Why Elon Musk Acquired Twitter?

By this time most of us are aware that Elon Musk overtook the microblogging site, Twitter. In this article, we will pay heed to what Twitter is, who founded it, its popularity among its users, and its culmination. To be specific the former times of the site and its evolution as a well-received site by its users.

In this article, we will not only focus on the microblogging site’s history but also try to find an answer to the reason behind selling the company and Elon Musk’s undivided attention to acquiring the microblogging site.

Twitter And Its History-

Twitter is a social media platform for microblogging founded by Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams on March 21, 2006. The microblogging site as a social media platform wasn’t born in a day and neither was its popularity was same as it is today.

The birth of the social media platform was an outcome of a ‘brainstorming session for quite some time’ by the board members of the podcasting venture ‘Odeo.’ Jack Dorsey who was then an undergraduate student introduced the idea of an individual using an SMS service to communicate with a small group of people. When Dorsey published his first Twitter message in 2006, he explained the origin of the title, he stated, “The definition of the word ‘Twitter’ was “a short burst of inconsequential information”, and “chirps from birds.” And that’s exactly what the product was.”

It was then in its cradling stage, there were numerous changes made since then and the most crucial change was doubling up the characters of ‘tweets’ (that is the messages sent on the social media platform) to 280 characters in November 2017.

Originally, tweets were confined to 140 characters in the year 2006 and there was a limit of 140 seconds for most accounts regarding audio and video tweets.  The culmination of the microblogging site’s popularity was the 2007 South by Southwest Interactive (SXSWi) conference, wherein the usage of the platform rose from 20,000 tweets to 60,000 tweets per day. 

If Twitter was popular what made it sell itself?

Parag Agrawal was the newly appointed CEO of the company, since the founder of the microblogging site, Jack Dorsey stepped down as the chief of the company, the investors seemed to be hesitant in showing faith in the newly appointed CEO.

Surplus Twitter’s stock price took a significant downward trend in the past year and hit a low of $31.30 per share this year and the stock price has no sign of recovering or going upward trend. So, when Elon Musk, the tech-giant bid $54.20 per share which roughly counts to $44 billion, the board members and the CEO couldn’t resist and it was seen as a good exit option.

Unlike Jack Dorsey who had an emotional connection with the company the board members and Parag Agrawal didn’t share the same connection, their main agenda was to run the business swiftly and had practical reasons for letting Musk overtake the company. The social media platform was finally sold to Elon Musk for $44 billion which is much more than the market cap of the company which is about $39 billion. Musk’s stake in the microblogging site is termed a passive investment.

Figure:  Market Cap of Twitter from 2016-2022 that shows the downward trend of Twitter’s stock price.

Why Twitter and not other Social Media Platforms?

Not only Twitter most of the social media sites were sold by their founders, for example, the founder of Instagram, an American photo and video sharing social media site was sold to Facebook, Inc in 2012. But Elon Musk wasn’t interested in buying other social media platforms than the microblogging site. It appears to be his interest for a very long time which is why he bought it even though the company was facing losses.

Why did Elon Musk spend $44 billion to overtake Twitter if the platform was facing losses?

When @realDonaldTrump, the Twitter handle of the former US President Donald Trump was banned Musk vehemently opposed and disagreed with censoring Trump’s account.

Elon Musk believed in ‘Free Speech‘ and calls himself a ‘free-speech absolutist.’ According to him people should understand and be allowed to express themselves freely only when they are consistent with the law and he opposes censorship that goes beyond the law. And the government has the absolute right to pass laws if the people of that particular country want less free speech. Therefore going beyond the law is contrary to the will of the people.

Musk at a conference said that he made an offer to buy the microblogging site because it had “become kind of the de facto town square, so it is just essential that people have the reality and the perception that they can speak freely within bounds of the law.”
He added: “This is not a way to make money. My strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization. I don’t care about the economics at all.” 

Musk in a tweet Monday: “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated.” 

Musk too promised some changes that he wanted to bring to the microblogging site. Firstly he wanted to enhance the product that is Twitter with new features like making algorithms an open-source to increase the trust of users in the product. He too wants to defeat spambots and authenticate all the users for there are more fake users who troll and spread fake news and violence. Authenticating would remove all the fake users and make the social platform a safe place for sharing thoughts and ideas.  

Elon Musk and his interest in Twitter

Elon Reeve Musk FRS (born June 28, 1971) is an entrepreneur, investor, and business tycoon. He is the founder and CEO of SpaceX and Tesla. According to Bloomberg Billionaires Index and Forbes Billionaires, he is the wealthiest person in the world with a net worth of around US$252 billion as of April 2022.
Though he bought the microblogging site, for $44 billion or $54.20 per share, his interest in this social media platform was long before then, that is 2017. After buying the microblogging site an old tweet of his interest in buying the site went viral on the social platform. 

In December 2017, Elon Musk arbitrarily tweeted, “I love Twitter.”  A user of the site named Dave Smith urged Musk that he should simply buy the entire company, to which he replied “How much is it?”

https://akm-img-a-in.tosshub.com/indiatoday/images/bodyeditor/202204/Elon_musk_twitter_buy_x.jpeg?PXBognxGQZKocB3tpC32F4UPKwfbn44I

This particular tweet has over 165L likes and 30,000 retweets at the time of writing this.

Musk tried his best to own the company by buying its stocks and then threatening the board members to sell the stocks if he couldn’t own the company, which would bring the market cap of the company to $33 billion from $39 billion. Eventually, the microblogging site as a company was sold to the Tesla owner, Elon Musk.

When he tweeted about buying the microblogging company nobody thought it would ever be possible for him to buy the company but within a span of a few years, he attained what he had said, even though the company was facing losses and the stock price of the company gradually declined yet Musk paid a handsome amount in cash.

What Others Have to Say-

  • Firstly Jeff Bezos tweeted, “Interesting question. Did the Chinese government just gain a bit of leverage over the town square?” then Bezos followed it up with his answer to the question and ended up praising Musk.
    However, Bezos too added, “But we’ll see Musk is extremely good at navigating this kind of complexity.”
  •  The founder of the microblogging site, Jack Dorsey said Musk is creating a platform that is “maximally trusted and broadly inclusive.”
    His tweets read, “I love Twitter and it is the closest thing we have to global consciousness. The idea and service are all that matter to me, and I will do whatever it takes to protect both. The microblogging site as a company has always been my sole issue and my biggest regret. It has been owned by Wall Street and the ad model. Taking it back from Wall Street is the correct first step.” He further added that he trusts Musk’s mission “to extend the light of consciousness.” 
  • The spokesman of Boris Johnson, Prime Minister of the UK, told the reporters that Twitter as a social media platform should entrust its users with safeguarding them from any kind of harm on their sites.
    He also added that it would be brisk to estimate the new changes as to how the microblogging site will operate in the coming times. And that they’ll continue to work with the company as long as the social media platform makes sure that it continues to improve its services.

Conclusion-

Twitter has become a private company now and the promises that Musk made about making twitter a fun and safe environment for his users would inspire many people to make an account on the microblogging site. It has always been a vital platform for governments, celebrities, and influencers to connect with their audience and if Musk authenticates every account on the social platform there will be fewer hate comments and trolling than most of the above-stated personalities go through.

Is there any ulterior motive behind overtaking of Twitter by Musk?

Right now it would not be possible for anyone to estimate whether there is an ulterior motive of Elon Musk of overtaking the microblogging site and making it a private company. However, as time passes by, we would know if there are any other motives for Musk’s buying the microblogging site other than his will for free speech. As of now, nothing is certain about it. 

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