- [Announcer] On April 25th,
Twitter accepted a $44 billion bid from Elon Musk
to take over the company.
Should the deal go through,
It would mark one of the biggest tech takeovers in history.
Musk shared his reasons
for making the offer at a Ted conference in April.
- Well, I think it's very important
for there to be an inclusive arena for or free speech.
Twitter has become kind of the defacto town square.
- [Announcer] Leading up to the bid,
Musk outlined a number of sweeping changes
he plans to make to the platform,
including removing its reliance on ads,
adding an edit button,
and changing the content moderation policy.
So what are the challenges Musk faces
in making his proposed changes?
And could his decision to buy the company
make it harder to enact these plans?
Musk bid for Twitter started in mid April,
when he made an initial offer of 43 billion.
- He hasn't liked a lot of facets about Twitter.
He hasn't liked the things;
they do moderate content.
I think he has some different views
on where those bars should be.
- [Announcer] The deal means
that Musk would buy out shareholders for $54.20 a share,
amounting to a $44 billion valuation.
But Musk won't pay that amount out of pocket.
- Keep in mind that the way Musk is paying for Twitter
is he's taking out a lot of loans.
Some of those are backed by his Tesla stock,
others are coming from other institutions,
and loans have to be paid back.
- [Announcer] Musk disclosed
that he had secured 46.5 billion in funding
before the deal closed.
According to a regulatory filing,
25 billion will come from debt,
to financial institutions like Barclays,
Bank of America and Morgan Stanley.
Musk will pay about 20 billion in equity,
likely by selling Tesla stock
or whittling down his in other companies.
The deal still must go through shareholders
and legal processes.
But if it is approved,
Twitter will become a privately held company
which will remove roadblocks from Musk
to make changes to the site.
- If the deal gets totally cleared and he owns Twitter,
he pretty much does what he wants.
Ultimately, he's accountable to himself,
but he is going to be accountable in a financial sense
to the institutions
and people who have supported him backed this.
- [Announcer] Musk plans to use the private status
of the company to make a number of changes to the site.
Technical changes that Musk has tweeted about
are things like adding an edit button,
making tweets longer,
and stopping spam bots.
But he also has broader to changes he wants to make
that could change how the platform operates.
These would at least include reducing Twitter's reliance
on ad revenue,
making the platform's algorithm open source
and softening the company's strict content moderation policy
which Musk has criticized in the past.
In a Ted conference interview,
after he initially put in the bid,
he said he wanted Twitter to be an arena for free speech.
- I do think that we wanna be just very reluctant
to delete things;
Just be very cautious with permanent bans
and a good sign as to whether there is free speech
is someone you don't like,
allowed to say something you don't like.
- [Announcer] But how many of these changes
could Musk actually make?
Some are more feasible than others,
but all are likely to come with challenges.
Adding an edit button might sound easy to do,
but does present technical issues.
- If somebody tweets out something
and two minutes later they decide,
oh, maybe I sort of said that differently or not said that
and try to change it,
if somebody saw that in that interim
and like captured it that original tweet can still live.
And so it's kind of hard to get around that part of Twitter.
And so I think technically speaking,
a lot of the things that he said he wants to do
that sound kind of simple,
I think a probably prove to be not quite so much.
- [Announcer] Musk may hit the most roadblocks
in maintaining the company's profitability.
Ads make up roughly 90% of Twitter's revenue
and removing them
could leave the company scrambling for money.
Fast, broad changes to the content moderation policy,
off the bat,
could also scare away advertisers.
- I think the important qualification to consider is
that the content moderation policies
that are supposed to keep Twitter,
a safer and friendly place,
a big plus to those is that
it's what makes it unattractive platform for advertisers.
Advertisers don't want to use platforms
where all kinds of harmful stuff
for those kinds of things go on.
- [Announcer] And while Musk is free
to make changes to Twitter without much oversight,
he'll still be accountable for the loans he borrowed
to make the bid,
making it difficult
to eliminate the company's reliance on ads.
- He needs the cashflow from Twitter
and he'll probably need more of it.
He'll need to come up with other ways
Twitter can make money,
but I don't think he can really afford right now
to do away with advertising.
He needs to pay for this deal.
So I think that's gonna kind of limit how many changes
he could make
or how drastic he could make them.
- [Announcer] Neither Musk or Twitter immediately responded
to requests for comment on the potential changes.
The deal won't be fully confirmed until later this year.
And users likely won't see any major changes
to Twitter until then.
(gentle music)