Elon Musk, Twitter, and the “False Flag of Free Speech”

BIANNA GOLODRYGA: Well, the world’s richest man just got a lot more powerful. Tesla and SpaceX CEO Elon Musk has done a deal to buy Twitter for $44 billion. He says, his goal is to bolster free speech on that platform. But, what does this mean for the future of one of the world’s most influential social media sites? Here’s author, entrepreneur, and professor Scott Galloway speaking to Hari Sreenivasan.

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HARI SREENIVASAN, CORRESPONDENT: Bianna, thanks. Scott Galloway, welcome back. So, for the billions of people on the planet who are not on Twitter, why is this a big deal?

SCOTT GALLOWAY, PROFESSOR OF MARKETING AT NYU’S STEM SCHOOL OF BUSINESS: Well, you have a media company — that is a media company that reaches, not only reaches hundreds of millions of people but it has tremendous influence. Have you checked Twitter today, Hari?

SREENIVASAN: Yes, but you know, I’m a journalist. I stay on top of it for that reason. But, you know, for people who don’t understand the value of this medium who say, well, I don’t really care about the — you know, what someone is thinking about or doing in this place. OK. So, it’s the richest man in the world. Is this really the Townsquare? Has this become the public square?

GALLOWAY: Well, I would describe it as the private square, you know. I think there’s been an incorrect inflation of First Amendment issues and this takeover. And that is that the First Amendment is a government pass on the law that restricts free speech. This is a private company and any private media company creates a voice. And part of that voice is not only about what’s on the platform but what’s not on the platform. So, I think that we incorrectly inflated First Amendment issues. But you say, well, I’m one of a small group of people. But the people who have impact on a lot of other people and shape their narrative usually they turn to Twitter first. So, I was on the board of “The New York Times” and we like to think that we were the paper record. And we you watch the evening news, what you found is the evening news, the producers of the evening news decided what America would see based on what was on the front page of “The New York Times”. And I think you’re starting to see that the narrative, what people decide is important is in large part dictated by what Twitter thinks is important. And it has become, sort of, the news polls if you will, where the kind of the narrative pulse where some people would refer to it as consciousness. And I’m — some of them misused that word. But it’s never, sort of, commanded the space that occupies as it relates to its financial value. The people — very few people argue it has global impact.

SREENIVASAN: You know, going back in time — look, billionaires have always tried to control and have successfully controlled the printing press. I mean, right now Jeff Bezos owns “The Washington Post”. There’s no evidence that he tampers with the editorial influence on a daily basis. Mark Zuckerberg has an enormous leverage and power over Facebook if he chooses to exercise it. And now, here’s the richest guy in the world saying, I want to on this one.

GALLOWAY: That’s exactly the right comparison, Hari. So, let’s look at that. Jeff Bezos, when anyone raises concerns about this, people say, well, this isn’t anything new. Michael Bloomberg has a media company and Jeff Bezos purchased “The Washington Post”. But just to give you a sense of just how stunning this offer is and the magnitude, Jeff Bezos purchased “The Washington Post” for $250 million. This is $45 billion. This is 180 times the capital of the purchase of “The Washington Post”. In addition — so, let’s make the bull on the bear case. The bull case is that it brings a fraction of that incredible innovation around product to Twitter and Twitter registers some of the incredible value that Mr. Musk has been able to create across his other ventures. The bear case is that you look at Mark Zuckerberg. And that is, you have one person who doesn’t have any safeguards between him in this media company. At “The Washington Post”, Mr. Bezos has an editorial board. He has 700 journalists, who quite frankly, you can’t tell them what to do every day. You can shape their narrative a little bit but they have their own free will. They have a lot of journalistic standards, you have editors, fact- checkers. At Facebook, it’s basically algorithms deciding what content is elevated or not elevated. It’s not about what content goes on the platform. It’s what content whether it’s hate speech or anti-vax information, gets more sunlight that it should. So, with Mr. Musk, what you have is an individual, who, a lot of people would describe as kind of reckless and sometimes punches down on the network. Who will — no — have no safeguards. There’s no editorial board here. It’s just him and the algorithms and the ability to elevate or deescalate content based on these algorithms. And, I think that’s the difference here. I think there are fewer guardrails between Mr. Musk and a global media company and Mr. Bezos and what ends up on the front page of “The Washington Post”. I do think there is a distinction here.

SREENIVASAN: You know, if you look at some of the reasons that Elon Musk says he wants to try to change Twitter, he says, he wants to stop at being an ad supportive model. He wants to shift to subscribers. Something that you have advocated for, for quite some time. He says that he wants to get rid of automated spam accounts, basically accounts that don’t actually exist, but they’re just created just for a moment to amplify something. And he says that very thing about the algorithm, if he wants to make it more transparent. Now, whether or not Mr. Musk follows through on these interests, I don’t know. But what’s wrong in trying to make the algorithm more transparent? Because it seems like one of our big, kind of, roadblock is that we keep talking about content moderation. But really, as you pointed out, it’s the algorithm that’s deciding what’s in front of our face.

GALLOWAY: Yes, there is this notion and some ideas and Jack Dorsey has promoted this, sort of, a web three decentralization kind of narrative. That you would open up the algorithm and people could tweet their own algorithm. And less than 10 percent of people clear their cookies. I just think it’s sort of a little bit ridiculous that we’re all going to start tweaking our algorithm to figure out what information we want. I don’t think that’s realistic. His narrative has changed a little bit. He initially started with — it’s about reducing moderation and free speech. And that was a difficult narrative to raise money on. There aren’t a lot of people who want to put a billion dollars towards Mr. Musk to kind of adventures or misadventures in free speech. So, he has more to his narrative into what I would call, I think, a more constructive narrative. For a long time, I’ve been saying that Twitter needs to move to a subscription model. When it’s a subscription model, you’re focused on a long-term relationship. You’re not focused on running on any more ads. And unfortunately, both Facebook and Twitter have incentives to take the commonwealth, the bad place and make our discourse more course. Because the bottom line is as a species, they have very much, kind of, leveraged a form of our species and that is we love — we’re like a Tyrannosaurus Rex. We like movement and violence. And the algorithms promote content that upsets people. It promotes novel content. So, information questioning the rights of women, or information saying that a vaccine alters your DNA gets a lot of engagement, a lot of enragement, and more ads. So, unfortunately, the algorithms sort of trade and shame and trade misinformation. And those algorithms have been hugely damaging to the commonwealth. So, the notion that we move to subscription and be more about the relationship. I mean, no one’s worried about Netflix being weaponized by the GRU. Yet these ad-supported platforms seemed to get weaponized and seemed to have real problems around the narratives and what is fact-checked and what isn’t. So, I think moving to subscription and cleaning up the platform, is a great idea. I would argue that the real secret to Twitter’s successes is actually more moderation. That people don’t want a free-for-all. They can go to Four Chant (ph) for that which has 20 million visitors a month versus 200 million a day. And to put it, I would argue Twitter’s success is because of moderation and not despite it.

SREENIVASAN: What is he getting wrong about this free speech question? Because I don’t know if he realizes. Obviously, he’s not a — say for example, women on the platform or journalists on the platform and the amount of trolls, and abuse, and harassment that they get. He might not have to live with that necessarily. But what is he not getting about his vision of free speech?

GALLOWAY: I think he uses the First Amendment as some blanket call sign to rally people on the right, which absolutely makes no sense. And also, I would argue — you can make an argument, there should be less moderation and it’d be a free for all. I don’t think that works. I think people get sick of that. They get sick of the abuse. They get sick of the false information. So, I get — the question is, when you say, what does he not get? What — I guess what we don’t get is, what exactly does Mr. Musk want to do on a platform that he can’t do right now? He’s been profane around elected U.S. Senators. He’s accused an innocent man of being a pedophile. He’s posted Hitler memes. You know, what does he want to do, Hari? Does he want to kill a puppy on Twitter spaces live? What exactly is he being constrained from doing? I don’t — very few of us woke up this morning and said, finally, I can express myself on Twitter. Twitter is more of the Wild West than it is Singapore, to use some sort of analogy. So, what does he get wrong? I think that he has incorrectly used this false flag of free speech when this is one of the freest speech platforms in the world that has some of the least moderation. And I would argue that’s been a negative that we have been subjected to a lot of misinformation. When they kicked Trump off the platform, mostly a third of election misinformation went away overnight. So, the question kind of goes back to Mr. Musk, like, what exactly do you mean when you say you want less moderation? Do you really want less moderation here?

SREENIVASAN: He said in a tweet recently that he wants all of — he hopes that all of his critics stay on the platform. You have been a critic of his. He’s called you — what was it, a numb skull.

GALLOWAY: An insufferable numb skull. And I — I would —

SREENIVASAN: An insufferable —

GALLOWAY: — I would push back on the insufferable part.

SREENIVASAN: Are you going to stay on the platform?

GALLOWAY: Oh, yes. I mean, this is like — you don’t like your heroin dealer. I am addicted to this thing. So, I’m still, you know, I’m still on the platform. And I think– I don’t think a lot of people will leave the platform. The platform — man, I don’t know how you feel, I do find it addictive. I do — the need for that dopa hit. That desperate need for the affirmation of others. That ability to get both good and bad comments. That ability to feel like you are seeing raw pulsing of the world’s consciousness is very addictive across a small number of us. But it — there’s just no getting around it. It’s, you know, it’s information crack. So, no, I’m not going anywhere.

SREENIVASAN: I want to ask a little bit about the business. Was it a good deal? I mean, how much money does Twitter have to turn around and make for him to make money on this?

GALLOWAY: Well, just to give you a sense of scale, Twitter will do somewhere between $6 or $7 billion. Facebook will do $170 billion. I mean, this is actually a pretty small business. You know, someone said on CNBC yesterday, you know, Twitter’s the size of all of the gardens in terms of revenue. I mean, it’s just not — it’s not a big business. And they — the issue here has always been the Delta or trying to — the investment piece has always been the same. How do we close with Delta between its influence and its evaluation? But nobody has been able to crack that knot. Now, if he’s able to (INAUDIBLE) move to subscription, I believe that if Twitter charged Elon Musk a million dollars a month, he’d start attacking all the board members. Make ad home meme and profane insults of management and then he would then pay it. Because General Motors spends $2 billion a year on marketing, on advertising. Tesla pays none. Which has the better brand? And it’s because they have an individual at 81 million followers that can put massive awareness and massive information around his products out hundreds of times a day. I think PBS gets huge monetary value from putting your stories and your great content out into the Twittersphere. I think if they charge, you guys, 1$,000, $5,000, $10,000 a month, you’d check back, you’d be angry, and then we’d pay — they charge me a few thousand dollars a month. I have almost a half a million followers, so. I think there’s a ton of surplus value here that is not being captured. I think that’s, if you will, the vision for the economic case. Other than that, it’s not entirely sure how he takes kind of a subscale platform with an inferior ad stack and competes against Google and Facebook.

SREENIVASAN: Let’s talk a little bit about how he financed this. Yes, he’s the richest guy in the world but he can’t write a check for $44 billion. He had to line up some money in some banks but he also put up some of his shares in Tesla as collateral.

GALLOWAY: Yes.

SREENIVASAN: And so, what is the — is there a contagion or ripple effect on that company which frankly has nothing to do with the business of Twitter?

GALLOWAY: That’s exactly right. So, CNN+ was shut down on Thursday unceremoniously. And everyone’s trying to figure out what happened with David Zaslav or Discovery or CNN+. What happened had nothing to do with Hudson Yards or Discovery. What happened is in the last six months, Netflix stock has declined 72 percent. Meaning, the entire ecosystem has been broken up and said, OK. This market isn’t worth as much. It was someone else’s stock that closed CNN+. The same thing could happen here. What people aren’t focused on is that Twitter is largely — the actions around Twitter and Mr. Musk’s involvement in Twitter is going to be unfairly dictated by the share price of Tesla. And that is — the deal is basically $13 billion in debt, and then about $33 billion of Mr. Musk’s money. Either him borrowing money or him pledging shares and getting margin. If Tesla’s stock were to do what Netflix stocked in and go down 72 percent, you would have an individual who has a lot of margin loans against Tesla stock and Tesla stock would get additional downward pressure. So, Tesla stock plays an important role here because this is the largest single contribution of someone’s individual wealth to take private in history. And the idea of Mr. Musk being a forced seller — I mean, quite frankly, Hari, this is nothing but downside for Tesla shareholders. It’s a distraction. And also, if in fact, Tesla stock were to go — if Tesla stock went down 90 percent, it would still be worth more than 14 General Motors combined. So, if you don’t think it can go down 90 percent, well it’s gone up tenfold, it can go down 90 percent. And I’ll point you to a bunch of great companies that are off 70, 80, even 90 percent in the last six months. So, if you see Tesla stock go down 20 percent or more before closing, you could see Mr. Musk walk from this deal. He has, what I call, new pressure on him. And also, people watching the price of Tesla stock because a lot of the money he’s put in in this deal is leveraged or borrowed against the value of that stock.

SREENIVASAN: You recently wrote on one of your blogs that a sign of intelligence is the ability for us to have contrarian thoughts in our head. And you said, you know, on the one hand, basically, Elon is one of the best entrepreneurs we’ve had in our lifetimes in the contributions that he’s made to Tesla, and SpaceX, and other companies that he’s owned. And at the same time that he could do more harm than good to — well, with Twitter. Explain that.

GALLOWAY: Well, you can land two rockets concurrently onto barges, you know, when we get to Mars, we’ll get there sooner because of Mr. Musk. The climate is better off because of Mr. Musk. More Tesla’s will be sold in America than Mercedes. I mean, he’s just — he is the entrepreneur of our generation. At the same time, he puts out names, mocking someone’s physical appearance and comparing them to the meme of a pregnant man. And I think a lot of young men, especially, around the world really looked to Mr. Musk for leadership. And the term I would use is punching down. And I don’t know if this — of someone who lacks the self-control that Mr. Musk seems to lack is the right person to be controlling the algorithms of a service that influences the way we feel about the world. So, I think he could do a lot of damage. I think this is the — I think the key to success in America is quite frankly that we have guardrails. We have boards of directors. Its individual leadership. We’ve sort of created this idolatry of the individual. And seeing leadership with someone who now does kind of profane or very provocative and inappropriate things with incorrectly complete battle leadership. The most great CEOs have a board that saves them from themselves, a partner, regulatory agencies, economic constraints. And now we have a billionaire that can buy a $45 billion media company. So, the question is, do we want to live in a society where these individuals that can extinguish media companies or buy them outright with no guardrails? And I would argue that is dangerous. The power corrupts and absolute power absolutely corrupts. And we are getting to a situation here where we have some individuals who have absolute power. And I don’t think Mr. Musk has quite frankly demonstrated the grace that you’d like to see in an individual that controls such an important messaging vehicle. There’s a lot of fun there. There’s a lot of dope hits. I don’t know if it is good for the commonwealth, Hari.

SREENIVASAN: Scott Galloway, thanks again.

GALLOWAY: Thank you, Hari. Good to see you.