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Takeover of Twitter by Elon Musk: the reasons for an announced failure

Elon Musk's Twitter profile is seen on a smartphone atop printed Twitter logos in this photo illustration taken April 28, 2022. REUTERS - DADO RUVIC

Text by: Aabla Jounaïdi Follow

4 mins

It's a twist in the latest episode of a long commercial saga.

Elon Musk ends Twitter takeover deal.

The management of the social network does not see it that way and is challenging this decision in court.

Decryption of this umpteenth episode with Julien Pillot, doctor in economics, teacher-researcher at Inseec, connoisseur of the strategies of tech companies.

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RFI: To what can we attribute this withdrawal announced by Elon Musk from the Twitter takeover operation?

Julien Pillot 

: Musk's part evokes a main reason.

This is the kind of opacity that would be organized by the management of Twitter around the number of active users of the platform.

Twitter claims around 300 million followers, but what matters to monetize Twitter followers is that they are real people who have enough activity on Twitter to be in contact with sponsored tweets, with advertising.

If you happen to have too large a proportion of that number of followers who aren't actually people, but algorithms - bots, which are there to retweet messages they've been programmed to - c it is impossible to monetize them.

Twitter claims that there would be only 5% of the number of accounts that would correspond to these famous algorithmic robots when the part of Elon Musk tends to consider that this number would be very largely undervalued and that rather 20% of the accounts would be affected.

Behind it, there is a capacity for monetization and also a capacity to have influence relays via Twitter which is diminished. 

What can be the consequences for Twitter?

You have to understand that we have reached a very advanced stage of the transaction.

Public announcements were made.

By definition, a process has been set in motion.

And if this process does not go to completion, there is bound to be a prejudice that is suffered by one or the other or both parties.

In this case, the damage would first be borne by Twitter.

The group wasted time, for one thing.

Above all, if the

was not made

, he would see his reputation tainted by suspicion, suspicion of opacity around strategic information related to real accounts on the platform.

But also, and this is the most important, an opacity around the ability to monetize the company.

The real capacity of the group to be able to sustainably and structurally generate profits.

Twitter sells ad exposure to advertisers.

If these advertisers realize that what they are being sold is an oversized number of active users compared to the real one, they are perfectly justified in asking for commercial discounts, which would make it even more difficult to Twitter's task of generating profits.

And for Elon Musk?

We are talking about a billion dollars [of possible indemnities for breach of contract].

The last time I looked at Elon Musk's personal fortune, it was valued at $220 billion.

1/220ᵉ of his fortune that he could possibly concede for a

that would not be made.

We can consider that for Elon Musk, it is a risk to be taken.

Did Elon Musk really want to buy Twitter, wasn't he bluffing?

It is obvious that in

of this type, especially when one of the two parties is as cunning and strong in business as Elon Musk, we are on a game of poker-liar.

That Elon Musk tried by all means to obtain a sale price of Twitter lower than the 44 billion dollars that he had announced elsewhere, it is, I would say, "good trade war".

But the deal went too far for it to be just a

.

There is a real desire to buy Twitter, but for him, it can't be done at any price.

My personal hypothesis is that there is hidden attention.

Elon Musk might be setting up a micro-blogging social network competing with Twitter, but one that he would master from A to Z, and from day one.

I would do the same in his place (laughs)!

Why ?

It would be less expensive to start from scratch than to buy a social network where a good part of the employees would not be enthusiastic to see you arrive.

In addition, Twitter is a dominant social network, therefore monitored by the authorities.

Maybe, he thinks, “might as well do like Donald Trump and launch my own platform for a lot less and do what I want on it since it's mine from day one”?

Maybe that's what's happening!

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