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Social Media Twitter Free Speech

Elon Musk’s decision to forgo a seat on Twitter’s board, explained

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By Kendra Barnett, Associate Editor

April 11, 2022 | 5 min read

Twitter’s chief executive officer Parag Agrawal announced late Sunday that billionaire entrepreneur Elon Musk will not join its board of directors, despite initially accepting the offer last week. Here’s what you need to know.

Conference room with glass walls

Though he initially accepted, Elon Musk has now turned down an offer to join Twitter's board of directors / Adobe Stock

What happened

● Last Monday, April 4, regulatory filings revealed that Musk has become Twitter’s largest shareholder, holding a 9.2% stake. Upon learning this news, Twitter offered the Tesla chief executive a seat on its board. In a memo to Twitter employees, Agrawal said that the board weighed the risks of bringing Musk onboard but ultimately believed that “having Elon as a fiduciary of the company, where he, like all board members, has to act in the best interests of the company and all our shareholders, was the best path forward.”

● The social media platform offered the seat to Musk last Tuesday on the condition that he not amass more than 14.9% of the company’s outstanding stock. He initially accepted the offer. However, according to an announcement made by Agarwal Sunday night, Musk backed out Saturday — the same day his appointment was to be made official. Agrawal did not expand on why the business titan had changed his mind.

● The announcement came after Musk shot out a flurry of Tweets over the weekend criticizing the platform’s policies and suggesting a variety of changes, including a proposal that the app eliminate ads. However, by this morning, many of the tweets appear to have been deleted.

● When the stock exchange opened this morning in New York, Twitter shares had fallen 3.1%.

Why it matters

● Musk is among Twitter’s most prolific and popular users; he has amassed some 80.5m followers and has gained cultish clout, leaning into meme culture and sharing eccentric and often controversial opinions on the platform.

● Musk has long been outspokenly critical of Twitter. He’s called for a removal of ads and has derided the platform’s content moderation policies, calling himself a “free speech absolutist.”

● By remaining an investor rather than a board member, Musk’s investments will no longer be capped at 14.9% ownership. Some experts have conjectured that by teaming up with other powerful investors, Musk could twist the company’s arm into making the changes he would like to see.

Some have aired concerns that, were Musk’s hopes for Twitter to loosen its content regulation practices to come to fruition, brands would be far more wary about advertising on the platform. And while such an outcome might align with Musk’s vision for an ad-free Twitter, a major drop in ad spend could issue a serious blow to the company’s bottom line. It’s estimated that, as it stands, advertising accounts for nearly 90% of the social network’s revenue.

● Per a new regulatory filing, the billionaire has no “present plans or intentions” to acquire more shares in Twitter, but he “reserves the right to change his plans at any time.”

● It’s worth noting that Musk is involved in an ongoing dispute with the US Securities and Trade Exchange Commission (SEC) regarding his behavior on Twitter. Following a now-notorious 2018 tweet about having the funding to price Tesla shares at $420 each, he and the company agreed to pay $40m in fines to the SEC and have a corporate lawyer oversee the executive’s tweets from that point forward. However, Musk’s lawyer argues that the SEC is overstepping its bounds on free speech rights.

● “Elon Musk doesn't do anything in halves,” says Dini von Mueffling, who runs an independent PR firm in New York. “By not accepting a board seat he… is showing the world that he wants Twitter to play by his rules — not the rules they once imposed on him.”

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