Would Twitter be better off if Musk managed to acquire it?

Despite the defensive strategy adopted by the board of directors of the Twitter company to block the acquisition of all shares of the company by the American billionaire Elon Musk, this does not prevent the board of directors from accepting the offer. takeover bid, which is about $43 billion, raising a broader question of whether completing the takeover would have improved Twitter’s position in management decisions and freedom of action. expression when it becomes a private company and ceases to be a public company, argues Musk?

toxic pill

The “poison pill” plan announced by the board of directors of the social networking company “Twitter” was nothing more than a plan similar to the plans adopted by public companies in similar circumstances, it is a defensive strategy aimed at hindering or discouraging any person or group, taking over the company by allowing shareholders to buy new shares if Elon Musk or someone else buys 15% or more of the shares of the company, which reduces immediately the share of Musk, who currently owns more than 9% of the shares, and the purpose behind this is to force anyone trying to get the company to negotiate directly with the board.

While companies are often hesitant to use the “poison pill” strategy because they don’t want to be seen as hostile to shareholders, they are becoming open to this tactic in certain circumstances, especially since Musk, who is currently the world’s richest man with an estimated fortune of around $270 billion, he may be aiming to cross the 15% threshold in ‘Twitter’ shares, which investors rarely cross, experts say scholarship holders.

long battle

Because this strategy won’t prevent Twitter, according to its board, from discussing the sale with any potential buyers and will give it more time to negotiate a deal that offers enough upside, it looks like Musk is preparing to a long battle when he tweeted that the acquisition decision should be made. It is left to the shareholders and not to the board of directors. Questions have arisen as to whether the platform would be better off if Musk succeeds in acquiring it and possibly transforming it from a public company to a private one. in which the decision becomes his own, which he disclosed in a letter to the board. He said Twitter could not serve as a platform for free speech as a public company and that the company was to transform into a private enterprise.

Mask and freedom of expression

However, the transformation of Twitter to become a better platform for free speech as a private company, in which opinions vary. In terms of definition, Musk himself believes that free speech is available when someone you don’t like can say something you don’t like. like, and Musk was reluctant to remove the tweets, because he’d rather not permanently ban users, instead preferring to give users a warning, and while Musk considers the blogging site to comply with state laws, he has intent to weed out fraud and armies of bots, and Musk insists that the algorithm Twitter uses to curate its content, determining what hundreds of millions of users see on the service every day should be in the hands of general users, not regulators, and for this he considers that if he can buy the site, it will allow more freedom of expression to flow on the platform, expressing his fears that Twitter is moving away from its roots as the Freedom of Expression Wing.

Musk’s concerns have been shared by many Twitter executives, who have also pushed in recent months for more transparency around Twitter’s algorithms, the company even released internal research into biases in its algorithms and funded a effort to create an open and transparent standard for social media. services.

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controversy and fear

Most jubilant about Musk’s desire to take control of Twitter are conservatives tweeting that they are free, after accusing Twitter and other social media companies of being run by liberal elites who selectively target conservatives and are working tirelessly to silence their voices, criticisms that have escalated sharply. Following the attack on the US Capitol, when social media companies suspended former US President Donald Trump’s accounts two weeks before he left the White House.

On the other hand, however, Musk has been embroiled in a frenzied and contentious political debate over social media moderation, particularly by liberals who see opinion restrictions on harmful or extremist speech as essential to freedom. expression on Twitter, and analysts warn that making Twitter free speech for all can harm site activity, because if hateful, aggressive or extremist posts go unaddressed, individual users will be less likely to use it.

Stifling content moderation would spark ‘a political storm from Washington to Brussels,’ says Dan Ives, an analyst at Wedbush Securities, as Colin Sebastian, an analyst at Byrd, warns of the risk of misinformation if Musk can buy The site said that Musk was highly critical of content restrictions that Twitter considers misleading information, including Covid-19.

Karen North, a professor at the University of Southern California and social media expert, said Musk can relax users and it could be worse, but he likes control and the ability to say things his way and can want to control how it comes out, big and small.

At the same time, specialists in the study of business and governance believe that private companies, although they enjoy greater freedom and faster decision-making capacity, nevertheless face problems. major because they lack many of the safeguards that govern the work of state-owned enterprises, such as external ownership and independent oversight.

Public and private companies

According to Bert Spector, professor of business administration at Northeastern University, public companies in the United States of America are companies that trade their shares in the public market, such as the New York Stock Exchange, and are regulated by the Securities and Exchange Commission. , and are subject to a number of important federal laws, including the Fraud Accounting Act, while shares of private companies are not publicly traded, where ownership is strictly limited by a limited number of investors selected, and therefore the private companies are not subject to the supervision of the general overseers.

In addition, the CEO of any public company is subject to a set of restrictions and a varying degree of oversight, but they are still important. For example, the boards of directors of public companies review all important strategic decisions and there are separate committees made up entirely of independent directors who have no ongoing involvement In the management of affairs which evaluates the performance of the CEO and determines compensation, general shareholders (shareholders) have the right to vote directly on salaries and bonuses awarded to senior executives, and CEO decisions, including mergers, acquisitions, and international expansions, are subject to the opinion of shareholders and directors.

Transparency and audit

The law regulates the formation of the board of directors, where half of the directors must be independent of the company, and board committees tasked with performing audits, appointing and removing the CEO, and determining executive compensation must be 100% independent, and at the same time, the Securities and Exchange Commission requires CEOs of public companies to fully and publicly disclose their financial performance through regular disclosure reports on operating expenses, critical partnerships, responsibilities, strategies, risks and plans.

In addition, the law requires public companies to employ an independent audit firm accredited by the company’s Public Accounts Oversight Council, to verify the accuracy of these financial statements, as any fraudulent report could lead to prosecution. criminal charges against the company’s CEO and CFO.

good governance

All these rules aim to protect the integrity of companies, to contribute to their transparency vis-à-vis public investors and to protect them against corruption. This does not mean that public companies are perfect, but that these procedures help them and benefit the shareholders, while private companies are not required to comply with any of these procedures.

Public companies that implement good governance laws and procedures well, such as Microsoft, General Motors, Visa, and Pepsi-Cola, tend to significantly outperform poorly run companies, and that doesn’t mean all companies companies are badly managed or that all public companies are badly managed. Good, but because the key elements of good governance, in particular accountability, are integrated into public companies in a way that is not appropriate for private companies.

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