June 4, 2023


Quietly Brilliant

How the US Govt. may kill Elon Musk’s Twitter deal, and why Musk may be secretly hoping for it- Technology News, Firstpost

Explained_ How the US Govt. may kill Musk’s Twitter deal, and why he may be secretly hoping for it

After going through all the drama between Elon Musk and his team, and Twitter, it turns out that it may be the US government who has the final say in the Elon Musk-Twitter deal.

Explained_ How the US Govt. may kill Musk’s Twitter deal, and why he may be secretly hoping for it

If Elon Musk does go through the Twitter deal, he will be paying more than what Twitter’s current market value is. Image Credit: AFP

After going back and forth a number of times over his proposal to buy Twitter for $44 billion, Elon Musk finally committed to his plan and stated that he will indeed buy Twitter for the agreed-upon amount. The issue is, that Musk, at least according to several trade analysts is overpaying for Twitter if he buys the company for the agreed-upon $44 billion mark. 

Superficially, Musk has maintained that if he buys Twitter, it would be hugely beneficial for his goal of launching a super app or his own social media platform, called X.com. However, Musk has also indicated very subtly that he does not want to buy Twitter, not for the price of $44 billion at least. If Musk is forced to go through with the deal, he will be paying much more than what Twitter is worth as of writing this article.

That is also being touted as the reason why Musk plans on laying off at least 75 per cent of the people working at Twitter, once he takes over.

According to a new Bloomberg report, the Biden administration is considering launching a number of reviews to see if the deal between Twitter, and Elon Musk, who owns Starlink Satellite Internet and SpaceX, could potentially jeopardise national security. These reviews could potentially end up blocking the Twitter deal from going through, which many commenters think is exactly what Musk wants.

Elon Musk’s recent comments and tweets on the war between Russia and Ukraine, and the fact that he allegedly spoke to Vladimir Putin about the war and tried to broker a peace deal did not sit well with the US government. Musk, of course, has denied that he spoke to Putin about the war, and that the last time they spoke was about 18 months ago, when they were speaking about space.

Musk’s stake in SpaceX and Starlink, and the government contracts that he has from the US government place him at par with some of the most powerful defence contractors in the US. Furthermore, there is speculation that Musk may be raising finance from outside the US in order to go through with his acquisition of Twitter. 

Because Twitter collects so much data on Americans, the US government considers it a potential risk that a Musk-owned Twitter could end up supplying data on Americans to Russia. 

US government authorities are now looking if the US even has the legal tools to conduct reviews into Musk’s deals. In all likelihood, if the US government does decide to investigate Musk’s deal with Twitter, it would be done under the laws governing the Committee on Foreign Investment in the United States (CFIUS), an interagency panel governed by the Treasury Department that reviews acquisitions by foreign buyers of US businesses.

However, the chances of that happening are very slim, unless Musk is trying to finance the Twitter deal using foreign investors. Moreover, even if he does take that route, everyone would be kept in the dark. CFIUS doesn’t comment on any acquisitions it may be reviewing, so it will be difficult to track if the US attempts to go that route.