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Twitter can't seem to stop mixing partisan politics with business. From leadership appearing to implement one-sided policing of content to the board of directors doing everything possible to block Elon Musk's purchase of the company, the social media company has made its politics clear. Fortunately, common sense and fairness prevailed, and Twitter accepted Musk's bid. This is, above all, a win for free speech.
The board's resistance exemplified what's wrong with political preferences eclipsing a company's responsibility to shareholders. But after all its protests, Twitter's board did what it had to do and allowed shareholders to implicitly accept Elon Musk's (above market) offer to buy the company. This took courage, but the sale could return the company to the democratic, shareholder-led vision on which it was built, and lead it away from the oligarchic board-led reality in which it recently found itself.
The perception that Twitter has a political stance is justified. The social media platform banned a sitting U.S. president, but not President Vladimir Putin or Ayatollah Ali Khamenei. Its apparent political slant was affecting not only its content, but also the value it could bring to its owners.
The board's resistance to a good offer should never have happened. A board doesn't own a company. Its members are appointed by, and ultimately work for, the shareholders. I sit on numerous boards of different companies—albeit much smaller ones than Twitter—and the same principles apply regardless of company size. The most important part of my job as a board member is being a responsible fiduciary for the shareholders of the company.
I think of it like being appointed by someone to sell a car. If one buyer wants to pay $10,000 and another wants to pay $15,000, I am duty bound to at least present the offer of the higher bidder to my seller. That's true even if I hate the way the bidder looks, the way he talks or his political beliefs. I might not like how he's going to drive the car, but it's not my car. I don't get to make those decisions.
Musk's offer to buy Twitter was almost 10 percent above the market price, and more than 30 percent higher than the market price when the billionaire reportedly started buying up shares. I'm sure many shareholders are happy with the premium they are set to receive. The board should have heard that—from the start.
Section 14(a) of the Securities Exchange Act of 1934 grants shareholders numerous protections. One of them is a say on mergers and acquisitions. In the early 2000s Congress passed the Sarbanes-Oxly Act in response to a number of corporate scandals. It was supposed to enhance corporate responsibility and financial disclosures, as well as restore investor confidence. The law stops corporate boards from blocking a buyer who offers over 10 percent above the market price simply because they don't like the buyer. In future, it should not even be open to debate.
Remove the man from the equation and imagine it was an anonymous—or politically neutral—buyer. Would there have been the same resistance?
Ignoring shareholder rights—the foundation of corporate America, and of a transparent and fair stock market—can even create regulatory issues that Twitter should avoid in the Musk era.
This era promises to bring an end to Twitter's misuse of Section 230—a serious regulatory issue, and one that many shareholders feel strongly about. Section 230 allows Twitter and other social media platforms to facilitate the sharing of content by their users, without being held liable for it (in the same way a newspaper would be).
Section 230 assumes that a social media platform is more like a printing press than a newspaper editorial board. That assumption only holds if Twitter is neutral and not acting in the role of an "editor." I hope that under Musk, the company as a whole—from the ground up—will deal with its apparent neutrality problem.
For a healthy society and functional politics, we need a shared public square. Gone are the days of people only getting their information from newspapers and televisions, and meeting exclusively in person to discuss topics that impact their daily lives. In this day and age, social media has become our conduit for not only sharing information but for consuming it in mass amounts as well.
Social media can—and must—provide a neutral conduit for information flow. But it can only do that if it is led by boards and leaders who maintain neutrality in their decisions. Our over-politicized, one-side-of-the-aisle-or-the-other mentality cannot exist among the decision makers at the very platforms we utilize to share and consume information. The laws on these issues are quite clear, yet time and time again, these companies seem to find ways to skirt what should be black-and-white topics. Ultimately, it is the shareholders and general public who suffer.
I hope Elon Musk will now change that—and other social media platforms will watch and learn.
Brendan Egan is a serial entrepreneur and published author. He is the co-founder of Simple SEO Group, a digital marketing firm, and the co-founder of Engage.
The views expressed in this article are the writer's own.
