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Musk may yet make Twitter deal look like good business

Matthew Lynn

Elon Musk’s takeover of Twitter, which surprisingly sprang back to life this week, already looks like a disaster. It is hard to imagine that anyone has ever kissed goodbye to $44bn (£40bn) quite so completely or so quickly.

Staff are already said to be completely demoralised and a slump in the tech sector since Musk first announced his offer means the Tesla founder looks to be paying through the nose for the deal. The social media site’s permanently angry users will abandon it in a fit of petulant self-importance, some believe.

Perhaps we should not be so quick to judge. Sure, it is easy to outline all the reasons why it will go wrong. And yet Musk is also a brilliant entrepreneur, and one who has called some huge wagers right in the past. He has already talked about turning the social media site into the “everything app”. Unpack that, and add in his other interests, such as Starlink, and Twitter could attack Amazon in retail, Google in search and services, and Meta in networking. It would be a lot closer to China’s hugely successful Wechat than anything we have seen so far in the West.

There have already been plenty of twists and turns in this saga. Musk transforming Twitter, making a success of it, and taking on the giants of the internet, could yet be the final one.

Right now, Kwarsi Kwarteng has more chance of overtaking Gordon Brown as the UK’S longest-serving Chancellor than Elon Musk appears to have of making a success of his purchase of Twitter. After tabling an initial $44bn bid back in April, Musk then pulled out of the deal amid a hurricane of accusations and counteraccusations about fake accounts. A couple of weeks before a court hearing that could have forced him to buy the company anyway, he suddenly announced the deal was back on again. With Musk, nothing is certain, but it seems unlikely even he could wriggle out of the offer a second time. Within a few weeks, Twitter’s shareholders will be celebrating a big payoff, while Musk will be taking control of his new toy.

It is hard to see that going well. Twitter’s liberal staff are already in open revolt over what they perceive as their new owner’s libertarian bias. Several months of openly trashing everything the company does as either a con or a threat to democracy has probably not endeared Musk to his new employees. Its users, not exactly the calmest or most fair-minded group of people on the planet, are already preparing to abandon it, especially as he may well reinstate the account of Donald Trump, probably the most hated man in the world, at least on social media. And perhaps worst of all, he is wildly over-paying. If the valuation had simply tracked the share price of Facebook-owner Meta this year, Twitter would be worth at most $20bn by now (and less than $15bn if it tracked Snapchat). If he had waited six months, Musk could have bought it at half the price. There have been some poorly conceived, and executed, buyouts over the years. But right now I would challenge anyone to think of one that looks worse.

And yet, here’s the catch. Let’s keep in mind that, for all his weirdness, Musk is the world’s most successful entrepreneur. He was one of the founders of Paypal, and then turned Tesla into the most valuable auto manufacturer in the world. He has a wacky, offbeat genius that is a rarity among the world’s biggest businesses. It is possible he could make a success of it.

Musk clearly has big plans for Twitter. He has already started describing it as an “everything app”. There is speculation he may rename it X (the original name of his first venture Paypal). As so often, Musk is very hazy on the details. But it already sounds as if he is planning something closer to China’s Wechat than anything we have yet seen in North America or Europe. Owned by Tencent, Wechat is the world’s largest app, offering not just chat functions like Whatsapp but a vast array of work, leisure, financial and travel services, all conveniently bundled up in one pale green package. With a billion users, it is a formidable product.

Will it be possible to create something similar in the West? It definitely won’t be easy. Competition regulators won’t like the idea of one company having so many different products (and the European Union in particular will be apoplectic). It will have tough competitors to take on. And it is not even clear that Twitter, with its odd mix of angry conversation and funny cat videos, is really the place to start with this ambition to create a Wechat competitor.

Against that, Musk has deep pockets. In Starlink, he will soon have his own satellite-based mobile system. He is a disrupter, who knows how to overthrow his rivals. And, for all his faults, Twitter at least gives him an installed user base of more than 200 million people to start with.

One point is surely clear. If Musk’s X is at least partially successful it will have huge consequences for the established giants of the tech industry. An “everything app” will attack Amazon in retail, providing, alongside the increasingly successful Shopify, a genuine alternative for buying things. On search and services, such as email and maps, it will provide a genuine rival to Alphabet’s Google unit. It will take on Meta, whose share price is already in freefall, in networking and messaging. It will even take on Microsoft, partially in business software but also in gaming. And elsewhere it will take on dozens of different rising stars of the web in everything from financial services to taxi and ride sharing services, and from music and film streaming to food delivery and health care.

Of course, it may crash spectacularly. More plausibly, it may turn out to be a damp squib, a “meh” app instead of the killer variety. We will start to find out after the takeover is completed. But there is a slim chance Musk may make Twitter into something that can provide a vast array of services – and if he succeeds in that it would hugely disrupt the internet economy.

‘If he had waited six months, Musk could have bought it at half the price’





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