Experts remain mixed on the prospects for the organizational health of Twitter (TWTR) and Tesla (TSLA) following the announcement of Elon Musk’s $44 billion acquisition of the social media platform.
The deal is expected to close between September and October, and the company will be privatized. However, director of MIT’s Digital Economy (IDE) Initiative Sinan Aral believes Musk may have bitten off more than he can chew.
“In that case, I think Elon Musk is overwhelmed this time because running Twitter isn’t as easy as colonizing Mars or electrifying the auto industry around the world,” Aral told Yahoo Finance Live. “And that’s just a bit of a joke, but seriously, he made this announcement via a censorship-free platform in the form of Twitter in the same week that the European Union passed the Digital Services Act, which carries many fines and penalties for companies that do not moderate their content.”
Aral joined Yahoo Finance Live to discuss expectations for Twitter led by Elon Musk, freedom of speech on Twitter and the prospects for the platform. The MIT Initiative on the Digital Economy is a Sloan School of Management initiative center working to explore the impact of the digital economy.
Musk ultimately has to juggle executive roles at five companies with his buyout of Twitter, including Tesla, SpaceX, The Boring Company and Neuralink. Although Musk’s plans for Twitter are still uncertain, he stated in a press release that he intends to fundamentally change user experience and culture. He expressed interest in adding new features, open-sourcing algorithms to increase trust, combat spam bot activity, and authenticate users.
In any case, Aral thinks the deal should go smoothly as long as Musk treads carefully.
“We know that Elon Musk likes to talk. He has an unbridled microphone. It’s rare that he shuts up,” he added. “I think he should stay calm during this time. I don’t see any major obstacles to this deal as long as he doesn’t do anything outrageous.”
The story goes on
Tesla and SpaceX Director Elect Elon Musk, Habla at the SATELLITE conference and exhibition in Washington, Monday, March 9, 2020. (Photo AP/Susan Walsh, Archives)
Musk against the EU
The European Union made a decision on April 23 to pass the Digital Services Act, which sets a new standard in the EU for accountability for “illegal and harmful content”. The legislation aims to better protect Internet users and their rights.
For Musk and Twitter, this means that the social media platform may not be able to do without moderation as much as previously hoped.
“This law requires social media platforms to engage in content moderation, remove hate speech, remove disinformation, misinformation and war propaganda, and they will be fined 6% of all revenue if they fail to do so,” said Aral. “And if you continue not to do it, you will be banned from Europe. He cannot create a European Twitter and a US Twitter. These are not decisions that can be talked around.”
And while a “Wild West” Twitter without any moderation is nowhere in sight, Aral believes content moderation could become less invasive under Musk’s leadership.
“And so I think there will be moderation,” he said. “I think what you’re going to see are high-level decisions that look like less moderation. For example, you might see Donald Trump reinstated on the platform. But if it is not moderated, it will encounter many commercial and legal difficulties that will make it difficult to run as a business.”
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV
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