A few months ago it became clear that the current richest man in the world, Elon Musk wanted to get his paws on Twitter. He started by buying a large chunk of it and then last week he made a bid to try and take it over but the Twitter board defended the company from this hostile takeover. Instead, they and Elon Musk entered negotiations and now have come to an agreement. Elon Musk will buy Twitter for about $44 billion and take the company private later this year. So what does it all mean? Reading the news can be confusing especially if business terminology is not your forte. We will endeavour to explain some of the issues involved in this issue.
Explaining the jargon
So a lot of laypeople are trying to wrap their heads around this whole buying a company thing. First of all, you need to understand that a company is simply an organisation that is treated as a separate person at law. Instead of this “person” having a birth certificate they have instead what is known as a certificate of incorporation. This means that the owner(s) of Twitter and Twitter itself are two separate people. It’s possible to steal from your own company and if you do you go to jail. Also, the debts of the company are not your debts with exceptions of course
.Furthermore, there are generally two types of companies. A public limited company and a private limited company. A private limited company is as the name suggests private. Its financial affairs are mostly private and its shares are not publicly available for purchase. This is where Elon Musk intends to take Twitter which is currently a public limited company whose shares are public. That is how he was able to buy into Twitter as anyone can buy Twitter shares at the moment. Companies are a large and exciting topic but for purposes of this discussion just know that both types of setups have advantages. In focus here are two. Going public i.e. turning a private limited company into a public limited company allows original investors to cash out and raise more capital. However, it opens up the company to hostile takeover as we have seen with Twitter and also you now have shareholders to satisfy and their outlook tends to be short term. If you defy their wishes to get as rich as quickly as possible they will always try to oust you from your own company. You can fix this by going private i.e. turning the company back into a private limited company and focusing on long term goals. Prior to this Dell was one of the biggest U.S names to go private.
What this means for Twimbos
This is so early in the game so it is hard to tell. Elon Musk has promised to make some big changes that users of the platform have been demanding for a long time. The biggest of these is the Edit button which will allow you to edit your typos and correct some mistakes. That will not be without controversy. Like Reddit’s subjects, Twitter is often loved for its not having an edit button. Edit buttons will allow people to edit their mistakes or early Tweets and have an impact on things like reTweets and comments. Let us say a person makes an awesome Tweet, you like and reTweet it, later someone changes it into a Racist Tweet by editing it, that makes it look like you are a racist and endorse racism especially if it’s an old Tweet you have forgotten about. This means you will now need to be more careful about what you like and reTweet than before.
Then there is the algorithm i.e. the secret sauce that makes Twitter work e.g. decide which Tweets you see or do not see and so on. Elon Musk has promised to make this secret sauce open source. This basically means that we will all know more about how Twitter works behind the scenes. Honestly, this is more about please rich white Republicans in America than it is about helping free speech. Zimbos will not really benefit much from this to be honest.
In the end Musk is probably planning a raft of other changes whose worth and usefulness will be evaluated once we know more but don’t expect the way you use Twitter to change much in the short term.
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