A Blog by Jonathan Low

 

May 9, 2022

Why Musk's Twitter Investors Raise Disinformation Opponents' Fears

Not a group of individuals historically known to favor responsible content moderation. JL 

Aaron Mak reports in Slate, image The Times of London:

Musk’s purchase has been cheered by figures on the far right who insist that Twitter persecutes them out of political bias. His bid has worried users who’d prefer that Twitter not roll back efforts to keep the worst of the worst—Nazis, QAnon boosters, extreme anti-vaxxers—off the platform. His choice of co-owners may be telling. In addition to typical Silicon Valley venture-capital firms, there are prominent Donald Trump supporters, advocates for looser moderation policies on social media, a major crypto exchange and VyCapital (Dubai), Qatar Holding and Alwaleed bin Talal bin Abdulaziz Al Saud.

Tesla CEO Elon Musk has corralled a group of 19 billionaires, firms, and funds to invest more than $7 billion to finance his takeover of Twitter, which he’s said he is pursuing in the name of “free speech.” Musk is on the hook for $44 billion to buy the platform, which he won’t be able to afford unless he pledges his Tesla shares for a loan. With these new investors, though, he’ll only have to personally put up half that amount.

Musk’s purchase has been cheered by figures on the right and far right who insist that Twitter persecutes them out of political bias, and Musk—whose politics aren’t entirely clear-cut—hasn’t dissuaded the notion, and has even been criticizing the left for being too extreme. At the same time, his bid has worried researchers and users who’d prefer that Twitter not roll back efforts to keep the worst of the worst—Nazis, QAnon boosters, extreme anti-vaxxers—off the platform. Musk hasn’t gotten into many specifics about how he’d change the company’s policies. He also may not be able to dramatically change how moderation works on Twitter given restrictions like the European Union’s forthcoming Digital Services Act, which will require social media sites to more forcefully regulate content.

But his choice of co-owners may be telling. In addition to a fairly typical assortment of Silicon Valley venture-capital firms and heavyweight foreign investors, there are a number of prominent Donald Trump supporters as well as advocates for looser moderation policies on social media and a major crypto exchange, which is surely thrilled to be in businesses with the planet’s most prominent booster of Dogecoin. Maybe they’re all there to make a buck: Musk pitched these investors on ambitious plans to grow Twitter by cutting down on costs and monetizing tweets. Just as likely, they want to make Twitter the social network they’d like to see in the world. Here’s a guide to the investors who may soon own a piece of Twitter.

Lawrence J. Ellison Revocable Trust

Larry Ellison—the multibillionaire founder of Oracle and Donald Trump supporter—pledged to invest $1 billion in Musk’s purchase. Ellison claims to be a close friend of Musk’s and joined Tesla’s board in 2018. Ellison’s Oracle almost got to take over part of TikTok’s U.S. operations in what appeared to be a sweetheart deal during the Trump administration. It withered after Trump lost reelection, but now Ellison may get another bite at the social-media apple.

Sequoia Capital Fund

This Silicon Valley fund contributed $800 million to the cause. “We see, as he [Musk] does, the opportunity to drive meaningful product innovation that will help unlock Twitter’s full potential as a global platform that connects the world,” a spokesperson told the New York Times. The firm was an early investor in the likes of Google and Apple. Sequoia also co-led the Series C funding round for the Boring Company, Musk’s underground-tunnel venture. Musk previously recruited Roelof Botha, a partner at Sequoia, to be the chief financial officer of PayPal.

VyCapital

This investment firm based in Dubai pledged $700 million. VyCapital has also invested in Musk’s Boring Company and Neuralink, the neurotechnology startup that recently faced allegations of abusing macaque monkeys in its experiments.

Binance

This cryptocurrency exchange platform invested $500 million, and reportedly contacted Musk directly for the privilege to do so. Musk has been a major booster of cryptocurrencies such as Bitcoin and Dogecoin, and he has shown he has a tremendous influence over their prices. Binance CEO Changpeng Zhao tweeted his support for Musk’s takeover.

If Binance’s inclusion is eye-raising, it’s for this reason: Musk has said he wants to purge spam bots from Twitter, where they remain a stubborn presence. Notably, many of those bots appear to pump crypto schemes.

Andreessen Horowitz

This venture capital fund, which invested $400 million, was founded by mega tech entrepreneurs Marc Andreessen and Ben Horowitz. Andreesen has been a major critic of Twitter’s moderation policies, something he has been very, very, vocal about on Twitter since Musk’s stake in the company was announced. However, he also sits on the board of the rival social media company Meta, which may present some conflicts of interest. Horowitz also tweeted about the investment and praised Musk’s crusade against moderation on the platform.

Qatar Holding

Qatar’s sovereign wealth fund invested $375 million.

Aliya Capital Partners

This Miami-based firm is investing $360 million. Aliya has also been an investor in SpaceX, Musk’s rocket company.

Fidelity Management & Research Company

This Boston-based company invested $316 million, and also owns about 1 percent of Tesla, making it one of the biggest investors.

Brookfield

The venture capital division of this Canada-based asset management company contributed $250 million. The company is working with Musk on his Boring Company and a sustainable housing development in Texas. Managing partner Josh Raffaelli recently wrote on his LinkedIn profile, “We are thrilled we can once again support Elon and his mission of transforming the future through innovative and world class technologies. Funding secured.” The last line is a reference to an infamous tweet Musk posted in 2018, in which he claimed to have “funding secured” to take Tesla private at $420 per share. That didn’t quite turn out to be the case, and the SEC sued him in a lawsuit that resulted in a $40 million settlement.

Strauss Capital

This New York–based investment firm pledged $150 million. Its founder, Tom Strauss, has held top positions at the likes of Barclays and Lehman Brothers.

BAMCO

This subsidiary of Baron Capital is investing $100 million. CEO Ron Baron is one of Tesla’s largest shareholders, though he previously commented that Musk’s initial attempts to join Twitter’s board and become its largest shareholder were “meaningless.” Now that Musk is set on taking over the platform, he’s become more optimistic. “My guess 2-3x return or more next 4-5 years if successful,” he told CNBC.

DFJ Growth IV Partners

This California-based venture capital firm is pitching in $100 million. The firm has investments in SpaceX, Tesla, the Boring Company, and SolarCity, Musk’s solar panel company. DFJ Growth also previously invested in Twitter.

Witkoff Capital

Founded by New York real estate mogul Steven Witkoff, this firm is investing $100 million. Witkoff is a friend and donor of Trump’s and served as an informal adviser to the former president on issues like the pandemic and opioids.

Key Wealth Advisors LLC

This wealth management company is investing $30 million.

A.M. Management & Consulting

This New York private equity and consulting firm is investing $25 million.

Litani Ventures

This venture capital firm based in Chicago contributed $25 million. Litani is headed by Peter Rahal, who along with his co-founder sold their RxBar protein bar startup to Kellogg for $600 million in 2018.

Tresser Blvd 402 LLC (Cartenna)

This Connecticut hedge fund is contributing $8.5 million.

Honeycomb Asset Management LP

Founded by New York hedge fund manager David Fiszel, this firm is pitching in $5 million. Fiszel previously invested in tech companies like Twitter and Palantir before they went public while he was a manager at the hedge fund Point72.

Alwaleed Bin Talal Bin Abdulaziz Alsaud

This Saudi prince has pledged to purchase 34,948,975 shares, which is worth about $1.7 billion. Prince Alwaleed is already one of Twitter’s biggest investors and previously voiced his skepticism in April about Musk’s bid to take over the platform, asserting that the offer was too low. Just three weeks later, though, the prince appears to be trying to make nice with Musk.

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