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Hiltzik: Musk’s stake in Twitter isn’t good news for users

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Through the years, Elon Musk has used Twitter to flout securities laws, smear his critics and promote useless treatments for COVID-19.

So after all Twitter judged that Musk “would carry nice worth to our Board.”

That’s how Twitter Chief Government Parag Agrawal justified the corporate’s appointing Musk to its board of directors Tuesday.

By means of conversations with Elon in current weeks, it turned clear to us that he would carry nice worth to our Board.

— Twitter Chief Government Parag Agrawal

Agrawal additional described Musk as “each a passionate believer and intense critic of the service which is strictly what we want on Twitter, and within the boardroom, to make us stronger within the long-term.”

Talking as a faithful and long-term consumer of Twitter, I can solely reply, “that relies upon.” One may be an intense critic of an organization but have solely concepts that can make it worse, and weaker.

Agrawal’s announcement glossed over what’s in all probability the actual cause he invited Musk onto the Twitter board: A day earlier, Musk disclosed that he had gathered a 9.2% stake within the firm’s inventory. That made Musk, who already was amongst Twitter’s largest customers, with greater than 80 million followers, Twitter’s largest shareholder.

Any shareholder with that a lot heft goes to make his views recognized to administration in a method that may be unattainable to disregard, so from Agrawal’s vantage level, it was in all probability simply as nicely that Musk be on the within than on the skin trying in.

It’s correct to watch that Musk might not have been totally candid about his intentions for Twitter.

He disclosed his possession stake on the Safety and Change Fee’s schedule 13G, which is often utilized by shareholders meaning to play a passive position within the topic firm; buyers shopping for stakes to play an lively position, similar to searching for management, usually disclose on schedule 13D, which is extra detailed and requires extra immediate disclosures of modifications in shareholdings and intentions.

Musk additionally checked a field on the 13G type designating himself as a “passive investor.”

It’s potential that Musk by no means supposed to be greater than a passive investor, however Agrawal supplied him a board set unbidden.

Agrawal did disclose, nonetheless, that he had held discussions with Musk, apparently about his becoming a member of the Twitter board, for “weeks.” It’s additionally value noting that Agrawal did extract a written dedication from Musk not to increase his holdings beyond 14.9% so long as he’s on the board and for 90 days after he leaves.

It’s additionally potential that Musk is testing the SEC’s willpower to power him to adjust to its rules, a follow that has made him a thorn within the company’s facet for years.

Even when Musk posed as a passive investor in Twitter earlier than, he’s not claiming to be passive about modifications he needs to see in Twitter: Following the announcement of the board appointment, he tweeted that he’s “trying ahead to working with Parag & Twitter board to make significant improvements to Twitter in coming months!”

However his outsized following, not a lot in Musk’s historical past with Twitter means that his concepts are sure to make it stronger. As a social media platform, Twitter has some notable flaws. As a result of Twitter’s policing of its customers’ tweets has been detached and ineffectual, the platform typically resembles a web-based model of an open sewer line.

It appears to take a big move of hateful and noxious content material to get a consumer suspended or banned, particularly a distinguished consumer similar to a nationwide politician. Donald Trump exploited Twitter to broadcast lies and different offensive materials for years till he lastly bought permanently banned following the Jan. 6, 2021, rebellion for violating the service’s strictures in opposition to the “glorification of violence.”

On a extra constructive stage, the attribute that makes Twitter helpful to subscribers is that one’s Twitter feed may be curated. Customers can designate accounts they want to comply with.

That doesn’t assure that obnoxious tweets received’t present up in a single’s feed, since trusted customers typically retweet offensive tweets for the aim of commenting on or ridiculing them, and people tweets can infiltrate one’s feed in different methods. But it surely does give customers some measure of management over what they see.

Twitter has acknowledged its accountability to train its personal accountability to attempt to stamp out hate and threatening speech, abusive tweets or exhortations to violence, amongst different infractions of its rules.

Musk has focused these insurance policies prior to now, partly by implying that Twitter’s content material moderation practices infringe on free speech. Final month, after he assembled his shareholding stake however earlier than it was disclosed, he tweeted a ballot studying: “Free speech is crucial to a functioning democracy. Do you imagine Twitter rigorously adheres to this precept?” Amongst his followers who responded, 70.4% said “No.”

That implies that as a board member, Musk may press for a loosening of content material moderation requirements. Making Twitter extra malodorous won’t be good for “a functioning democracy.”

Musk has additionally advocated permitting customers to edit their tweets after posting. The “edit button” concept has all the time been controversial — co-founder and former Chief Government Jack Dorsey as soon as stated it could probably never be implemented — as a result of it’s unclear that it could be an unalloyed enchancment. Though it could permit customers to take away typos of their posted tweets, it may additionally permit them to edit tweets in misleading methods.

To position Musk’s new position at Twitter in perspective, it’s helpful to look at how he has used it prior to now. Musk has been such an assiduous tweeter that Twitter has been accepted as a proper supply of public disclosures about his corporations, together with Tesla Motors and SpaceX, of which he’s chief govt.

His tweeting, nonetheless, has introduced him into battle with the SEC, which has charged that a few of his tweets are materially deceptive to buyers. Probably the most notable case considerations a tweet on Aug. 7, 2018, wherein Musk claimed to have “funding secured” to take Tesla private at $420 a share. The inventory opened that day at $68.77 and closed at $75.91. Because it occurred, Musk had not secured funding for the transaction.

The SEC ultimately compelled Musk to surrender his chairmanship of Tesla and for Musk and the corporate to every pay a $20-million penalty. The corporate additionally agreed to require Musk to hunt its approval earlier than issuing any tweets about Tesla’s enterprise.

Musk and the SEC have since engaged in a prolonged combat over that settlement. Final month, Musk asserted in a authorized submitting that he entered into the settlement under duress due to the SEC’s implicit menace to break Tesla’s monetary well being. The SEC replied that Musk attested on the time in writing that he had settled the case “voluntarily” and that “no threats … of any sort” had been made by the company.

Musk additionally has contended that the settlement infringes on his 1st Amendment right to free speech and that the company has been engaged in a prolonged marketing campaign of harassment. The SEC says the subpoenas for Tesla and Musk information that Musk finds objectionable replicate “legit inquiries as to new probably violative conduct by Tesla and Musk.”

All that factors to the final word — and presently unanswerable — query of whether or not, if you happen to’re a Twitter consumer, you really need its insurance policies to be influenced, a lot much less dictated, by somebody like Elon Musk. The worth of his Tesla shares make him the richest man on the earth, and even when he wasn’t the richest earthling, he wasn’t referred to as somebody who was particularly welcoming to criticism.

Some wealthy, controlling executives, similar to Meta Platform’s Mark Zuckerberg, have led their corporations into thickets of problem, exactly as a result of they couldn’t be challenged. Even with 14.9% of its inventory, Musk received’t have sufficient management of Twitter to make certain of getting his method. However he positive received’t be a silent accomplice.