Ever since Elon Musk took Twitter private for US$44 billion (£36 billion), the debate around the social media platform has been vitriolic. There has been considerable angst about the direction Musk has been taking the company and his potential backpedalling on initial promises about free speech.
Musk’s takeover appeared to do much financial damage to the company, with many advertisers walking away. Although Musk claims Twitter is no longer on the “fast lane to bankruptcy”, I would argue that neither the former nor current ownership models look capable of making much money or benefiting society.
What follows is a proposal that would make Twitter more financially sustainable and move it back towards open speech, within limits. It would remove many of the problems related to anonymous and bot accounts while allowing Musk to recoup at least a substantial amount of his investment.
A new Twitter hybrid
I’m certainly not the first to suggest an alternative ownership model for social media companies. Back in 2017, the Financial Times columnist Andrew Hill suggested ownership by a cooperative of users. Twitter shareholders even voted on such a move at their annual meeting that year after it was tabled by tech activists James McRitchie and Steffen Sauerteig, though only those holding 5% of the shares were in favour.
The cooperative model certainly has attractions. Many large-scale cooperatives owned by users have operated successfully for decades, such as German food retailer REWE and Japanese insurer Nippon Life. Generally, however, cooperatives don’t appear to scale well outside certain industries and circumstances, and it is not clear the pure cooperative model is workable for a social media behemoth.
Instead, I’m proposing a hybrid of a cooperative and a public company for Twitter. Here is a ten-point plan:
Twitter would be reformulated as B corporation, a newish type of company dedicated to working as a force for social good. Twitter would be committed to funnelling a fixed proportion of future dividends to the causes of democracy and free speech.
Musk and his financial backers (who would of course have to back the deal) would be bought out via a combination of cash, loans and debt rollovers.
Any individual or company with a Twitter account with minimum usage would receive one Twitter share. They would have a limited period such as three months to take possession. This would require the same legal identification procedure as on major stock exchanges.
Anyone with an active account could purchase up to nine more shares at an IPO price to be determined. All share ownership would be public, with the “blue tick” system for verifying users replaced by an entry in users’ profiles showing their shareholdings.
No user would hold more than ten Twitter shares. There might be an exception for companies or governments that wanted more than ten accounts, perhaps by giving them non-voting shares for the extra accounts or requiring all dividends from these accounts to be donated.
Anyone wishing to join Twitter in future would have to purchase at least one share at the market price. There would be a specific class of “gratis” shares for certain pre-approved groups such as charities or NGOs so that they didn’t have to pay.
Twitter shareholders could collectively form coalitions to vote with their shares as a block.
Anyone closing their account would receive the market price for their shares.
Anyone violating Twitter’s user policy – over hate speech, for example – would have their account suspended, including any claim to dividends. They could, however, sell their shares and close their accounts.
To accommodate new users, the board would be able to increase the number of shares within limits. All other aspects of governance would be in accordance with the rules of B corps and the designated stock exchange used to transact shares. Advertising fees would be charged in line with current practices.
Many specifics would need to be worked out, of course. This is a better method of validation and certification than simply paying for a blue tick, since one cannot remain anonymous to the organisation as an individual shareholder. It removes the threat of fake accounts, and gives users a formal say in company decisions. It brings Twitter back into public ownership, opening up its management and governance to scrutiny.
Users would be able to benefit financially and socially from the platform’s success. And it gives Musk a way to minimise his losses and exit Twitter easily and quickly.
Currently Twitter has approximately 250 million users. Supposing it was valued at US$30 per share, the approximate price before Musk launched his bid, users would receive a share of US$7.5 billion by being granted one share each. This would be added to the balance sheet as shareholders’ equity.
Supposing, on average, users bought an additional five shares at the IPO price, that too would be booked as shareholders’ equity, as well as giving the company US$37.5 billion in cash. This may overestimate the level of buy-in, but it gives a working example of how it could play out.
Musk’s personal exposure at the time of the takeover was approximately US$25 billion, with major banks lending him another US$13 billion and wealthy investors like Oracle founder Larry Ellison and Saudi prince Alwaleed bin Talal buying stakes worth about US$7 billion.
It is hard to imagine this group recouping their entire US$44 billion, since much of the cash raised through this IPO would be needed for operations. But this is more about minimising losses than maximising gains. Also there is the the massive reduction in Musk’s wealth in the last year to consider – much of it from his other companies falling in value because investors were worried about the Twitter distraction. The prospect of Musk exiting Twitter to revive the fortunes of these other endeavours might sufficiently motivate him to accept a deal that minimises his losses.
So, Twitter is not a lost cause. With some ingenuity it could become the public forum we need. In the words of founder Jack Dorsey: “It’s critical that the people have tools to resist [government and corporate control], and that those tools are ultimately owned by the people.”