Elon Musk buys Twitter… well, sort of

Disclaimer We'd like to advise that the following program may contain real news, occasional philosophy and ideas that may offend some listeners.

Kai We have all these stories prepared.

Sandra Yeah. One was about mass-market tacos and about boring technology, and new ASIC rules, and unionising, and all this stuff. But then...

Kai Elon Musk happened.

Sandra Yeah. Elon Musk bought Twitter so...

Kai Well part of it, but a large part of it.

Sandra It's a Musk.

Kai It's a Musk. Yes.

Sandra We have to do that.

Kai Let's do that.

Intro From The University of Sydney Business School, this is Sydney Business Insights, an initiative that explores the future of business. And you're listening to The Future, This Week, where Sandra Peter and Kai Riemer sit down every week to rethink trends in technology and business.

Sandra There's been a long line of Musks on our podcast, the 'we're all living in a computer simulation" Musk. We've had...

Kai $600 flame throwers, remember those? The Boring Company.

Sandra Yes, The Boring Company. We've had Elon Musk creating humanoid robot friends. We've had the couch, the crowdfunded couch, that the internet fundraised for his office because he was sleeping in his office, remember?

Kai Because he was working so hard. Why did he sleep at all? That was the question at the time. He was frustrated with the share market, wanted to take Tesla private, remember that infamous $420 tweet that got him into trouble with the SEC?

Sandra And now it's another Musk.

Kai Elon Musk bought 9.2% of Twitter shares. And everyone's asking, why?

Sandra Hang on, we will get to why and we will talk about this story. But there's a few things we do need to mention that have happened in the last week, like Amazon finally unionising. We've talked about that story a few times.

Kai Well, that is workers at Amazon, I don't think the company was very much in favour of it. Having gone to great lengths to so far stifle any efforts, including, remember, apparently creating fake Twitter profiles of people.

Sandra The staff was never proven that it was Amazon behind it. But there were fake profiles created to try to dissuade Amazon workers from unionising. But the first Amazon union coming out of a warehouse in Staten Island in New York. It was pretty much a historical vote in terms of Amazon. And it was run by Chris Smalls who used to work at Amazon and got fired at the very beginning of the pandemic after trying to unionise workers back then. But this has been the first successful union at Amazon, but it's looking like more than 50 other warehouses are looking at creating unions of their own. So something to keep an eye on.

Kai And remember, even though there's people out there saying that, you know, why would they unionise, Amazon is at the forefront of paying above minimum wage. Unionisation is about more than just pay, and the working conditions in those warehouses, working hours, trivial things like toilet breaks, all of this is part of that discussion.

Sandra There's also been quite a few stories this week talking about the continued reverberations of the conflict in Ukraine on, not just energy markets, but food prices, commodity prices, causing wider and wider problems. And we're likely just seeing the beginnings of this.

Kai And cost of living is just part of the bigger phenomenon of inflation, which has implications for economies, for interest rates, for mortgages. So there is real ripple effects that we can see. And in some sense, worrying for the world economy, but also an interesting lesson to see live how the economy is actually interconnected, and how a conflict that on a global scale might be small in Ukraine, has implications that over time will affect you know, likely all parts of the world.

Sandra And all parts of the world in very different ways, right, we're seeing surging prices for food in places like Sri Lanka and Egypt already. And whilst increasing food prices in a place like Europe, where food spending does not account for that much of our budget, might not be such a big pain and might be able to be absorbed, at least in the short term, you have emerging economies, you have Sub-Saharan Africa where food makes up almost 40 to 50% of people's spending. So an increase in food prices in those places will have a very substantial and very real effect over the next couple of years.

Kai And there's other product categories. We discussed neon at length in our previous episode that impacts or aggravates the already existing chip crisis, and chips go into many of the products that we all use.

Sandra And we're already seeing in Europe turbine makers and glass factories and plants slowing down or having to stop production altogether. We've seen the ripple effect in logistics and supply chains, some of that coming from the conflict in Ukraine, some of it stemming from still effects from the pandemic or renewed lockdowns in Asia. And we've talked about surging energy prices and the effects of Russian oil, gas, and coal sanctions on the rest of Europe. And there's also a large number of European companies that had Russia or Ukraine as an export market that are also being impacted. Everything from, you know, people who make shoes to people who make industrial equipment.

Kai Probably something that we'll come back to, we're already seeing headlines that the 'economy is weird', because there's lots of things going on, that are flow-on effects of these crises, something to look at.

Sandra Yep, and I think we shall have a macro look very soon on The Future, This Week. But one more thing we need to mention that's happened in the last week, which is in Australia, ASIC having a stab at finfluencers. We've covered finfluencers before on The Future, This Week, we'll put the link in the shownotes.

Kai And finfluencers are influencers that spruik financial products or give financial advice, investment advice, or explain things around personal finance on platforms such as YouTube, or TikTok.

Sandra And we've mentioned that a large number of young people actually do get their financial advice from places like TikTok.

Kai And ASIC, the Australian Securities and Investment Commission is now regulating and cracking down on finfluencers who give financial advice to protect consumers.

Sandra And these are serious penalties, people could end up in jail or face up to a $1 million fine if they don't essentially shut down their accounts.

Kai And it's up to five years in jail, which is a substantial penalty for giving advice. And that includes advice around shares, investment funds and other financial products.

Sandra And this was a really unregulated space, we talked about that they were basically unlicensed financial advisors, they did not have to comply with any of the rules and regulations in the space. And now ASIC...

Kai ASIC, yeah.

Sandra Is saying they cannot rely on disclaimers on posts or on any exemptions that normally apply to, for instance, media commentators that talk about stuff.

Kai And why would it? Just because you're using a different channel to give that kind of advice, and monetizing it, right? So you're doing it because you create a large followership and you could have any number of conflicts of interests that, you know, a proper financial adviser would have to either disclose or wouldn't even be allowed to go near certain things.

Kai But there is one loophole or stark omission, really.

Sandra But.

Sandra Well it's kind of stark in one way, right, the ASIC rules do not cover crypto. Yes, it's a loophole. And even though we've seen many finfluencer talk about crypto, and we've previously talked about pump and dump schemes on social media. Crypto is not part of the ruling, because crypto assets of any sort are not financial products, so ASIC cannot regulate them. So if you do follow advice on the internet, about crypto, you know, you're on your own.

Kai Which is an interesting way of saying that we're not regulating it in the digital space either, but arguably, this is a large chunk of not only what finfluencers do, but also where people potentially lose a lot of money. Which ironically, now bans those finfluencers who might give advice around legitimate, less risky financial products than those who may, you know, spruik Dogecoin.

Sandra But what is Dogecoin?

Kai It's another Musk, that's what it is.

Sandra Yeah, pretty much. Dogecoin is a cryptocurrency that was created as a joke back in 2013, but really gained enormous value after the finfluencer Elon Musk started talking about it, the coin of the people.

Kai And that then created this meme and this skit on Saturday Night Live, which actually featured Elon Musk in the role of a financial expert and when repeatedly pressed, 'but what is Dogecoin?', he basically agreed that it was a hustle. Upon which, Dogecoin plummeted.

Sandra But remember, Tesla announced back in January that it would accept Dogecoin as payment for some of its stuff, and then the cryptocurrency had gone up. Elon Musk said that he was working actually with the founders of Dogecoin to make it more efficient and have it as a real payment method. So there was this whole Musk where Dogecoin actually went up, and it went up again, I think about 10% the other day, after Elon Musk bought the 9.2% share in Twitter, which is what we do need to talk about today.

Kai Because not only Dogecoin went up, Twitter went up more than 30%.

Sandra I think this is where you disclose that you do have Twitter shares.

Kai Not many, a few, which you know thanks to Musk I recovered my losses.

Sandra But it is the story that many people have been asking us to talk about. So we will talk about it. And probably a good place to start is the Wall Street Journal article from yesterday that talks about Elon Musk to join Twitter's Board of Directors after becoming its largest shareholder, the CEO of Tesla acquired all up a 9.2% stake in Twitter.

Kai But the timeline here is interesting. So he's been buying these shares bit by bit since January, but only on Tuesday disclosed that he had bought this stake, upon which the shares went up like a rocket.

Sandra Yep. 27% after it was disclosed that Elon Musk has this stake in Twitter, and then they continued to go up.

Sandra Well, he is on the board.

Kai Because people started wondering, why would he buy this? Is he a passive investor as his original filing with the SEC said? Or is he going to push for being on the board?

Kai While commentators were still writing stories about whether he would or would not join the board, he was already on the board, and updated his SEC filing to be now an active investor, having gained one of 12 seats on the Twitter board.

Sandra Let's just say this outright here that the intentions that Elon Musk has for Twitter, for his shares, for his position on the board, or anything that has to do with the future, are still really, really murky. We don't know why he's done this. We know that he's one of Twitter's most intensive high-profile users, especially after Trump got kicked off the platform. But he's also one of Twitter's most vocal critics. We also know that the company was considered to be undervalued. So it's a good financial investment and considering his stake has gone up 30%.

Kai He made a billion dollars on it; I've recovered a couple 100. But you know, potato, potahto.

Sandra So it's only speculation as to what he will do with his share.

Kai But speculate, we will.

Sandra And speculate we will. But this is not the conversation about Elon Musk the man, but rather a conversation about a social media platform that is a de facto space for our public discourse. We've got elections coming up in Australia, we've got misinformation/disinformation campaigns. We've got a place where, you know, a large proportion of the public gets their news from. So what happens, what the future of this organisation is, and what happens to that public space is a matter of interest,

Kai And also matters of how much power single individuals in this day and age can wield over platforms, but also financial markets.

Sandra And that's an interesting phenomenon that we've touched a little bit on before, the fact that these days there are individuals that have a power on markets that used to be reserved to institutions, the power to move a currency by 10, 20, 30%, to move a stock price literally overnight by 27%. One individual, Elon Musk.

Kai Analysts don't wield that kind of power. Even central banks don't move markets by such large percentages. But single individuals such as Elon Musk can do this overnight to what is arguably not a small company like Twitter.

Sandra And this becomes an interesting conversation to have when these individuals are involved with platforms such as Twitter, or Facebook, or platforms that have become de facto public spaces that have become infrastructure for the way we, you know, conduct our democracies.

Kai We have discussed on numerous occasions, the power that Mark Zuckerberg wields over making decisions around content moderation, or who to kick off the Facebook platform.

Sandra And it's the first time that we're seeing single individuals actually having this power. And I recall when we spoke about Cloudflare.

Kai Which is an infrastructure company that underpins many of the websites that we all use.

Sandra Yeah, it basically sits between kind of our browser and the servers where we need to get our information from, and it's responsible, I think it was about 10% of the content that gets distributed around the internet, making sure that we can access those websites and that we get access to them at speed.

Kai And their CEO one day decided to just kick a whole group of people, right-wing neo-Nazis, off the internet.

Sandra And the reasons are varied, its popularity, as in the case of Elon Musk, and money, also Elon Musk, but also the way in which founder shares of some of these companies are structured and give them outright influence, such as in the case of Mark Zuckerberg.

Sandra Yep. The CEO, Matthew Prince had sent an internal email where he said, you know, "The people behind The Daily Stormer are assholes, and I'd had enough". But he continued to say that "Let me be clear: this was an arbitrary decision. I woke up this morning in a bad mood and decided to kick them off the internet. It was a decision I could make because I'm a CEO of major infrastructure company". And whilst we might agree with his decision this time around, it really highlighted the fact that certain individuals in certain key positions, and increasingly Elon Musk is positioning for that in the context of Twitter, can make arbitrary decisions that influence public infrastructure.

Sandra To be fair, it remains to be seen to what extent Elon Musk will have an influence over the board. However, he has tweeted since that he's looking forward to working with the CEO of Twitter and the Twitter board to make significant improvements to Twitter in the coming months.

Kai Commentators do not agree that his ideas will necessarily lead to improvements. An article in Bloomberg put it very nicely, gave the following algorithms: First, Musk thinks of a way to make Twitter more annoying, such as you know, the edit button, or free speech, or Dogecoin integration. Second, Musk conducts Twitter poll asking if Twitter should do the thing. Three, yes, be more annoying wins in a landslide. How could it not? Four, Musk shows up at the board meeting to be like, 'see our users want this annoying thing'. Five, also, he owns the most shares. Six, the board does the annoying thing. Seven, emboldened, Musk returns to step one. And so that really sums up the concern here that Musk might actually want to shape Twitter in his image, which raises the question of what influence should power users have over the platforms that all of us are using?

Sandra And you might ask, so what's the problem with someone who uses Twitter a lot trying to make Twitter better, right? And Elon Musk is someone who uses Twitter a lot. He's got about 80 million followers. That's almost the population of Germany, right?

Kai Yeah.

Sandra And he uses it quite masterfully, right. Many other companies, like, have to spend millions and millions of dollars to make announcements around, and have advertising campaigns around, new products and new services that they offer. Elon Musk often launches them in the comments thread of a tweet.

Kai He influences governments to you know, let him build rocket launching facilities. And he makes product announcements for Tesla, where others have to spend millions of dollars in marketing budget, Tesla famously spends very little because they have Elon Musk's Twitter account, for better or worse.

Sandra But let's remember the way someone like Elon Musk uses Twitter is often quite different to the way most people use Twitter. And Elon Musk has been a very staunch free speech proponent, basically saying there are no limits, everyone should be allowed to say whatever they want. This is in the context where quite recently, there have been sanctions put on companies that promote misinformation, disinformation, around the conflict in Ukraine, around the COVID pandemic. Famously, Donald Trump was kicked off Twitter. But Elon Musk comes with a very different stance.

Kai Yeah, so his beliefs and also his use are not representative of how most people would use it. In terms of free speech, he's a what he himself calls a 'free speech absolutist', which means he's against any form of censorship, or really, content moderation.

Sandra But he does understand free speech, not as the free and fair exchange of ideas, but rather as everyone should be allowed to say whatever they want.

Kai And that's really the point, if we understand speech holistically, it's about creating a space where this free and fair exchange of ideas can happen. And it doesn't always happen when anyone is allowed to blurt out anything they want. Spaces that are conducive to the free and fair exchange of ideas need to be free from bullying, from spam, from the kind of noise and the kind of, you know, hate speech that might prevent people from uttering their opinions, of wanting to be putting their opinions out there for fear of being shot down verbally, for example. So content moderation is not the enemy of free speech, you could argue that it's actually the basis for creating spaces that can have free speech.

Sandra And let's remember, if places like Twitter, the digital equivalent of the town square, this is already very much distorted in favour of people who have a very big platform. And we've spoken about this before. The Twitter algorithm basically decides who gets to hear your message, and it favours people who already have a very big following.

Kai Ironically, it favours people like Elon Musk, where the algorithm "knows", in inverted commas, that his utterances, his opinions, will get wider engagement, which is good for the platform. And therefore, his opinions will be amplified for the algorithm which already distorts the free and fair exchange of ideas.

Sandra And we've actually done quite a bit of research in this area. And we'll put links in the shownotes.

Kai We call this phenomenon algorithmic audiencing because the audiences for tweets and posts on social media are increasingly decided by algorithms, which, again, might be a much larger interference in the free and fair exchange of ideas than content moderation could ever be.

Sandra Yeah, because it applies to all content, not just to some messages, like in the case of content moderation. But different conversation for a different day, we're back to kind of power users deciding what's good for a community. And a good example of this in the case of Elon Musk is his campaign for the edit button on Twitter so you can edit tweets.

Kai After the fact, after you've posted them you can edit them, there's some debate on how long should you be allowed to edit them? Is it a few minutes? Is it indefinitely? Is it a couple of days?

Sandra And on the face of it, if you're looking at it from a user perspective, that's a great thing. So I've posted something, I've made typos, or I've actually changed my mind, or I've looked up the right data, and now I'll just fix up my post so that it reflects what I'm thinking about now, or it's now correct.

Kai Or I got myself into trouble with the SEC, because I didn't think before I tweeted, or I didn't run it past the lawyers that I should have.

Sandra It's basically no more covfefe.

Kai Yeah. And it's also no more It's a Musk, potentially. But what sounds great from the point of view of a power user, like Elon Musk, an individual user creates all kinds of problems systemically, because tweets never exist in isolation. They get retweeted and endorsed. Now, if I endorse a tweet, which says something that I endorse, and someone goes back and edits this later and says maybe the opposite. Do I still endorse this? Do I know have to go back and re-edit?

Sandra What happens to the conversation that follows on from this?

Kai Yeah, exactly, yeah. When the original tweet now all of a sudden has changed? How do you go about fixing or editing this whole thread? Will every user, mind you...

Kai I don't know, and mind you, even if it's only a few minutes, Elon Musk's tweet gets retweeted and commented on within minutes, like 1000 times, do all these users now go back and re edit their retweets. How is this even going to work?

Sandra How far back can you go?

Sandra You sound like you should go and tweet about this.

Kai Outrage!

Sandra Outrage aside, the bigger issue here to consider is how do we think about systemic effects rather than thinking about platforms from the perspective of the single power users. And to be fair to the Musk, we actually don't know to what extent he will try to influence this, although he has criticised the platform repeatedly, so there is a good case to be made that probably this is the direction that things are going in.

Kai Also the fact that he now has a seat on the board, and he has made those proclamations around wanting to shake things up at Twitter.

Sandra But maybe the bigger question is, how will Musk, who had to sleep at his office to, you know, get all his work done with Tesla and with SpaceX, how is he going to fit this one in?

Kai He's already colonising Mars and worrying about the robots coming for us. Where does the man find the time to also, you know, fix Twitter?

Sandra And while we'd love it if he stuck to Tesla and SpaceX, and, you know, batteries,

Kai And flame throwers, maybe, you know, digging tunnels with The Boring Company. At least he is a treasure trove of entertainment, and an occasion to sometimes you know, foreground interesting issues around platforms and technology. So we give him that

Sandra That's all the Musk we had for today.

Kai That's all we have time for. Thanks for listening.

Sandra Thanks for listening.

Outro You've been listening to The Future, This Week from The University of Sydney Business School. Sandra Peter is the Director of Sydney Business Insights and Kai Riemer is Professor of Information Technology and Organisation. Connect with us on LinkedIn, Twitter, and WeChat, and follow, like, or leave us a rating wherever you get your podcasts. If you have any weird or wonderful topics for us to discuss, send them to sbi@sydney.edu.au.