You can say this about Elon Musk: He’s never boring.
You can also say this: The longtime entrepreneur, loudmouthed tech visionary, risk-taking rich guy and obvious Twitter addict knows a bargain when he sees one. Adding to the circuslike atmosphere he’s already created around the world’s loudest digital megaphone, on Thursday he made a delicious $43 billion offer to buy Twitter outright. Lowball, but not that lowball.
And who’s going to make a counter bid amid all this? A buyer would be taking on all of Twitter’s controversies and, despite its outsize profile, a largely moribund stock and business. Other tech shares have soared during the pandemic, but until Musk arrived (and for a brief period just over a year ago when it hit $77 a share), Twitter’s stock has generally hewed close to or below its initial trading price in November 2013, when it rose to nearly $45. It closed at $45.85 on Wednesday, despite the recent Musk bump, and ended Thursday lower, a signal that Wall Street believes he is trying to dump the stock for a quick profit.
Doubt about his motivations aside, Musk is making noises like he’s serious. In his filing with the Securities and Exchange Commission, he said the firm would be better as a private company because he has no confidence in Twitter management. He said his offer represents a 54 percent premium over the price the day before he started acquiring Twitter shares in January.
Naturally amid all this serious-seeming corporate raiding, Musk included a big smoky joke in his per-share offer of $54.20. Get it? 4:20, the well-known code for weed o’clock.
It’s not the first time he has pulled this kind of gag — in 2018 he tweeted that he had “funding secured” to take his electric car company, Tesla, private at $420 a share. That claim was premature and earned him and Tesla $20 million in regulatory fines each, though I can tell you it made my teenagers snicker.
Now the mischievous edgelord is doubling down on the chutzpah with a hostile bid, noting quite correctly that “Twitter has extraordinary potential.” And since this is someone who styles himself as the next Steve Jobs, Musk declared rather grandly, “I will unlock it.”
If “I alone can fix it” sounds familiar to some who consider Musk the Donald Trump of tech, it’s a bit more complex, whether you like his billionaire bad boy act or not. In many significant ways — Tesla, SpaceX and PayPal — Musk has more than earned the right to say he is good at creating value and pushing boundaries to get there. When everyone else zigs, he not only zags, but practically pretzels and then, well, takes off for the cosmos.
Though its business and stock price have been underwhelming, Twitter occupies an outsize role since the media, politicians and business leaders around the globe use it as a kind of universal kaffeeklatsch. It has also become a powerful distribution vehicle for news and a perfect place for marketing. Musk has some good ideas — already suggested by others — about subscriptions and rewarding loyal users more, as well as product improvements that are easier to do as a private company. That said, he has used divisive rhetoric about free speech that has surely alienated employees who have plenty of other places to decamp to if they prefer to avoid the drama that always follows Musk.
His meme-heavy Twitter persona — often very funny and just as often utterly juvenile — reflects someone who relishes dunking on competitors and ticking off the pre-offended. In an interview I did with him last September, it took him no time to start making a series of sophomoric jokes about the underwhelming qualities of the rockets being launched by Jeff Bezos, the Amazon founder and Musk’s space-tech rival. “If you’re only going suborbital, your rocket can be shorter,” Musk said with a straight face that turned into a naughty grin.
He had some choice comments on Thursday at a TED conference where he seemed to admit it might be a long-shot bid. “I am not sure that I will actually be able to acquire it,” he said. “I could technically afford it.” Musk went on to call the S.E.C. “those bastards” and said Twitter should be a free speech arena and open its source algorithm up to the public to prevent “behind the scenes manipulation.”
That kind of troublemaker attitude and his persistent wrangling with the S.E.C. may make it easy for many to assume this is all a game for Musk to gin up the stock in order to sell his recently disclosed holdings of just over 9 percent of Twitter stock. After a brief and stormy flirtation with becoming a Twitter board member and lots of big words about free speech, Musk realized he was more powerful outside the tent than inside it. As a cooperative, rather than activist, investor, he’d have had to compromise in ways he does not at the companies he runs and where he is the unchallenged king.
And so to be the true emperor of Twitter, the world’s richest man has to buy it. And it rings true that Twitter can’t make the changes needed as a public company. In addition, it would take a very gutsy hedge fund or fellow tech mogul to take on Musk, even though Twitter is still one of the few big properties on the internet that could be had for around $50 billion. It’s hard to imagine there are not one or two private equity players and others who have done that math too, even if they have to take on its biggest and most obstreperous shareholder.
Putting aside whether this is a legitimate hostile takeover bid or an extravagant pump-and-dump effort, the leadership of big tech platforms has become highly controversial and decidedly partisan. The idea of sole billionaire owners of major digital platforms whose influence is growing is problematic no matter which side you’re on. Twitter, as well as Facebook, has done a poor job managing its users and enforcing its rules, and its decisions often seem arbitrary.
Musk’s solution is simple and also simplistic: Let it fly and damn the consequences. Those who are the wealthiest and safest can, of course, make declarations like that.
It may not end with Musk, either. “Google, Microsoft and every major tech platform including Salesforce is probably asking their antitrust lawyers if they can” buy Twitter, a tech entrepreneur who knows his way around the merger game told me. Twitter’s board is meeting to discuss the offer, which I think it will ultimately reject. Already one of the company’s longtime and biggest investors, Prince Alwaleed bin Talal of Saudi Arabia, has dinged the offer, saying it undervalues Twitter’s “intrinsic value.” The company board is reportedly considering a poison pill to prevent Musk from buying it out.
It’s not the first time Twitter has been approached for an outright buyout. Marc Benioff was willing to have Salesforce, the company he co-founded, pay around $20 billion for Twitter in 2016 before abandoning the move after a lot of pushback from Wall Street investors and his own executives. “I’d learned over time to trust my instincts and thought I had a pretty good track record in that regard,” he wrote in his book “Trailblazer.” But, he concluded, “I need people to trust me more than I needed to trust my own instincts.”
Questioning himself is something I have never seen Musk do (and do not expect him to start now). He likes to shoot the moon, as they say, even though this purchase stretches his own finances. But he has access to even more capital and also has a gaggle of rich friends who might like to own this unique toy. Given that most of his worth is in Tesla stock, which some view as overvalued, he could be putting shareholders at risk if he uses his holdings to finance a Twitter takeover.
Noting in his filing that he was not “playing the back-and-forth game,” Musk grandly declared in a gamelike metaphor, “I have moved straight to the end.”
What end will be the big question. On Sunday, after it was announced Musk was not joining the board of Twitter, I tweeted that “all bets are off.” And this is exactly what I think today, since it’s hard to know what someone like Musk will do at any time. When I told one of my teenage sons about the bid, he again snickered at the $54.20 price and then guessed quite seriously what might be motivating Musk: “He’s bored.”
Bored, perhaps. But not boring.
4 Questions
Cathy O’Neil is a mathematician, data scientist, author and former hedge fund quantitative analyst. She has written several books, most recently “The Shame Machine: Who Profits in the New Age of Humiliation,” in which she tallies up the cost of society’s efforts to shame one another. I’ve edited her answers.
Shame has been around since forever. So why does social media make it any worse?
Social media shrinks our notion of community down to the friends we have on Facebook, who generally speak more similarly to us than the larger community. That means when we enforce community norms through shame, those norms tend to be much more rigidly defined and tighter, leading to increased self-consciousness and anxiety. Moreover, social media algorithms feed us exactly the content that is most likely to offend and outrage us, which conditions us to lob shame toward other social media communities, even if they’re only slightly different from ours.
We actually like shaming other people; it lights up our pleasure center. So, when we shame other people on social media, we enjoy it, and then we also enjoy the retweets or likes or encouragement from our friends. It becomes a habit to be as performatively shaming as possible for the attention.
I would note that historically, shame was useful to enforce community rules: Don’t hoard food in a famine, for example. The threat of shame was existential, because if you got expelled from your community, you could actually die of exposure. That natural and healthy impulse to protect our community has been hijacked by social media algorithms to simply shame for entertainment. Moreover, the platforms do this to us because they optimize to keep us on the platform, which is correlated with clicking on ads. They manufacture shame for profit.
You’ve talked about your own issues of being shamed around weight. Tell me more about that and what you learned as a person and as a mathematician.
I was deeply fat-shamed as a child and young adult. I thought I’d transcended that, but when I was researching bariatric surgery as a way of avoiding Type 2 diabetes, I was inundated with fat-shaming ads. Ironically, I had worked in advertising technology as a data scientist myself, and I knew exactly why my search terms were resulting in these ads, but it still had a powerful effect on me. At those moments, I would have been willing to pay good money to stop that feeling. Of course, that’s exactly what the shame machine does: It shames you for profit.
As a mathematician, I knew that the dieting studies were riddled with statistical flaws, such as survivorship bias, where they’d report only the results of people who had stuck around reporting their weight for six months, thereby losing track of all the people who’d drop out. It’s an industry, like many other shame machines such as products that make women feel bad about their vaginas or about aging, that shames their customers when their products don’t work as promised. They depend on repeat customers for survival.
Speaking of math, your last book covered the idea of “math destruction.” What about that led to shame as the focus, mathematically speaking?
I was interviewing schoolteachers, and their principals, about this terrible algorithmic scoring system for teachers called the value-added model. Some teachers had been fired based on a low score, without an explanation. I would ask them what was said when they demanded an explanation, and they all said something like, ‘They told me it’s math and I wouldn’t understand it.’ And it was a bunch of teachers. The message was, you aren’t a math person, so you don’t deserve an explanation. I saw then that math shame was potent — powerful enough to force someone to cede their rights — and of course that math, and the trust people have in math, was being thoroughly abused.
So, when I wrote the book about all the terrible algorithms, that kept coming up, that abuse that was hiding behind the power of shame. Of course, it didn’t work on me, since I have a Ph.D. in math, but I think that’s why I was able to observe it for what it was. Shame has a way of confusing and bewildering us in the moment.
Much of the shame discussion has been around teenage girls, where the data is less clear. What needs to be done in terms of data to better understand what is happening?
The data is less clear because there is no science going on in the companies that own social media platforms. They have hired people who call themselves researchers, but I’d suggest that’s an inappropriate term, because it implies a certain freedom of inquiry that they simply don’t have. They should call themselves scientific marketers. And, of course, because of strong intellectual property laws, there is very little access by outside algorithmic auditors or researchers into what’s really happening. Until the access improves, we won’t have what I would describe as real science going on, which is to say a bunch of studies studying similar questions in different ways and achieving similar and robust results.
That said, the preliminary studies that have been conducted on the effect of social media on young girls are pretty damning, as we’ve learned. I’m sure they would have done more studies if they hadn’t been so compelling, just to clear their names. They are sitting on their hands because the evidence looks bad and because they can.
Section 230 Faces a Legitimate Challenge
I don’t usually spend a lot of time perusing lawsuits, but there is one that tech and media players should be watching carefully that had significant developments recently. It’s related to, allegedly, disreputable media men and Section 230 of the Communications Decency Act. At its core, the suit is about online accountability and could have bigger implications for a raft of companies.
The suit revolves around the infamous “Shitty Media Men” list from 2017. For my readers who didn’t read every word of it, as I did, the spreadsheet appeared right when the #MeToo movement was cresting and attempted to name and shame a plethora of men who were purportedly accused of sexual harassment and other bad behavior. Created by Moira Donegan, a former New Republic editor, the list was initially passed around for others to add to, before going viral.
It was immediately divisive. Some viewed it as something of an online background check, empowering women to warn others about the industry’s worst offenders. Others thought it was nothing more than an online mob whose damaging accusations could be made against men without due process and leave them with irreparable damage to their reputations.
Naturally, a libel lawsuit was mounted by one of the accused, Stephen Elliott, who denied the list’s allegations that he was guilty of sexual harassment and worse, calling them “unsubstantiated.” Donegan hired the high-profile lawyer Roberta Kaplan, who quickly seized on a Section 230 defense. Under that federal provision, digital platforms and other media entities are generally understood to have broad protections from liability for certain online content.
That’s a plausible enough tack — but not to U.S. District Court Judge LaShann DeArcy Hall, who overruled an attempt to get a summary judgment in the case, clearing the way for Elliott’s suit to move forward. The judge was unswayed by Donegan’s defense that she did not “solicit or encourage anyone to add false statements or false misconduct allegations” to the list, pointing out that she had basically been too sloppy when recollecting how she maintained it.
DeArcy Hall wrote: “Defendant’s inability to recall the contents of her communications leaves open the possibility that Defendant did specifically encourage the posting of unlawful content.”
The suit could become an example of a powerful way to claw back some of the power of Section 230, a target on both sides of the aisle, by noting that it does not protect unfettered speech in every instance and that there is a responsibility not to encourage possible falsehoods. This is one to keep an eye on.
