Whenever we begin to evaluate how the U.S. government may respond to Elon Musk buying out Twitter and changing the dynamic behind Jack’s Magic Coffee Shop, it is always worth remembering a key point. Elon Musk is not in an adversarial relationship with the U.S. government. Indeed, almost every Musk venture is tied into the matrix of multiple government institutions.
That said, only Elon Musk knows the full intent of his objective to utilize Twitter and his larger aspirations to open information systems to all people (Iran example).
Having listened to a lot of Musk’s explanations for his endeavors, I’ve yet to nail down how his statements mesh with the public-private partnership that forms the baseline of revenue for his various engagements.
The Washington Post is reporting that Musk may RIF (reduction in force) to 75% of Twitter employees. “Elon Musk told prospective investors in his deal to buy the company that he planned to get rid of nearly 75 percent of Twitter’s 7,500 workers, whittling the company down to a skeleton staff of just over 2,000.” {link}
(WaPo) […] On Thursday evening, Twitter’s top lawyer Sean Edgett sent out a note to all employees saying the company did not have any confirmation from Musk about his plans. Twitter’s own, smaller-scale “cost savings discussions” were put on hold once the merger agreement was signed, Edgett said, according to an email viewed by The Post.
In internal Slack groups, Twitter employees reacted to the news with anger and resignation, supporting each other and making jokes about the turmoil of the past few months, according to people familiar with the conversations.
Twitter and Musk are expected to close the purchase by Oct. 28. Planning for the closing is moving forward in apparent good faith after months of legal battles, say people familiar with the negotiations who spoke on the condition of anonymity to discuss internal deliberations. If the deal closes, Musk would immediately become Twitter’s new owner. (read more)
Meanwhile Bloomberg was reporting yesterday the Committee on Foreign Investment in the US (CFIUS), a Treasury Dept agency, was considering a national security review of the purchase due to foreign nationals investing and participating in the funding mechanisms for the buyout. However, Bloomberg updated that angle today noting any CFIUS review would be unlikely:
(Bloomberg) Alarm over Elon Musk’s recent Russia-friendly tweets is driving Biden administration officials to explore using a secretive review panel to assess the national-security risks of his business interests.
Yet experts say that deploying the Committee on Foreign Investment in the US to investigate Musk’s dealings — including his pending $44 billion purchase of Twitter — is unlikely to work and would face legal challenges.
There may be an argument for some sort of CFIUS review, but it’s thin, according to Emily Kilcrease, a senior fellow at the Center for a New American Security. The panel would only get involved if foreign investors were taking a controlling stake in the new company, she said, something Musk doesn’t appear ready to allow.
CFIUS has the right to look at foreign investors, not Musk, Kilcrease said. “So if there’s concerns around Musk, CFIUS is a really messy, imperfect tool to try to deal with that — and I suspect would be subject to legal challenge,” she said. (read more)
Two things about Twitter and the U.S. government are true, and that makes predicting where this ends up quite challenging to game out.
♦First, the U.S. intelligence apparatus is actively involved in the background operations of Twitter. The extent of the IC involvement may be debatable, but the IC being involved in Twitter is fundamentally true.
♦Second, if the U.S. government wanted to stop Elon Musk from purchasing Twitter, they could – very easily. As noted, Musks network of business operations is heavily dependent on a partnership with the U.S. government (SpaceX, Starlink, Tesla, etc.) The State Dept, Pentagon, NASA, FAA, and various intelligence agencies are all parts of a deep network of relationships with Musk’s organizations.
The fact that the U.S. government does not intervene in any Musk effort, including Twitter, is not evidence of Musk being outside the system. Factually, it would be challenging to find another company with tentacles as wide, far reaching and connected to the U.S. government.
Musk is purchasing Twitter because the U.S. government wants to allow Musk to purchase Twitter. Musk may be ‘dirty dancing‘ with the government while trying to retain the patina of an outsider, but the network of his company attachments to the U.S. government run counter to that outlook.
Again, I don’t know what Musk’s intent is, and hopefully the Twitter outcome is something much more open and transparent than currently exists. However, that said, we should not assign too much weight to any media outline of the dynamic until we have actual reference points to any possible change.
