Speaker 1: From the heart of where innovation, money and power collive
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Emily Jay. I'm Emily Chang in San Francisco, and this
Speaker 1: is Bloomberg Technology. Coming up in the next hour, Elon
Speaker 1: Musk changes his mind again, saying he will buy Twitter
Speaker 1: after all at the original price. The Bloomberg scoop sends
Speaker 1: Twitter share soaring and Testlas shares falling. Why the change
Speaker 1: of heart after spending a fortune a lawyers trying to
Speaker 1: get out of the deal to buy a company he's
Speaker 1: now criticized for months? Will tip Twitter just drop it
Speaker 1: suit or try to get more certainty that Musk will
Speaker 1: actually go through with it this time? And how will
Speaker 1: this all impact? Musts roll at Tesla in Spain Sex
Speaker 1: We've got experts on all angles. Will ask those questions
Speaker 1: throughout this hour, But first I want to start with
Speaker 1: the market reaction. Bloomberg's Ludlow has been across this all
Speaker 1: day in New York and walk us through the ups
Speaker 1: and the downs. Yeah, so, I mean Twitter shares surge
Speaker 1: right the most sense. April fourth, which was the day
Speaker 1: when Musk first disclosed his stake in Twitter, let alone
Speaker 1: before he announced that he would try to buy the
Speaker 1: company and take it private. Ultimately, we ended up with
Speaker 1: gain of the stock was halted at one point for
Speaker 1: volatility and then resume trading. And by that point Muscut
Speaker 1: updated is thirteen D filing to let us know what
Speaker 1: go it was going on, and a Twitter spokesman has
Speaker 1: spoken as well. Let's take a look at this terminal chart,
Speaker 1: which is the spread, right, the difference between the fifty
Speaker 1: dollar twenty cents per share price and the current share price,
Speaker 1: and now it's off the chart, right. We're really closing
Speaker 1: that gap as we moved towards something that we expect
Speaker 1: to happen quite quickly. All of the conditions of the
Speaker 1: original April agreement have largely been satisfied. And that is
Speaker 1: what must talks about in his letter to Twitter that
Speaker 1: was disclosed on Tuesday. He is going with the original
Speaker 1: terms of the deal. You also mentioned Tesla. We did
Speaker 1: see that stock pair a gain of as much as
Speaker 1: six percent after that Bloom Blow scoop closing up by
Speaker 1: around three percent. I think what's interesting here is that
Speaker 1: the feeling in the market is Musk will at some
Speaker 1: point have to sell some more Tessa stock to cover
Speaker 1: the equity portion of the financing for this deal. But
Speaker 1: there's also an element of key Man risk. Right Elon
Speaker 1: Musk is the CEO of both Tesla and space x. Well,
Speaker 1: if he is going to buy Twitter, how much of
Speaker 1: a distraction is that. I know you've got some great guests.
Speaker 1: You can put that to question too. But we're back
Speaker 1: to where we started him. What a day. It's not
Speaker 1: a done deal yet. So because I've got the letter here,
Speaker 1: which you can look at Bloomberg dot com, the letter
Speaker 1: saying we write to know notify you that the Musk
Speaker 1: parties intend to proceed to the closing of the transaction
Speaker 1: subject to the conditions set for therein and pending receipts
Speaker 1: the proceeds of the debt financing. So he's trying to
Speaker 1: put some conditions on the deal. We look back in April,
Speaker 1: Musk raised or secured twelve point five billion dollars of
Speaker 1: debt financing and an additional five million revolving credit line.
Speaker 1: That's split between a six point five billion leverage loan,
Speaker 1: three billions of secure bonds, three billions of unscured bonds.
Speaker 1: What's changed is yields are soaring the market has changed
Speaker 1: and it's a really difficult time to sell leverage debt
Speaker 1: or buy out debt. And so basically the banks that
Speaker 1: Musk has engaged we have to go to asset managers
Speaker 1: and try and get this debt sold. It's a much
Speaker 1: harder sell in present day than it was back in April,
Speaker 1: so there's an uncertainty there. But as I said, go
Speaker 1: back to the original or April agreement. Look at section
Speaker 1: two point to the closing and the conditions, and a
Speaker 1: lot of those conditions are now met, shareholder approval from Twitter,
Speaker 1: regulatory waiting periods have surpassed, so it could be interesting
Speaker 1: to see how quickly the closing of this deal proceeds.
Speaker 1: And as Kurt's going to go through some of the reporting,
Speaker 1: I think haf and st Je mccule make the Chance
Speaker 1: Street judge, who was due to preside over the child
Speaker 1: in October. She's basically saying, how is this going to
Speaker 1: go moving forward? Right? She said, come back to us
Speaker 1: with a proposal. Okay, thank you. We're going to talk
Speaker 1: to a little bit later in the show. It all
Speaker 1: started with a Bloomberg scoop, Bloomberg obtaining a letter from
Speaker 1: Elon Musk's team stating that he wants to go ahead
Speaker 1: and buy Twitter after all for the original price and
Speaker 1: twenty cents a share. Let's get right to Bloombergs Kurt Wagner,
Speaker 1: who helped break this story, as well as Geruber Kawasaki
Speaker 1: President and CEO Ross Gerber, who owns Tesla but sold
Speaker 1: his stake in Twitter over the course of all of this, Kurt,
Speaker 1: I want to start with you, what is the very
Speaker 1: very latest that we know? Yeah, I mean you and
Speaker 1: Edward kind of hitting on it. Right. Obviously, Elon Musk
Speaker 1: is saying, hey, let's get back to this original deal
Speaker 1: that we had in April. Twitter has said, hey, we
Speaker 1: want to close this at per share, which is what
Speaker 1: they've been saying all along. Now, you would think, okay,
Speaker 1: both sides are at the exact same spot, right, that
Speaker 1: was the agreement that was in April. Now, the fact
Speaker 1: that there is a little bit of reservation here or
Speaker 1: hesitation just goes to show how much distrust has you know,
Speaker 1: come up between these two sides over this process. Right.
Speaker 1: So the fact that both of them are saying they
Speaker 1: want the exact same thing on the same day, and
Speaker 1: yet people are still waiting to say, well, let's wait
Speaker 1: until it's officially signed on the dotted line. That just
Speaker 1: kind of gives you a sense of how this has
Speaker 1: played out, that that everyone is gonna hold their breath
Speaker 1: until this becomes final final, which we may find out
Speaker 1: in the next couple of days. Right, and who can
Speaker 1: blame them? Right? As a Tesla investor, Ross, you weren't
Speaker 1: happy about Elon Musk trying to buy Twitter at all.
Speaker 1: You got out of Twitter. What are you thinking now?
Speaker 1: I'm thinking it's gonna make the business books on how
Speaker 1: not to buy a company. Um, he's literally created a
Speaker 1: huge loss for himself by really the way he's handled this,
Speaker 1: because a lot has changed inside Twitter in the last
Speaker 1: four months as well, and including a mass amount of
Speaker 1: high quality individuals who worked at Twitter leaving and a
Speaker 1: lot more planning on leaving. So he's paying the highest
Speaker 1: price possible. He's trying to get dead at the worst
Speaker 1: time possible. He's basically being forced to buy this company.
Speaker 1: It's not like he changed his heart. I think his
Speaker 1: lawyers just told him he was gonna lose. And so
Speaker 1: this is what I thought the whole time, And I
Speaker 1: got out of this mess because I didn't want to
Speaker 1: be involved with this mess, and I'm grateful I did.
Speaker 1: I lost a little money, but but this is a mess.
Speaker 1: It's really not great for Ellen. That said, I'm glad
Speaker 1: that it's going to come to a conclusion and and
Speaker 1: hopefully as a Tesla investor, we can get back to
Speaker 1: focusing on the most exciting company in the world. Kurt,
Speaker 1: let's talk a little bit about how Twitter is digesting this,
Speaker 1: you know, because they haven't dropped their litigation and talking
Speaker 1: to my sources, you know, if your Twitter, you're gonna
Speaker 1: want some certainty. Is he really serious right now? Is
Speaker 1: this really what are you hearing from the Twitter camp
Speaker 1: about what their next move is? Right Well, to your point,
Speaker 1: going back to that distrust I was talking about earlier,
Speaker 1: right there, there's not a lot of incentive for anyone
Speaker 1: to simply say we're gonna drop everything we're doing because
Speaker 1: this guy said X. Right, and so I think, you know,
Speaker 1: my understanding is that Twitter would need to stay or essentially,
Speaker 1: you know, retract its lawsuit against Musk in order for
Speaker 1: him to sign this um. Presumably, you know, if they
Speaker 1: believe that he's operating in good faith. That would be
Speaker 1: the next step was that they'd say, okay, the lawsuits over,
Speaker 1: let's get back to the original agreement. But again, the
Speaker 1: fact that we're even discussing this, it just shows how
Speaker 1: fractured that relationship has been. And Emily, we've talked about
Speaker 1: this before. What's crazy is this is now who they
Speaker 1: want to run Twitter, right, A person that they've kind
Speaker 1: of painted as a liar, someone that they painted as
Speaker 1: as uh, you know, not prepared to operate the social network,
Speaker 1: and yet they're fighting to get him to do it.
Speaker 1: That's where employees are today, right there, suddenly waking up
Speaker 1: and saying, okay, now, this kind of in some of
Speaker 1: their minds worst case scenario is coming true, which means
Speaker 1: that they're going to have a new boss very shortly,
Speaker 1: and it's someone that they might not necessarily agree with
Speaker 1: on a bunch of different things. Right. And you know,
Speaker 1: from many perspective, Twitters in a worse position than it
Speaker 1: was when Elon Musk decided to buy the company because
Speaker 1: of what's happened with morale, what's happened with folks leaving
Speaker 1: the company on the Tesla side. Ross. You know, clearly
Speaker 1: investors are concerned about this, given the reaction to the stock.
Speaker 1: Do you believe the concern is more that he might
Speaker 1: sell Tesla stock to finance this deal, or the key
Speaker 1: man risk that his attentions are going to be even
Speaker 1: more divided. So you know, from the perspective of Tesla,
Speaker 1: he sold a lot of stock already and it's been
Speaker 1: an overhang all year from those sales. And if he
Speaker 1: has to sell you know, another couple of billion, it's
Speaker 1: a huge company and and that will be that and
Speaker 1: so it takes away that uncertainty either way. I don't
Speaker 1: think it's that material from an economic perspective. But I
Speaker 1: think the second issue brought up is material, which is
Speaker 1: being CEO of three major companies is not something humans
Speaker 1: can do well. And so I get that he thinks
Speaker 1: he can do this, but this is now a media property,
Speaker 1: which is very different than running a space or e
Speaker 1: V which are both technology companies, and and the dynamics
Speaker 1: it takes to run a media company is completely opposite
Speaker 1: from his skill set. And that's been more than proven
Speaker 1: by the way he's handled the employees of Twitter, like
Speaker 1: at all hands meeting. And I think you guys are
Speaker 1: being nice saying that there's distrust. It's not distrust, it's hate.
Speaker 1: They hate him. Okay, he's created a situation. He created it,
Speaker 1: and I love Ellen, you know, I'm I'm a fan
Speaker 1: and supporter, don't get me wrong, but I have friends
Speaker 1: at Twitter and they hate him. So this is like
Speaker 1: to getting to divorced people who hate each other to
Speaker 1: now get married again. Now, if I'm Twitter, I'm not
Speaker 1: gonna get rid of this lawsuit at all. I'm going
Speaker 1: to force specific performance on Elon because there's no trust
Speaker 1: there at all. So this is a really really difficult situation,
Speaker 1: and I think that it's the risk, the key man
Speaker 1: risk to Tesla is that now he gets this company
Speaker 1: and you know, like, tell me what day is gonna
Speaker 1: be easy for him at Twitter? And the reality is, Kurt,
Speaker 1: let me know if I'm right here, I mean, Elon
Speaker 1: Musk could own Twitter in a matter of days, right,
Speaker 1: This could all happen really quickly, That's right. Well, all
Speaker 1: of the kind of stipulations for the deal closing have
Speaker 1: have already happened, uh, including the shareholder vote, which we
Speaker 1: you know covered last in September last month, and so
Speaker 1: you know, yes, this could all happen very quickly. What
Speaker 1: I find kind of crazy and sort of ironic and hilarious, right,
Speaker 1: is that the last guy who are on Twitter essentially
Speaker 1: was asked to leave because he had two jobs, right,
Speaker 1: and now the guy who's running Twitter is going to
Speaker 1: have three jobs. This has been said before, but the
Speaker 1: irony here Emily is quite strong strong indeed, uh ross
Speaker 1: As a Tesla shareholder, what's your biggest concern about how
Speaker 1: you know he plans to run Twitter, If he plans
Speaker 1: to run Twitter, how involved he plans to be in management?
Speaker 1: And what would you like to see. I'm assuming a
Speaker 1: more hands off approach, you know, this whole face. You know,
Speaker 1: I don't know how he got himself into this, but
Speaker 1: you know, and he's a very smart guy, so I
Speaker 1: don't know. But that's said, I mean, I just don't
Speaker 1: know where this goes. Like, uh So, I think the
Speaker 1: most important thing is that he stayed as much out
Speaker 1: of politics as possible, And obviously that's just not gonna happen,
Speaker 1: and it's going to create a lot of a lot
Speaker 1: of negativity towards him, and and you know, I just
Speaker 1: it's a really politically difficult environment to have an opinion
Speaker 1: about politics in the day and age. And of course
Speaker 1: you all in the media know this. More than anybody,
Speaker 1: and and every time he makes political statements, he's attacked mercilessly,
Speaker 1: and much of it for good reason. So that I
Speaker 1: think is the problem with him run in Twitter is
Speaker 1: it put some square in the face of a lot
Speaker 1: of issues that have nothing to do with Tesla that
Speaker 1: will affect people's perception of Tesla. And you know, I
Speaker 1: think it's there's a point at time where Tesla is
Speaker 1: a big enough company, and it's it's now where it's
Speaker 1: not that it's like Ellen needs to give a little
Speaker 1: bit of control up so that investors feel more confident
Speaker 1: about the secession plan. This is what I've been talking
Speaker 1: about for like years, that there needs to be a
Speaker 1: strong number too at Tesla and there needs to be
Speaker 1: a deeper management best bench. And Tesla tells me all
Speaker 1: the time how great all these young people are, which
Speaker 1: I agree, but I'm like, you need to promote these
Speaker 1: people and you need to show and give these people
Speaker 1: some power over the business, because the perception right now
Speaker 1: is exactly what you're saying, is now this guy runs
Speaker 1: three public companies and in different industries, Like once again,
Speaker 1: I don't think that's possible. So something's got to give,
Speaker 1: and you know, hopefully it's not Tesla, that's for sure,
Speaker 1: And Kurt, four weeks away from an election. Um, you
Speaker 1: know how our folks at Twitter thinking about this if
Speaker 1: this does happen right in a matter of days. The
Speaker 1: election is four weeks away. And Ellen has said repeatedly
Speaker 1: he doesn't you know, agree with a lot of Twitter's policies.
Speaker 1: He doesn't necessarily think they're necessary. Right, these are things
Speaker 1: that have been kind of implemented over years, right over
Speaker 1: multiple election cycles. And uh, you know, the big one,
Speaker 1: of course, is he said he would bring back President
Speaker 1: Donald Trump on the Twitter if if he was owning
Speaker 1: the company, right, and there is a chance that all
Speaker 1: of those different things could come, you know, into play
Speaker 1: over these next couple of weeks in the lead up
Speaker 1: to the US mid terms and and you know, not
Speaker 1: even looking ahead to whatever happens in four So I
Speaker 1: do think that there's a lot of people who are
Speaker 1: very conscious of that. We're probably very worried about that,
Speaker 1: mostly because they just don't exactly know what he's going
Speaker 1: to repeal or take away if he indeed, you know,
Speaker 1: becomes a CEO, and how quickly they would move on
Speaker 1: something like that. But given where we are with this election.
Speaker 1: It has to be noted that that that kind of
Speaker 1: stuff could play a factor. It's gonna be hard, probably
Speaker 1: impossible to stay out of politics given the timing. Okay,
Speaker 1: Bloomer's Kurt Wagner, thank you. We're going to continue to
Speaker 1: watch your reporting. Great job breaking that story. Gerber's Kawasaki
Speaker 1: President and CEO, Ross Gerber, always appreciate your commentary here.
Speaker 1: Thank you. All right. Today's big story Elon Muska Green
Speaker 1: to buy Twitter at the original price. What does it
Speaker 1: all mean for the months long legal battle between the two.
Speaker 1: Let's bring into a law school's associate Dean and Lipton
Speaker 1: for more and from a legal perspective, given Elon Musk
Speaker 1: has already spent a lot of money trying to make
Speaker 1: this go away, what do you think changed on his end?
Speaker 1: I think, um, in many ways this is almost the
Speaker 1: most expected outcome of all, which is settling on the
Speaker 1: eve of trial just before deposition of the main players,
Speaker 1: the Elon Musk himself. I mean in that sense it's
Speaker 1: actually very traditional sort of settlement, and so he doesn't
Speaker 1: want to be deposed. He has, you know, probably some
Speaker 1: embarrassing text messages and conflicting statements and all of that
Speaker 1: would make for a very unpleasant deposition for him. He
Speaker 1: is was scheduled to be deposed later this week. Everyone
Speaker 1: on Twitter's end has been deposed, So perhaps you're right
Speaker 1: he didn't want to go through that process. But it's
Speaker 1: not really a settlement at all because he's not essentially
Speaker 1: winning anything. I mean, the price is the same. Yeah, yeah,
Speaker 1: he's he Yeah. I mean I think the idea must
Speaker 1: be something like um uh, Twitter already took a shareholder vote. Uh.
Speaker 1: To go back to the shareholders and ask them to
Speaker 1: accept less would not only be time, it would be
Speaker 1: time consuming, It would be embarrassing. Twitter would have to
Speaker 1: explain why it was doing this when in fact it's
Speaker 1: in a very strong legal position. And if the goal
Speaker 1: year is to stop the proceedings in court, there may
Speaker 1: not have been enough time. I mean, trial was supposed
Speaker 1: to start in two weeks, getting the papers together just
Speaker 1: to have a second share hold the vote, would you know,
Speaker 1: very possibly not get the goal of stopping the delaware
Speaker 1: of proceedings going forward. So that is ultimately likely. It
Speaker 1: is part of must thinking in terms of not even
Speaker 1: pushing further to get a couple of dollars off the price. Interesting,
Speaker 1: so walk as there. How this will likely play out
Speaker 1: in court because if you're Twitter, you're wanting to get
Speaker 1: some certainty that he really means it. This time he
Speaker 1: threw in some language about dead financing and a condition,
Speaker 1: and I'm sure that's making the Twitter folks say, hey,
Speaker 1: what does he mean by this? Could they still go
Speaker 1: to a judge and ask the judge to somehow uh,
Speaker 1: you know, be part of the agreement or somehow further
Speaker 1: enforce an agreement. Yeah, I think, and I think that's
Speaker 1: probably what Twitter wants. I mean, the defining thing thing
Speaker 1: was always a condition for him to follow through, So
Speaker 1: I don't think that necessarily adds anything like he was always,
Speaker 1: um not going to be under an obligation to close
Speaker 1: unless he at the debt financing in place. But I
Speaker 1: think that um, but his his letter was very kneeling.
Speaker 1: Now it's very unclear exactly how much he was committing
Speaker 1: to in that letter. And Twitter obviously is not gonna
Speaker 1: want to give up its trial date and undo the
Speaker 1: depositions that are scheduled or what other proceivings are scheduled.
Speaker 1: It's not gonna want to change any of that until
Speaker 1: it's rock solid that this is for real, absolutely definitely happening,
Speaker 1: no bacsies. So they might seek some kind of court
Speaker 1: order that requires him to go through with the deal,
Speaker 1: or some kind of court representation that he's not going
Speaker 1: to make any additional arguments and so forth, and gathered
Speaker 1: that's exactly what they're going to be trying to work
Speaker 1: out next and being told that's called a consent judgment.
Speaker 1: Is that what you're talking about by a court order? Yeah? Yeah,
Speaker 1: it could be something like that, some kind of you know,
Speaker 1: exactly some kind of judgment by the court that he
Speaker 1: has agreed to uh buy the company in particular price,
Speaker 1: go through whatever that needs to go through, and that way,
Speaker 1: if he defies it and he's defined a court order
Speaker 1: of using the chance of court, given all of these
Speaker 1: you know, legal issues to work out, is it your
Speaker 1: understanding that this could happen in a matter of days.
Speaker 1: Do you think it's likely we get to that October
Speaker 1: seventeenth trial date or that this is you know, said
Speaker 1: and done before then. I think it's very possible it's
Speaker 1: going to be done. I mean, obviously Twitter is suspicious.
Speaker 1: Twitter is you know, suspicious that this is some kind
Speaker 1: of game by must to delay things and they don't
Speaker 1: want to let that happen. And if he is actually
Speaker 1: trying to play some town of game, then obviously we're
Speaker 1: still going to go forward everything. But I think it's
Speaker 1: very likely that this is serious and as soon as
Speaker 1: must can get the assurances the Twitter needs, UM, things
Speaker 1: can probably happen very quickly. After that. The company has
Speaker 1: already gotten the regulatory aprouvals and the shareholder approval that
Speaker 1: it needs to close, so it's really just a matter
Speaker 1: of getting the financing and that probably won't take very long.
Speaker 1: So yes, I think that this could definitely close soon.
Speaker 1: And uh with the trial date will will be suspended
Speaker 1: that there won't be a trial. I think that's very long.
Speaker 1: So after let's say that happens Moscow's Twitter, you know,
Speaker 1: we're a few weeks out from an election, what happens?
Speaker 1: You know, how quickly could he just start making changes? Right?
Speaker 1: I mean, you know, he's in charge of the company,
Speaker 1: and he can make whatever changes. Lots I suppose he
Speaker 1: orders it on. The question is whether he really does
Speaker 1: want to. I mean, I think um, part of the
Speaker 1: reason that he may have gotten cold feet about the
Speaker 1: whole deal was because he didn't necessarily want to change
Speaker 1: responsibility for all of that. And I don't know if
Speaker 1: he wants to thrust himself into that kind of political
Speaker 1: spotlight right away, but I mean, you know, once it's
Speaker 1: his company, he can order what he wants, all right.
Speaker 1: So much to continue to tease out here, to continue
Speaker 1: to follow and lipped into Lane Law School's associate Dean
Speaker 1: always appreciate you um sharing your legal perspective with us.
Speaker 1: Thank you. We're gonna have much more come up next.
Speaker 1: Stay with us. This is Bloomberg. Some more stories were
Speaker 1: following micro and I said it plans to invest as
Speaker 1: much as a hundred billion dollars over the next twenty
Speaker 1: years to build a factory in upstate New York. This
Speaker 1: in an effort to boost US production of memory chips.
Speaker 1: The company says this is the largest private investment in
Speaker 1: New York state history. This comes in conjunction with the
Speaker 1: investment that we had announced in Boise a few weeks
Speaker 1: ago the leading edge memory manufacturing fab Data as well,
Speaker 1: and the two together with helpers bring our domestic production
Speaker 1: to by the end of the decade versus ten percent
Speaker 1: currently meantime. Tesla rival Rivan reported progress in ramping up production.
Speaker 1: Van also reaffirmed its goals building electric vehicles this year.
Speaker 1: Rivan says it produced more than seventy three hundred cars
Speaker 1: in the third quarter. Will have more on that later
Speaker 1: this hour. And Meta plans to close one of its
Speaker 1: New York offices as the company winds back expansion plans
Speaker 1: in the city. According to Bloomberg sources, Meta has been
Speaker 1: consolidated it's New York workforce, building out offices and Hudson Yards,
Speaker 1: and moving ahead with other office plans near Penn Station.
Speaker 1: Last week, met It announced the hiring freeze and restructuring.
Speaker 1: Welcome back to Bloomer Technology and Emily Chang in San Francisco.
Speaker 1: Back to today's top story. Are at Ludlow, Uh and
Speaker 1: the whole newsroom really following the Musk Twitter saga since
Speaker 1: the start and you've actually been talking to some folks
Speaker 1: at Twitter. How is this all going down on the inside. Yeah, Well,
Speaker 1: when news broke the Elon Musk had sent Twitter a
Speaker 1: letter saying he would perceive in the original terms. A
Speaker 1: number of very wide range of Twitter staff were in
Speaker 1: a three hour long quarterly strategic planning meeting and apparently
Speaker 1: in the first fifteen minutes, paragag Rol, the CEO of Twitter,
Speaker 1: was delivering some opening remarks, and pretty much for the
Speaker 1: entire duration of the three hour meeting, not a single
Speaker 1: word was said about the news that was breaking all
Speaker 1: around these employees. There was no sort of official comment.
Speaker 1: We later in a memo that was shared to Bloomberg
Speaker 1: News or shared with Bloomberg News from Shaw and Edgett,
Speaker 1: whose general counsel. Eventually, once it was already in the
Speaker 1: public domain, employees were informed of what was going on.
Speaker 1: But you know, it's a very tough time right now
Speaker 1: if you're a Twitter employee, especially if you're working on
Speaker 1: the product, you really don't know where you stand. Reminders
Speaker 1: at what Musk has said about his vision for the platform.
Speaker 1: We know he's concerned about barts and spam. We know
Speaker 1: he said he potentially would reinstate uh, former President Trump.
Speaker 1: You know what, what's our sense of what he'll do
Speaker 1: once he potentially in a matter of days, owns Twitter. Yeah,
Speaker 1: I mean it's worth remembering as well what we learned
Speaker 1: in the text messages that came out as part of
Speaker 1: discovery through court filings, you know, and the whole reason
Speaker 1: for must take taking Twitter private largely comes from conversations
Speaker 1: with Jack Dawesy right that they need to enact changes
Speaker 1: that they felt couldn't be done if Twitter were republic entity,
Speaker 1: a public company, and a lot of that revolves around
Speaker 1: the ad model, moving away from an ad model, you know,
Speaker 1: they want to tackle the box issue on the platform.
Speaker 1: Musk has also talked about, you know, paying for the
Speaker 1: privilege essentially a verification um, and finding new ways to
Speaker 1: monetize the platform beyond just relying on ads. And of course,
Speaker 1: you know, the big technological one for Muskar is open
Speaker 1: sourcing the algorithm that kind of drives the Twitter platform itself.
Speaker 1: So those are the key areas that we think you'll
Speaker 1: focus on, But broadly, the kind of principle or ideological
Speaker 1: changes are this idea that he believes that it should
Speaker 1: be a place where freedom of speech is protected and
Speaker 1: that as long as that no one uses the Twitter
Speaker 1: platform to cause harm or offense, that a broad range
Speaker 1: of voices should be allowed onto it. And that seems
Speaker 1: to be Vlon Musk's philosophy. All right, I'd love They'll
Speaker 1: thank you, of course for you're reporting throughout the day. Um,
Speaker 1: I want to take a look at this from a
Speaker 1: slightly different angle now, with the news of Elon Moscow
Speaker 1: greening to proceed with this Twitter deal, the idea of
Speaker 1: free speech on the internet of course back front and center.
Speaker 1: He has said that he would reverse former President Trump's
Speaker 1: permanent ban on Twitter that took place days after the
Speaker 1: US capital attack. That attack had been in part fueled
Speaker 1: by Trumps Stop the Steel movement, a meme that became
Speaker 1: larger than life, with real world consequences. That's the subject
Speaker 1: of a new book, Meme Wars, The Untold Story of
Speaker 1: the online battles up ending Democracy in America, by researchers
Speaker 1: at Harvard Shorenstein Center on Media, Politics and Public Policy.
Speaker 1: Research director and co author of that book joined Joan
Speaker 1: Donovan is with us now for more. So, Joean a
Speaker 1: lot to digest here. Elon Musk is a meme starter,
Speaker 1: one of the biggest meme tweeters in the world. He's
Speaker 1: the butt of a number of memes as well. What
Speaker 1: do you think him owning Twitter means for the platform?
Speaker 1: You know, when he first started making hay saying he
Speaker 1: was going to buy it, I thought it was going
Speaker 1: to be nonsensical. Um, now that he's invested in this
Speaker 1: is going to go through. One of the things that
Speaker 1: we looked at was, you know, what is Elon Musk
Speaker 1: like to tweet? And he does tend to get right
Speaker 1: in the middle of very important worlds, historic geopolitical flame wars.
Speaker 1: UH just recently with Slinsky, for instance, about the war
Speaker 1: in Ukraine, and so UM he's he's not a politician,
Speaker 1: but he's very much a political figure, and he now
Speaker 1: has bought one of the most consequential communication technologies of
Speaker 1: our present day. And so we have to be on
Speaker 1: alert and very careful about UH charting these changes that
Speaker 1: are going to come about. It Twitter very rapidly, and
Speaker 1: when he first started saying that he was going to
Speaker 1: buy the form of cross, UH many good employees left
Speaker 1: right away. And so I'm I'm afraid that the people
Speaker 1: who are there that are doing excellent work are not
Speaker 1: going to want to stay there because of the political
Speaker 1: climate that their new boss brings. You make a very
Speaker 1: good point that just in the last twenty four hours
Speaker 1: he got right in the middle of a war between
Speaker 1: Russia and Ukraine, got a really heated response from Ukraine's
Speaker 1: President Zelinski himself. What are your biggest concerns about someone
Speaker 1: like Elon Musk owning this platform. UM And would you
Speaker 1: say concern is your overwhelming sentiment right now or are
Speaker 1: you also intrigued or potentially even a little bit excited
Speaker 1: about the possibilities. Well, if you read the book mean
Speaker 1: More as it starts with the occupy movement, and Twitter
Speaker 1: is a key figure throughout the book as a place
Speaker 1: where people do launch mean mores and start and spark
Speaker 1: political movements, and where politicians have gotten their voice and
Speaker 1: their audience all the way up to where we end
Speaker 1: the book at the insurrection where events sitting president at
Speaker 1: the United States was able to use memes and hashtags
Speaker 1: in order to UH foment an insurrection With Elon Musk,
Speaker 1: I imagine more than being concerned, I don't know the
Speaker 1: way in which he's going to come at questions of
Speaker 1: content moderation that are, you know, under the purview of
Speaker 1: UH what are obstensively called trust and safety teams. UM
Speaker 1: And particularly some of the tweets and memes that Elon
Speaker 1: has been sharing over the years do tend to run
Speaker 1: right up on the line of terms of service, whether
Speaker 1: they're transforment, transphobic, or homophobic or anti a woman, UM
Speaker 1: or almost financial scams. He was also behind UH the
Speaker 1: early calls for people to take hydroxy chloroquine to cure coronavirus,
Speaker 1: and so everywhere we look and see his opinions floating
Speaker 1: around UM, we have to wonder to what degree is
Speaker 1: he also spreading misinformation and disinformation on the platform. But
Speaker 1: business model wise, I can't imagine that this is gonna
Speaker 1: be big boon for Twitter over time, because if the
Speaker 1: quality of the information people have access to on this
Speaker 1: platform degrades much further than people are going to seek
Speaker 1: out UH similar technologies. Public trust is fairly low when
Speaker 1: you look at the surveys in social media are on
Speaker 1: social media. Given your work covering and researching to stop
Speaker 1: the Steel movement, UM, what do you make of the
Speaker 1: timing of this UM and how Elon Musk could influence
Speaker 1: the moderation of content on the platform just weeks days
Speaker 1: before mid Jorm elections. It's a really good question because
Speaker 1: we don't know. What's interesting about bureaucracies in general is
Speaker 1: they're usually so big and inflexible that it would be
Speaker 1: hard for him to undo everything all at once, unless
Speaker 1: he were to say we're going to get rid of
Speaker 1: the algorithms that remove hate speech. For instance. Uh, there
Speaker 1: are other algorithms that remove gore and pornography. Maybe they
Speaker 1: leave those in, but maybe they remove the filters that
Speaker 1: take out hate speech. UM. That could be really horrible
Speaker 1: for people who are using Twitter to look up information
Speaker 1: about voting or information about civic participation. UM, and they're
Speaker 1: looking at it from the perspective of wanting to know
Speaker 1: if a candidate is black or Latino, and they yet
Speaker 1: then inundated with a bunch of hates, breech and slurs
Speaker 1: and insults, because that that stuff is the stuff of
Speaker 1: content moderation. That's why UM, our Twitter feed isn't like
Speaker 1: a o L in the nineties, which was just um
Speaker 1: heinously full of stam and I think that, uh, based
Speaker 1: on the way he was talking about bots, I don't
Speaker 1: know if he really in depthely understands the way in
Speaker 1: which this platform has evolved over time, and that boughts
Speaker 1: have been there since very early on on Twitter. And
Speaker 1: so the idea that you could get rid of bots,
Speaker 1: it's not just a question of figuring out what's automated,
Speaker 1: but also figuring out, well is that business that is
Speaker 1: using a bot that is totally legitimate Are they able
Speaker 1: to keep using bought in that way? So I think
Speaker 1: he's gonna I mean, unfortunately, I think he he bought
Speaker 1: a big bag of problems. Right, So last quick question, we're,
Speaker 1: you know, weeks away from an election. How do you
Speaker 1: think the meme wars are going to pick up between
Speaker 1: now and then? Elon Musk aside, Well, Elon Musk is
Speaker 1: a voracious memer and he does tend to get a
Speaker 1: lot of his memes from from Reddit, so I have
Speaker 1: a feeling he'll be in the game. If Trump comes back,
Speaker 1: We're gonna see the the reanimation of Q and on Uh.
Speaker 1: It's already happening over on truth Social. I think the
Speaker 1: mean more to watch right now is between Dr Odds
Speaker 1: and Fetterman. Uh. Fetterman has been coming out with a
Speaker 1: bunch of memes linking different things that Odds has done
Speaker 1: in his past too funny and quippy sayings and short videos.
Speaker 1: Odds too has been trying to uh make Fetterman uh
Speaker 1: or expose Fetterman for having some medical issues, and so
Speaker 1: that is ongoing. We are also seeing a mean moore
Speaker 1: develop around Dark Brandon. This idea that Joe Biden isn't
Speaker 1: what the insults have been saying all along, that he's
Speaker 1: the senile old man. No, instead, he's this uh, hyper
Speaker 1: aware man would laser eyes that is organizing some kind
Speaker 1: of deep state takeover by having Trump's family charged. Um
Speaker 1: and of course what's going on in mar Lago, And
Speaker 1: as we watch these things play out, what we know
Speaker 1: that is underneath mean moors of course are um lies, disinformation.
Speaker 1: They're made to trick you. They're uh, they're made to
Speaker 1: incite you. They're made to be confusing. But at the
Speaker 1: end of the day, because they function in the medics,
Speaker 1: they're also emotionally contagious, and so people do share them
Speaker 1: because it feels good. Uh. It's it's some dark and
Speaker 1: scary stuff that you've just walked us through there, uh
Speaker 1: And if you want to learn more about it, of
Speaker 1: course you could read jones book Memoirs. Joan Donovan, great
Speaker 1: to have you on the show. Thanks for helping us
Speaker 1: walk through this breaking news as well. You can check
Speaker 1: out Jones book now. Okay, coming up, how Musks take
Speaker 1: over impacts the tech m and a landscape. That's next.
Speaker 1: This is Bloomberg, the revival of Elon Musk's planned to
Speaker 1: take Twitter private. I want to bring in Robert cant Well,
Speaker 1: now portfolio manager at the Hedge fund Upholdings. Uh, Robert,
Speaker 1: you don't hold Twitter, you don't hold Tesla. So just
Speaker 1: to clarifying that at the start, what's your take? Well,
Speaker 1: our take is that Ellen, the whole negotiation was an
Speaker 1: option that didn't pay out, and it was a perfectly
Speaker 1: rational thing for him to pursue and put money into.
Speaker 1: And you know, folks are wondering how much money to
Speaker 1: lose on the lawyers, but you know, he had the
Speaker 1: opportunity to win billions back in a in a purchase price.
Speaker 1: And clearly, as as the case wore on and as
Speaker 1: the text messages even began to leak, our suspicion is
Speaker 1: that his financial backers are not comfortable with that stuff
Speaker 1: being transparent. And so when he's facing you know, the
Speaker 1: potential loss of his co investors versus you know, having
Speaker 1: to pay a little bit more of a premium for
Speaker 1: the deal, I think it's become clear here that he
Speaker 1: was willing to take the deal at the higher price
Speaker 1: without losing the backing of his partners. Well, and it's
Speaker 1: even more of a premium now that you know Twitter
Speaker 1: shares orders so much pressure after he pulled out of
Speaker 1: the deal. You know, do you think it's likely he's
Speaker 1: going to get the financing that he needs to do
Speaker 1: this banks, that the banks are going to be able
Speaker 1: to sell that well. The markets have been bouncing back
Speaker 1: a little bit. You've seen liquidity returning in little pieces.
Speaker 1: M and A has has frankly been the biggest driver
Speaker 1: of the market. You had the Adobe acquisition of Figma
Speaker 1: that was a public over a private deal. You had
Speaker 1: Posh Mark acquired by an Asian business that's a public
Speaker 1: going private. Uh, now you've got Ellen now coming back
Speaker 1: to the Twitter deal, and there's a lot of this
Speaker 1: could be also framed around knowing that that price that
Speaker 1: he negotiated in April, the market had come down a
Speaker 1: little bit. We hadn't reached the June lows yet, so
Speaker 1: there was a ninety day window there where he was
Speaker 1: trying to get a little bit cute around the price
Speaker 1: that he was paying. But now that you're seeing the
Speaker 1: market recovering, now that you're hearing from other federal reserves
Speaker 1: around the world that they're starting to think about loosening
Speaker 1: how far they're going to go on interest rates, you're
Speaker 1: starting to see equity multiples come back, and that also
Speaker 1: could have been a consideration where if if you really
Speaker 1: did still want Twitter in his heart of hearts, he
Speaker 1: might have had to pay even more for a year
Speaker 1: from now. So as market prices are improving, that also
Speaker 1: made the deal financially more attractive at where he had
Speaker 1: agreed to previously. And there's still a very long path
Speaker 1: from here until the deal closing, but it certainly seems
Speaker 1: as likely as it's ever been now right, it's not
Speaker 1: over till it's over and then over again. You do
Speaker 1: own a number of you do have a huge tech portfolio,
Speaker 1: including you know, social media advertising revenue based companies. How
Speaker 1: do you think this impacts the advertising revenue stream for Twitter?
Speaker 1: I mean, advertisers have been you know, understandably spooked over
Speaker 1: the last few months um whether or not they should
Speaker 1: be back, you know, putting their money into Twitter at
Speaker 1: all anymore. So for context, Twitter they've got about five
Speaker 1: and a half billion dollars of revenue, Snapchat about four
Speaker 1: and a half, met about a hundred and twenty so
Speaker 1: for orders of magnitude that we're talking here, Twitter is
Speaker 1: still a relatively small player. But the thing that's different
Speaker 1: about Twitter relative to a snapchet. Twitter is a top
Speaker 1: five global web property, so when you talk about the reach,
Speaker 1: and if you look at the top thirty web properties
Speaker 1: in the world, they're basically owned by Googler Meta. So
Speaker 1: Twitter was the last remaining independent top ten worldwide internet property,
Speaker 1: and that's got to be the one thing that they're
Speaker 1: in their heart of hearts telling themselves, this is why
Speaker 1: this thing is worth forty four billion dollars, because there's
Speaker 1: a lot more ways that we're gonna be able to
Speaker 1: extract value from it beyond just advertising. So advertising is
Speaker 1: likely to look reasonably healthy in the fourth quarter. You've
Speaker 1: got the mid terms coming up in a month. Political
Speaker 1: quarters are always pretty good for digital advertisers, and they
Speaker 1: also may have heard that Twitter's numbers were improving and
Speaker 1: must wanted to get ahead of that as well. So
Speaker 1: that's what we're mainly looking out for, is the digital
Speaker 1: digital advertiser performance in the fourth quarter of this year.
Speaker 1: All right, Robert kentwell, upholding portfolio manager. Good to have
Speaker 1: you hear you on this. Thank you so much for stopping.
Speaker 1: Now wrap it all up. I want to bring in
Speaker 1: our own Sarah Fryar or Bloomberg Tech editor to cap
Speaker 1: this crazy day and talk about what this means for
Speaker 1: the future. Sarah, A lot of huge existential questions here.
Speaker 1: Let's say Elon Musk does buy Twitter, it's a done deal.
Speaker 1: How do you imagine, as someone who has covered social
Speaker 1: media for the better part of a decade, how do
Speaker 1: you think he'll change Twitter and social media? I think
Speaker 1: he's very quickly going to find out that a lot
Speaker 1: of the things that he wanted to do to change it, um,
Speaker 1: such as you know, these broad notions, notions of advocating
Speaker 1: for free speech, are a lot easier said than done. UM.
Speaker 1: I think that he, as we've seen in his text messages,
Speaker 1: gets a lot of feedback from very powerful people around
Speaker 1: the world and sometimes acts on it. And so I
Speaker 1: think he's going to be UM really grappling with that
Speaker 1: and trying to figure out what principles to push for
Speaker 1: and and what is worth ignoring. I wonder if Twitter
Speaker 1: will be under even more scrutiny also with Musk as
Speaker 1: a sole owner, you know, I think about the scrutiny
Speaker 1: that Mark Zuckerberg has gotten at Facebook, will the pressure
Speaker 1: to be even higher? The pressure might be higher, but
Speaker 1: we're not going to get as much information. It's gonna
Speaker 1: be more of a black box. I think that as
Speaker 1: a private company, Twitter is much less likely to tell
Speaker 1: us how it's growing or or how its business is doing,
Speaker 1: and UM Elon Musk will be the main source of information,
Speaker 1: So it's going to be even more critical for journalists
Speaker 1: like us to really find out what's happening behind the scenes.
Speaker 1: UM I. I do think that there are going to
Speaker 1: be a lot of disgruntled employees, people who already tell
Speaker 1: us that they're they're not looking forward to UM leadership
Speaker 1: under Musk for whatever reason. UM, and I think that
Speaker 1: it's going to be a big cultural change for the company,
Speaker 1: especially UM in in issues as simple as as work
Speaker 1: from home. As Elon Musk has said that he's not
Speaker 1: he's not a big supporter of that quickly. Are you
Speaker 1: expecting an exodus of employees or you know, also potentially
Speaker 1: and in flux definitely both right. I think that we're
Speaker 1: going to see people who are are huge fans of
Speaker 1: Elon Musk and what he's accomplished elsewhere UM say that
Speaker 1: they'd love to work for him in Twitter. I think
Speaker 1: we're also going to see employees who disagree with with
Speaker 1: him UM try to find other employment. But that's that
Speaker 1: It is a tough time. There are hiring freezes across
Speaker 1: the board of tech companies UM companies that are cutting
Speaker 1: their budgets. So if you are a Twitter employee who's
Speaker 1: trying to get out of there, you probably already tried
Speaker 1: to UM to start your search. I think that a
Speaker 1: lot of employees are are sort of figuring that out
Speaker 1: right now, and we're a little uncertain. I think there's
Speaker 1: still some uncertainty about whether this is going to actually happen.
Speaker 1: All right, Sarah, thank you for giving us a little
Speaker 1: view into your version of the crystal Ball, Big hard
Speaker 1: Questions at hand, Bloomberg, Sarah Fryar, thank you. That does
Speaker 1: it for this edition of Bloomberg Technology. We're gonna be
Speaker 1: across all developments on this tomorrow, of course. And also,
Speaker 1: Francis Howgan is joining us the Facebook whistle blower, one
Speaker 1: year after her historic testimony before Congress. I'm sure she
Speaker 1: has some thoughts on Elon Musk owning Twitter as well.
Speaker 1: I'm Emily Chang in San Francisco. This is Bloomberg