Elon Musk’s Big Gamble


It became apparent that Musk had closed the deal to acquire Twitter after tweeting a video of himself walking into Twitter’s headquarters, carrying a physical sink in his arms.[1] He captioned the video “let that sink in,” which was likely a message to anyone who doubted Musk’s capacity to take charge of Twitter.[2]

Because of his disagreement with Twitter executives over the company’s direction, one of his first moves was firing CEO Parag Agrawal, CFO Ned Degal, legal chief Vijaya Gadde, and general counsel Sean Adgett.[3] He fired all of them “for cause” in an attempt to avoid paying the severance payouts and unvested stock awards which could amount to as much as $122 million dollars.[4] Though Musk’s actions seem harsh, they were probably an attempt to curb spending, given the fact that Twitter is currently losing $4 million dollars a day.[5]

Musk bought Twitter because he believes that future civilization should “have a common digital town square, where a wide range of beliefs can be debated in a healthy manner, without resorting to violence.”[6] Although Musk has previously espoused the belief that Twitter should allow all speech that is protected by the First Amendment,[7] Musk has since made clear that Twitter will continue to moderate content that is shared on the platform.[8] A continuing practice of content moderation  is very important from a revenue generating standpoint because some companies have refrained from advertising on the platform out of fear that Twitter under Musk’s control would not adequately moderate users’ tweets. [9] For example, companies like the Volkswagen Group, REI, and United Airlines have paused advertising since Musk has taken over.[10] Without proper content moderation, companies are concerned that their advertisements may appear next to tweets that promote hate and violence.[11]

Although Musk has promised that Twitter will continue to moderate content, Twitter’s recent mass layoffs could possibly have undermined the ability for Twitter to effectively do so.[12] It will be imperative for Musk to foster an environment where the public believes that the content on the platform is free from misinformation, hate speech, and violence.[13] If not, advertisers may continue to stay away from Twitter, thus negatively affecting advertising revenue.[14]

One of Musk’s first plans to increase revenue is to implement a subscription service called Twitter Blue, which gives paying subscribers a blue check mark on their profiles.[15] Whereas in the past the blue checkmark was only given to celebrities, companies, and politicians, Twitter Blue allows anyone to have a blue checkmark if they are willing to pay a monthly subscription fee of $7.99.[16]

Despite the plan, Twitter announced that Twitter Blue’s release would be delayed until after the midterm elections.[17] Users and employees expressed concern that individuals could make accounts impersonating elected officials and post misleading or false information.[18] Because it may not be immediately apparent to everyone that the blue checkmark is no longer a symbol of status,  it will likely be easier for bad actors to impersonate famous individuals and elected officials.[19] To illustrate, in the past a user could name themselves @ElonMusk, but only the real @ElonMusk—as verified by Twitter—would  have a blue checkmark next to their handle. With Twitter Blue, however, we may now see numerous @ElonMusks, all with blue checkmarks. This would necessarily complicate the ability for users to know which @ElonMusk is the real one. Musk’s plan to combat this problem is to ban users that impersonate someone without clearly identifying themselves as a parody account.[20]  Twitter Blue’s release date was postponed until after the midterm elections likely because Twitter did not feel confident in its ability to effectively enforce the ban.[21]

As Musk continues to overhaul the whole company, it will be interesting to see whether his $44 billion purchase was a good investment or a passion project gone wrong.

[1] See Elon Musk (@ElonMusk), Twitter (Oct. 26, 2022, 2:45 PM), https://twitter.com/elonmusk/status/1585341984679469056?s=20&t=MRp7ClU0W1vO_w6rz5nbQQ.

[2] See id.

[3] See Ryan Hogg, Elon Musk fired Twitter execs including CEO Parag Agrawal ‘for Cause’ in a bid to avoid paying out tens of millions in severance, report says, Bus. Insider (Oct. 30, 2022, 6:50 AM), https://www.businessinsider.com/elon-musk-fired-twitter-execs-for-cause-avoid-severance-report-2022-10.

[4] See id.

[5] See Tom Huddleston Jr, Elon Musk says Twitter is losing $4 million a day: How many $8 subscribers would it need to break even?, CNBC (Nov. 11, 2022), https://www.cnbc.com/2022/11/11/how-many-twitter-blue-subscribers-elon-musk-needs-to-make-up-losses.html#:~:text=A%20pedestrian%20outside%20Twitter%20headquarters,%2C%20Oct.%206%2C%202022.&text=Elon%20Musk%20says%20Twitter%20is%20losing%20%244%20million%20each%20day,media%20platform%20turn%20a%20profit.

[6] See id.

[7] See Jeffrey Rosen, Elon Musk Is Right That Twitter Should Follow the First Amendment, Atlantic (May 2, 2022), https://www.theatlantic.com/ideas/archive/2022/05/elon-musk-twitter-free-speech-first-amendment/629721/.

[8] See Elon Musk (@ElonMusk), Twitter (Oct. 28, 2022, 2:18 PM), https://twitter.com/elonmusk/status/1586059953311137792?s=20&t=MRp7ClU0W1vO_w6rz5nbQQ.

[9] See Tiffany Hsu, Twitter’s Advertisers Pull Back as Layoffs Sweep Through Company, N.Y. Times (Nov. 4, 2022), https://www.nytimes.com/2022/11/04/technology/twitter-advertisers.html.

[10] Id.

[11] See id.

[12] See Barbara Ortutay & Matt O’Brien, Twitter layoffs slash content moderation staff as new CEO Musk looks to outsource, USA Today (Nov. 15, 2022, 9:19 PM), https://www.usatoday.com/story/tech/2022/11/15/elon-musk-cuts-twitter-content-moderation-staff/10706732002/ (explaining that the layoffs included a number of contracted content moderators that were previously responsible for “track[ing]hate speech and enforc[ing]rules against harmful conduct”).

[13] See Hsu, supra note 9.

[14] See id.

[15] See David Yaffe-Ballany, Twitter Begins Offering $7.99-a-Month Verification Subscriptions, N.Y. Times (Nov. 5, 2022), https://www.nytimes.com/2022/11/05/business/twitter-verification-check-marks.html.

[16] Id.

[17] See Yaffe-Ballany, supra note 16.

[18] See id.

[19] See id.

[20] See Elon Musk (@ElonMusk), Twitter (Nov. 6, 2022, 5:53 PM), https://twitter.com/elonmusk/status/1589390597798125568?s=20&t=d1eH-rGeuY3tBKILQ0X8mw.

[21] See id.


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Fordham Journal of Corporate & Financial Law