**This special edition of Mo News would typically only be available to premium subscribers. But we're PAUSING our paywall today because of the high interest surrounding potential changes to Twitter with Elon Musk buying the platform. If you'd like to support our work and continued growth, please sign up for our premium content HERE.**
In this premium edition of Mo News, we spoke to Rebecca Jarvis, ABC News' Chief Business, Technology & Economics Correspondent, about Elon Musk's $44 billion purchase of Twitter and his plans to take the company private. We asked Jarvis why the Twitter board ultimately decided to accept his offer, what Musk's vision is for the platform, what she has learned from interviewing billionaires and why he decided to spend $44 billion (much of it his own money) on the company.
🗞 But first, a few of today's headlines:
😷 Covid-19: The CDC now says the majority of Americans have been infected with Covid-19 in the past two years, with nearly 60% of the population having natural antibodies from a previous infection.
The number is even higher for children, with 3 in 4 having been infected, many during the Omicron wave. ~ NPR
BTW: Pfizer has officially asked the FDA to approve booster shots for kids 5-11.
On the Covid front, Vice President Kamala Harris tested positive for the virus. She wrote on Twitter: "I have no symptoms... I’m grateful to be both vaccinated and boosted." A spokesperson says Harris has not be in close contact with the president.
🇺🇸 Presidential Pardons: President Biden granted the first pardons of his presidency to three people, including the first Black Secret Service agent on a presidential detail. He also commuted the sentences of 75 nonviolent drug offenders. ~ Washington Post
“America is a nation of laws and second chances, redemption, and rehabilitation... Elected officials on both sides of the aisle, faith leaders, civil rights advocates, and law enforcement leaders agree that our criminal justice system can and should reflect these core values that enable safer and stronger communities.” -- President Biden
🇺🇦 Ukraine: The mayor of Mariupol in the south says a third mass grave has been found near the city. Ukrainian officials also say there's heavy fighting in the Donetsk and Luhansk regions in the eastern part of the country.
Russia's foreign minister is warning that there is a “considerable” risk the military conflict could spread beyond Ukraine. Russia is shutting off gas supplies to Poland and Bulgaria, "in a dramatic escalation of tensions with the West." ~ CNN
🤝Twitter Deal Latest: A securities filing released Tuesday reveals that if the $44 billion deal between Elon Musk and Twitter falls apart, either side may have to pay the other $1 billion. According to the filing, Twitter would have to pay Musk if the company signs a deal with another buyer whose offer it believes is better. For his part, Musk would have to pay Twitter if his billions in financing for the purchase falls apart.
The sale is not set to close for several more months (potentially more than six+ months) given all the shareholder and regulatory approvals that need to take place. BTW, if a deal does not close by Oct. 24, both sides have the option of walking away. ~ NY Times
That comes amid new reports that Twitter’s top lawyer cried during a staff meeting about the Musk takeover. Vijaya Gadde, a key executive involved in decisions to remove former President Trump and ban political advertising, expressed uncertainty about the future of the platform. ~Politico
Now to our interview with ABC News' Rebecca Jarvis. She is an award-winning correspondent who has covered the tech industry, Silicon Valley, Wall Street and economic issues around the world for years--interviewing some of the biggest names in business. Jarvis and I had a chance to work together at CBS News and she has an incredible way of breaking down all the complex topics in finance and technology. She is also the creator and host of 'The Dropout' podcast, which chronicles the rise and fall of Theranos and its leader, Elizabeth Holmes.
**I also spoke to Jarvis about 'The Dropout' and the Elizabeth Holmes trial during our conversation this week. Her podcast inspired the new Hulu series, which she executive produced. We'll bring you that conversation and a behind-the-scenes at Theranos (Jarvis was once kicked out by Holmes' security team!) in an upcoming premium newsletter.**
The following interview has been edited for time and clarity.
Mosheh Oinounou: I want to begin with the news of the week, Elon and Twitter. The richest man the world buying one of the most influential social media companies (with 200+ million daily users). Break down for us what it means and what he says he's going to do with the platform.
Rebecca Jarvis: What's interesting here is that Elon Musk has said he wants to transform this platform. At the same time, we don't know how that's going to look when he ultimately gets in there and starts talking to employees. Some of the biggest things he's talked about-- authenticating users, verifying user identities, kicking bots off the platform-- so that some of the spread of disinformation, some the really nasty things that are being said, by individuals, you don't know who they are, because they are bots, don't get said as much on the platform. But he wants to keep it free and transparent. And he talks a lot about free speech. There's also the edit button (he is considering) that so many users have talked about wanting such that you could send a tweet and edit it after the fact. And also potentially opening up the algorithm so that everybody can see it (and) it's more transparent.
And then I think there's another big question here, which is the advertisers. Twitter last year did about $5 billion in sales. And most of that is advertising revenue. I interviewed the GM CEO Mary Barra recently [before the deal closed], and I said to her, 'So let's just say that one of your biggest competitors, Elon Musk, who owns Tesla, or excuse me, as the CEO of Tesla, now owns Twitter, which is one of your major advertising platforms, are you going to be willing to spend the same kind of money on Twitter advertising for General Motors and all of the cars as you would if it wasn't owned by Elon Musk?' She wasn't able to say at that time what they would do, but she also wasn't unequivocal that yes, we'll just continue with the way things are. She wanted to know how things are gonna go and see if the same terms are in place. But that is a good question for Twitter going forward. If advertisers-- which are the bulk of their revenue-- are not as comfortable under this new scenario, is there an alternate way that Elon Musk would make money on the platform? He doesn't necessarily need to make money on the platform if he's willing to burn his own money.
MO: I find it so interesting, because he literally said this deal isn't about making money. I think the quote was-- "I don't care about the economics at all." He wants to build a platform that is important to the future of civilization. What do you make of that take? And what investors say about not caring about the money?
RJ: Well if you're an investor, you obviously are looking for a return. And that is why this deal got done. Because there weren't any other buyers. $54.20 a share was the best offer that the Twitter board was going to get. There weren't any other offers. And it was their fiduciary responsibility to take the deal....It really speaks to the fact about a long term vision for this company, and what could happen. I think it's really interesting that Jack Dorsey has spoken out-- founder of Twitter, former CEO-- has spoken out about being really supportive. He tweeted the Radiohead song, "Everything in its place." Is that the name of the song, Mosh? I'm a Radiohead fan, but Creep was the first song we played at my Bat Mitzvah. I don't remember...all the Radiohead songs but big fan.
MO: I think I had Ace of Base and Boyz II Men played at my Bar Mitzvah. I think we were in similar time periods there in the Midwest in the mid-90s.
RJ: Love that.
MO: So I was struck by this. The Financial Times says Twitter is 16 years old and said, like many teenagers, it is trying to figure out what it wants to be.
It has struggled with the lack of innovation, it's never been consistently profitable. It's small compared to some of its social media competitors. And, of course, the free speech challenges that it's been facing as far as misinformation and abuse. Elon is the richest man in the world. This seems like a big headache. Why do you think he wants this?
RJ: It's impossible to get inside of someone else's head. Things that he has said is that this is for the protection of the world, that he sees this as part of his life's mission.
I do think, having interviewed a handful of billionaires, not Elon Musk specifically, but some of these incredibly wealthy individuals, especially on the flip side of making that money, there's this feeling of wanting to leave a legacy. And I don't know if it's coming from a place of guilt or a place of responsibility, but when you find yourself in this position where everything that you could possibly want can be yours, then you start to think longer term about how you will be remembered. And even beyond that, there also is this point of like, you can have more money than anyone else. And there's still things that are out of reach. So how much of it is like a competitive thing of just wanting to try to have that?
I think the comparison of Jeff Bezos and Elon Musk, where they're both in the space race, they're both in this race to be the wealthiest and they're both very high up on that list. Elon Musk happens to be number one right now. But you look at the comparison, Jeff Bezos buying the Washington Post for $250 million, Elon Musk buying Twitter for $44 billion. I mean, these are magnitudes of difference in terms of the cost. And yet here we are.
MO: Taking a company private: what does that mean for users? I mean, there's a lot of concerns that he can go inside people's DMS, use (Twitter) for his own business interests. What sort of government oversight still exists when a company is private versus is public?
RJ: There are fewer restrictions on private companies than public companies. But a lot of that has to do with the financial accounting and reporting because the SEC is oversight of a public company versus a private company. I think some of the questions are going to be more related to the FTC and communications. There haven't been at this point a really direct line around social media, and who do we trust who has access to that information. Those are still big questions that regulators are going to have to answer. Some people have asked this question-- could regulators stand in the way of this transaction? Everyone I've spoken to says no, that's not going to be the case because we're not talking about an anti trust situation here. He's CEO of SpaceX and Tesla, but those are not companies that play in the same field as Twitter.
I will say, in sort of this rivalry between Bezos and Elon Musk, Jeff Bezos was tweeting about this deal. And he raised this question of what happens with China because, of course, Elon Musk with Tesla, they sell a lot of Tesla's in China, and that's part of the long term business plan. Could China lean on Elon Musk and say-- whether it's a ban, or it's whatever it is in terms of speech in China, with Twitter-- could China exert that force over Elon Musk with Tesla, because that's where he has major financial interests? Ultimately...where (Bezos) fell on that was that Musk is an extraordinary adept negotiator. He'll figure things out with China basically.
MO: And I want to get to the free speech issue, because that's come up big. And that's certainly a dilemma for moderating content, whether it's Google and YouTube, whether it's Meta with Facebook and Instagram. And of course, Twitter has been dealing with it.
Can you lay out for us how Silicon Valley (has) been approaching this. We saw this week that Europe has instituted its latest law against tech companies. I think it's the third in Europe, and we haven't seen one here in the US. How are these companies have been approaching the moderation of content and the particular challenges that Elon may face when it comes to Twitter and free speech and moderation?
RJ: A lot of it is on the companies themselves here in the US to figure it out. And it's also on the consumers to figure it out. Once users grow tired of a service or feel that that it isn't working to their advantage, they start opting out.
And not to suggest that huge numbers of people are opting out of Twitter, or Facebook or Instagram, or any of these social media giants. However, that said, a lot of them peaked in terms of their users, and the actual amount of consumption is starting to decline somewhat. And I'm not betting against any of these social media giants. In the long term, I do ask myself about human nature and how committed we are to doing the same things over and over again, habitually.
Everybody has a limited amount of time in their day, there's always going to be a new thing. And I do wonder if we're sort of hitting a wall in some of these things. Users again, as consumers, you have power as a consumer, if you delete the thing, if you don't pay attention to it, that's one less person who's participating in it. And that's not what I'm specifically advocating for here. But I do think that the US has taken more of this approach, as opposed to Europe, which has taken a far more regulatory approach. We've had, you know, here in the US, we've had these big moments where the CEOs go in front of legislators on Capitol Hill, and yet, almost nothing comes of that other than the theater that we watch on the news at night.
MO: If you talked to Facebook several years ago, they're like, well, we're not responsible for this sort of thing. And then there was a quick realization that no, actually, what happens on our platform leads to things like planning for January 6, and election impact, etc. How serious are (tech companies) taking their responsibility when it comes to what is said and done on their platforms?
RJ: Well, if you want to take the most cynical approach, they take it as seriously as it becomes a business risk. So if you risk losing customers, if you risk losing advertisers, if there are risks to the bottom line, then you will take it seriously. If there's no fallout for you and for your company personally, then why make changes. I also think though, from talking to a number of leaders in the space, they believe that the bigger picture, this idea of just having this open space that's been created is more important than navigating inside of it, if that makes sense.
And look, I think that what Elon Musk, at least at this point, has said he would like to do with this is to to give something completely different than what has been tried. And to do it as a private company means he doesn't have to make sure that the shareholders are getting paid, he doesn't have to try to maximize profits every quarter. So there are different models. I mean, if they weren't going to go the advertising path, we talked about some of the questions there. There have been ideas floated like would he charge users? Now, of course, if you're trying to be egalitarian and democratic, then suddenly when you're charging users, that can end up keeping people off the platform. And that raises questions in and of itself.
But it's still again early days, I still think that's a really important thing. Because what people are hearing today from both Elon Musk as well, as everyone else who's got an opinion on this could be very, very different than when this deal closes. And I believe that from every source...that it will close. But that still could be six or nine months from now. And when that happens, we could be looking at a really different world and a very different picture based on what the employees and Elon Musk discuss.
MO: To be continued. The end of the story has not been written there.
**Program Note** I also spoke to Jarvis about 'The Dropout' and the Elizabeth Holmes trial Tuesday. Her podcast inspired the new Hulu series, which she executive produced. We'll bring you that interview in an upcoming newsletter as we continue to watch the trial unfold of Holmes' business partner, Sunny Balwani.**
⭐️ Premium Members: This special edition of Mo News would typically only be available to premium subscribers. But we paused our paywall today because of the high interest surrounding potential changes to Twitter with Elon Musk at the helm. If you'd like to support our work and growth, please sign up for our premium content HERE. It will help us grow the newsletter and continue to expand to multiple platforms.