector is currently one the strongest areas of job creation in the digital industry, providing employment to over 470,000 people in United States alone. Therefore, an effective acquisition of Twitter by Musk could fuel the generation of even more jobs, and stimulate the greater economy in the process.
The Role of Tech Magnates
Ultimately, the future of social media, technology, and their responsibility to their users is likely to be determined by tech magnates such as Musk. His potential acquisition of Twitter is a perfect example of this, as he is one of the few people with the financial capacity to take on the risks associated with such a venture.
It is not yet clear how such a move would affect the digital media sector – but an acquisition of Twitter by Musk would undeniably serve as a major milestone in the development of online media.
Ultimately, one thing is certain – if the acquisition goes ahead as planned, the tech billionaire would be placing himself at the forefront of an online revolution, and set a new standard for global media corporations to follow.
