Elon Musk takes Twitter, and tech deals, to another level

The Tesla chief's $44 billion takeover of the platform is different. It is an individual buying something for himself that 240 million people around the world use regularly



Reuters
Reuters

By David Streitfeld

Published: Fri 28 Oct 2022, 11:40 PM

Forget about the endless drama, the bots, the abrupt reversals, the spectacle, the alleged risk to the republic and all we hold dear. Here is the most important thing about Elon Musk’s buying Twitter: The moguls have been unleashed.

In the old days, when a tech tycoon wanted to buy something big, he needed a company to do it. Steve Case used AOL to buy Time Warner. Jeff Bezos bought Whole Foods for Amazon. Mark Zuckerberg used Facebook to buy Instagram and WhatsApp and Oculus and on and on. These were corporate deals done for the bottom line, even if they might never have happened without a famous and forceful proprietor.

Musk’s $44 billion takeover of Twitter, which finally became a reality on Friday, six months after he agreed to the deal, is different. It is an individual buying something for himself that 240 million people around the world use regularly. While he has other investors, Musk will have absolute control over the fate of the short-message social media platform.

It’s a difficult deal to evaluate even in an industry built on deals, because this one is so unusual. It came about whimsically, impulsively. But, even by the standards of Silicon Valley, where billions are casually offered for fledging operations — and even by the wallet of Musk, on most days the richest man in the world — $44 billion is quite a chunk of change.

Buying Twitter is also an overwhelmingly brash action — a belief that a communications platform that has defied all efforts to become seriously profitable, and that has been ensnared in controversy about the limits of speech almost since its founding in 2006, can be easily fixed by one person.

If you have billions of dollars these days, however, belief in yourself is never in short supply.

Musk’s fortune comes from the electric carmaker Tesla, which he turned into the leading vehicle for changing how Americans drive, an uphill task if there ever was one. Musk and Bezos are separately vying to re-create the space programme, which in the 1960s was deemed too important and too expensive to be run by anything except the federal government.

Zuckerberg has changed Facebook’s name to Meta and reoriented the company to create a virtual world where people will henceforth “live.” Peter Thiel, who co-founded the payments firm PayPal and was an early investor in Facebook, has become the midterm elections’ most prominent campaign contributor, pumping tens of millions of dollars into right-wing congressional candidates. Two of his former employees are the Republican nominees for senator in Ohio and Arizona.

Richard Walker, a professor emeritus of economic geography at the University of California, Berkeley and a historian of Silicon Valley, sees a shift in the locus of power.

“In this new Gilded Age, we’re being battered by billionaires rather than the corporations that were the face of the 20th century,” he said. “And the tech titans are leading the way.”

Even people who have been watching the tech scene closely for decades are stumped for precedents for Musk’s buying Twitter.

“Most of the guys built great companies, retired and created giant foundations to give away their money,” said Michael S. Malone, who has written histories of Apple, Intel and other companies. “Nobody has done something like this.” He counts himself a fan of Musk’s loosening of Twitter’s rules, though: “Making the place wide open will make it even crazier and more fun.”

Musk, who disbanded Tesla’s public relations department, didn’t respond to a message for comment.

Rich people have long wanted to own media properties, a tradition the tech titans have continued. Bezos bought The Washington Post for $250 million. Marc Benioff of Salesforce owns Time magazine. Pierre Omidyar of eBay developed a homegrown media empire.

Deals have been a feature of Silicon Valley as long as there has been a Silicon Valley. Often they fail, especially when the acquisition was made for technology that either quickly grew outdated or never really worked at all. At least one venerable company, Hewlett-Packard, followed that strategy and has practically faded away.

Dealogic, a data firm, compiled for The New York Times a list of the top 10 tech biggest deals since 1995 by deal value. By that measure, Musk’s purchase of Twitter is No. 10. Microsoft’s $70 billion-plus acquisition of Activision Blizzard, which is pending, has garnered a fraction of the attention despite being No. 2.

Activision Blizzard is merely a video game company. Musk has maintained from the beginning that buying Twitter isn’t a trophy or a game or a scheme to increase his net worth. Instead, he has cast it in the grandest terms possible.

“Having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization,” the entrepreneur said in April after sealing the deal. “I don’t care about the economics at all.”

He cared a little more when the subsequent plunge in the stock market meant that he was overpaying by a significant amount. Analysts estimated that Twitter was worth not $44 billion but $30 billion, or maybe even less. For a few months, Musk tried to get out of the deal.

This had the paradoxical effect of bringing the transaction down to earth for spectators. Who among us has not failed to do due diligence on a new venture — a job, a house, even a relationship — and then realised that it was going to cost so much more than we had thought? Musk’s buying Twitter, and then his refusal to buy Twitter, and then his being forced to buy Twitter after all — and everything playing out on Twitter — was weirdly relatable.

Inescapable, too. The apex, or perhaps the nadir, came this month when Musk introduced a perfume called Burnt Hair, described on its website as “the Essence of Repugnant Desire.”

“Please buy my perfume, so I can buy Twitter,” Musk tweeted on October 12, garnering nearly 600,000 likes. This worked, apparently; the perfume is now marked “sold out” on its site. Did 30,000 people really pay $100 each for a bottle? Will this perfume actually be produced and sold? (It’s not supposed to be released until next year.) It’s hard to tell where the joke stops, which is perhaps the point.

Walker, the author of “Pictures of a Gone City: Tech and the Dark Side of Prosperity in the San Francisco Bay Area,” fears for the future.

“There’s no counterbalance to the new business moguls,” he said. “Unions, fraternal organisations and local media have been greatly weakened. The general public is cut off from these positive influences and awash in misinformation.”

If Musk’s buying Twitter signifies the beginning of something, it also, in another way, represents an ending. The other social media platforms are closely held by their founders through their companies’ share structures. No one could buy Facebook away from Zuckerberg without his agreement, or Snap from its chief co-founder, Evan Spiegel.

“What was unique about Twitter was that no one actually controlled it,” said Richard Greenfield, a media analyst at LightShed Partners. “And now one person will own it in its entirety.”

He is relatively hopeful, however, that Musk will improve the site, somehow. That, in turn, will have its own consequences.

“If it turns into a massive home run,” Greenfield said, “you’ll see other billionaires try to do the same thing.”

— This article originally appeared in The New York Times


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