Elon Musk closes Twitter deal and fires top executives

by Faiz Siddiqui, Elizabeth Dwoskin / The Washington Post

13:52 JST, October 28, 2022

SAN FRANCISCO – Elon Musk became Twitter’s owner late Thursday as his $44 billion deal to take over the company officially closed, marking a new era for one of the world’s most influential social media platforms.

As one of his first moves, he fired several top Twitter executives, according to three people familiar with the matter who spoke on the condition of anonymity to discuss sensitive matters. One of those confirmed the deal was complete.

Chief executive Parag Agrawal, chief financial officer Ned Segal and Vijaya Gadde, head of legal policy, trust, and safety, were let go, according to the people. Sean Edgett, the company’s general counsel, was also pushed out, one of the people said. The top executives were hastily booted from the company’s San Francisco headquarters.

Musk’s moves late Thursday signal his intentions to firmly put his stamp on Twitter. Musk has publicly criticized the company’s outgoing management over product decisions and content moderation, as well as saying he would restore former president Donald Trump’s account.

Still, “Twitter obviously cannot become a free-for-all hellscape, where anything can be said with no consequences!” Musk tweeted Thursday.

The closure of the deal ended a months-long, roller-coaster saga in which the billionaire – the world’s richest person – conducted a hostile takeover to buy Twitter at an inflated price, only to renege on the deal and then enter into a bitter legal battle with the social network.

But in recent days, Musk appeared resigned, and even enthusiastic, about his impending ownership. He showed up at the company’s offices unexpectedly Wednesday, carrying a sink to suggest that the message that he would become owner needed to “sink in,” according to a photo he posted to his more than 100 million Twitter followers.

He also plans to hold a companywide town hall Friday.

Neither Twitter nor the executives responded immediately to a request for comment.

The moves place the entrepreneur at the helm of one of the world’s most powerful communication platforms just days ahead of major elections in the United States and Brazil.

Musk, a transportation magnate who is CEO of Tesla and SpaceX, has offered some clues about what he would do when he took over Twitter – despite having no experience running a social media service.

He has suggested that he wants to loosen standards for the policing of harmful content such as misinformation and hate speech. He has also decried so-called censorship by social media companies.

Musk has repeatedly criticized the company and supported online attacks against individual executives. He has told potential investors and partners that he wants to execute a financial turnaround of the company by firing nearly 75 percent of its workforce and leaning into new business opportunities, including having people subscribe to exclusive content from popular influencers on the service.

Musk represents a different kind of owner than Twitter co-founder and former CEO Jack Dorsey, or his now-rival Mark Zuckerberg, the CEO of Facebook, who generally try to stay politically neutral.

Over the course of his Twitter bid, Musk has at times styled himself a moderate, but he also announced plans to vote for a Republican president in 2024. He has also weighed in on geopolitical conflicts between China and Taiwan and on the Ukraine war.

Inside Twitter, Musk’s arrival has been met with resentment and dismay – though Musk’s visit on Wednesday left some hopeful. Those hopes were quickly dashed with the firings of longtime top executives, who had commanded the trust of existing staff.

The mood after Wednesday’s visit was “overall slightly more positive,” said one employee, who spoke on the condition of anonymity because they were not authorized to speak publicly about the company, adding “everyone’s ready to close this chapter and get to what comes next.”

Musk’s interest in owning Twitter became public in early April, when financial filings revealed he had taken a more than 9 percent stake in the company, making him its largest individual shareholder. A day later, Musk was announced as Twitter’s newest board appointee.

But his relationship with top executives quickly went south. Agrawal took exception to Musk’s April 9 tweet that asked “Is Twitter dying?” according to text message exchanges revealed in court documents. Musk laid out his plan in subsequent messages.

“I’m not joining the board,” he said in one. “This is a waste of time.”

Instead, he decided to take Twitter private and went to the board with an ultimatum: Let him buy the company or he would start a rival social media service. He publicly launched a hostile takeover bid, pricing the deal at $54.20 – a possible wink to cannabis, raising some doubts about his sincerity.

Roughly two weeks later, Musk and Twitter struck a deal. In an onstage interview, Musk discussed his plans.

“Well I think it’s very important for there to be an inclusive arena free speech,” Musk said, echoing statements he has made over the past couple weeks. “Twitter has become kind of the de facto town square, so it’s just really important that people have the, both the reality and the perception that they are able to speak freely within the bounds of the law.”

But Twitter’s board – while angry at Musk’s tactics – was ultimately eager for the deal.

Twitter executives were predicting internally that the company would be far off track from meeting revenue targets in 2022, according to documents obtained by The Washington Post, as well as people familiar with the matter, who spoke on the condition of anonymity to describe proceedings.

Twitter’s board was planning to make “drastic” cuts to staff and other services, including cutting roughly a quarter of the budget for third party contractors who moderate content for the company, major cuts to infrastructure and data centers, and firing thousands of people to shave at least $700 million off labor costs, according to the interviews and documents. One of the leaders who signed off on the layoff notices was Edgett, who was fired Thursday.

Executives also believed that the company would not have easily found other buyers, according to one of the people.

Musk announced his acquisition three days before those layoffs were set to be announced.

Musk planned to buy the company with a combination of debt financing, co-investors and his own personal wealth, much of which is generated by his stake in Tesla. But the stock market started to collapse, affecting Tesla’s stock prices and Musk’s overall wealth.

Musk started tweeting about Twitter’s tabulation of spam and bots, which he argued understated the true proportion of nonhuman accounts on the site.

He declared the deal “on hold” in an early morning tweet May 13. By early July, Musk backed out of the deal completely.

Twitter sued him days later alleging breach of contract, sending the matter to the Delaware Court of Chancery. Musk’s chances were broadly viewed as grim, but Musk’s legal team latched onto a new strategy after The Post uncovered a whistleblower complaint that included explosive claims about Twitter’s business.

Musk shifted his opinion on whether to buy the company after a series of losses in the Delaware Court of Chancery in matters related to scheduling and discovery, according to people close to Musk and his team who spoke on the condition of anonymity to describe sensitive matters. A loss became a serious possibility if the matter went to trial, risking penalties beyond merely the buying cost. And the blows to Tesla’s stock and Musk’s net worth became a lingering concern.

Musk also took solace in his debt and equity commitments, which locked him into the deal on favorable terms that might not be otherwise available, the people said. And he became excited by his plans for the site.

Earlier this month, the Delaware judge overseeing the case agreed to let Twitter and Musk resolve their dispute by Friday or it would go trial.

The deal ultimately closed a day before the deadline.