Musk recently acquired a 9% stake in Twitter, while joining other critics in questioning the social media platform’s dedication to free speech and the First Amendment. On Tuesday, Twitter Inc. said in a regulatory filing that it entered into an agreement with Musk that will give the billionaire a seat on its board, with the term expiring at its 2024 annual shareholders meeting.
Musk, either alone or as a member of a group, won't be allowed to own more than 14.9% of Twitter's outstanding stock for as long as he's a board member and for 90 days after.
Twitter CEO Parag Agrawal said Musk’s appointment to the board came after conversations with him in recent weeks, adding that "it became clear to us that he would bring great value to our Board."
"He’s both a passionate believer and intense critic of the service which is exactly what we need on @Twitter, and in the boardroom, to make us stronger in the long-term," Agrawal said. "Welcome Elon!"
In response, Musk wrote that he was "looking forward to working with Parag & Twitter board to make significant improvements to Twitter in coming months!"
The serial entrepreneur’s aim in acquiring 73.5 million shares, worth about $3 billion, isn't clear. A U.S. Securities and Exchange Commission filing made public on Monday said the event triggering the filing happened on March 14. Musk has also raised the possibility with his massive Twitter following that he could create a rival social media network.
Prior to the board announcement, Musk on Monday evening tweeted out a yes-or-no poll, writing: "Do you want an edit button?" He cheekily misspelled the choices as "yse" and "on" – a reference to users' inability to correct typos once tweets are sent.
As of Tuesday morning, the yes option was winning with more than 70% of the vote.
Former Twitter CEO Jack Dorsey said in 2020 that Twitter would "probably never" implement such a feature. On Friday, which was also April Fool’s Day, the company tweeted bluntly, "we are working on an edit button."
Agrawal quote-tweeted Musk's poll shortly after with a caption saying: "The consequences of this poll will be important. Please vote carefully."
Musk, who has 80 million Twitter followers and is active on the site, has questioned free speech on Twitter and whether the platform is undermining democracy. Agrawal, who succeeded founder Dorsey as CEO last year, was mirroring a phrase that Musk used in a tweet about Twitter's free speech principles on March 25.
In years past, Twitter and other social platforms have faced criticism for allowing harmful speech ranging from incitement to violence to coordinated harassment and racial abuse. More recently, these platforms have made concerted efforts to rein in such behavior, often drawing criticism similar to Musk's from the political right. Both Twitter and Facebook faced blowback after suspending the accounts run by former President Donald Trump following the Jan. 6 Capitol insurrection last year, as well as restricting links to the spread of a New York Post article about Hunter Biden leading up to the 2020 presidential election.
Responding to Musk’s recent poll over an edit button, Twitter user Everyday Astronaut suggested that it only be available for a few minutes after being posted, and that edited tweets also contain a link showing the change made.
In response, Musk said the two conditions sounded "reasonable."
Since becoming Twitter’s largest shareholder, industry analysts and legal experts say Musk could begin advocating for changes at Twitter immediately if he chooses. Musk’s stake in Twitter is now more than four times the size of Dorsey’s, who had been the largest individual shareholder, according to the Associated Press.
Musk could see Twitter as an investment with big growth ahead, or he could have non-investment reasons for the purchase, such as buying to make sure the platform doesn't restrain his speech, said Erik Gordon, a law and business professor at the University of Michigan.
"What he could be worried about is if enough of his tweets start to look like disinformation, that Twitter says ‘we’re doing our job against disinformation.’" Gordon told the Associated Press. No CEO would refuse to take a call from the company's top shareholder, so the purchase gives Musk access to Twitter's top management, he said.
FILE IMAGE - Tesla CEO Elon Musk is pictured as he attends the start of the production at Tesla's "Gigafactory" on March 22, 2022, in Gruenheide, southeast of Berlin. (Photo by PATRICK PLEUL/POOL/AFP via Getty Images)
Twitter earlier this year banned the personal account of far-right U.S. Rep. Marjorie Taylor Greene for multiple violations of the platform’s COVID-19 misinformation policy. Other people banned in recent years include Steve Bannon, for suggesting the beheading of Dr. Anthony Fauci, former Ku Klux Klan leader David Duke for breaking the social media site’s rules forbidding hate speech, and right-wing conspiracy theorist Alex Jones and his Infowars show for abusive behavior.
Musk recently described himself on Twitter as a "free speech absolutist" in explaining why the Starlink satellite internet service — part of his aerospace company SpaceX — would not block Russian state media outlets, which have spread propaganda and misinformation in line with the Kremlin’s narrative on its war in Ukraine.
Twitter’s stock surged nearly 30% Monday. Since March 14, the date listed on filing by Twitter, its shares are up nearly 50%, meaning that Musk’s investment has paid handsomely — so far.
Musk is also locked into a bitter dispute with the SEC over his ability to post on Twitter. His lawyer has contended in court motions that the SEC is infringing on the Tesla CEO’s First Amendment rights.
In October 2018, Musk and Tesla agreed to pay $40 million in civil fines and for Musk to have his tweets approved by a corporate lawyer after he tweeted about having the money to take Tesla private at $420 per share.
The funding was far from secured and the electric vehicle company remains public, but Tesla’s stock price jumped. The settlement came after the SEC brought a securities fraud charge. It specified governance changes, including Musk’s ouster as board chairman, as well as pre-approval of his tweets.
Musk’s lawyer is now asking a U.S. District Court judge in Manhattan to throw out the settlement, contending that the SEC is harassing him and infringing on his First Amendment rights.
The SEC says it has legal authority to subpoena Tesla and Musk about his tweets, and that Musk’s move to throw out the settlement is not valid.
The SEC also disclosed that it is investigating Musk’s Nov. 6, 2021 tweets that asked followers whether he should sell 10% of his Tesla stake. The commission said it issued administrative subpoenas while investigating whether Musk and Tesla are complying with disclosure controls in the 2018 agreement.
Musk ended up selling more than 15 million shares worth roughly $16.4 billion. With some sales in late December, Musk is close to selling 10%.
The Associated Press contributed to this story. It was reported from Cincinnati.