opinion | Musk buys Twitter: a new institutional risk

By Olivier Bomsell (professor of economics at Mines ParisTech)Remi Devaux (Economist, PhD student at Mines ParisTech.)

Posted April 28, 2022, 12:35 PM

“Do we need a new platform? The Tesla founder launched on March 26 on his Twitter feed, which has some 79 million subscribers. He then rages against the social network censorship that has caused him setbacks in the stock market. And even goes so far as to conduct a survey on free speech online, which accounts for 70% of disaffected people.

On April 14, he announced his intention to buy Twitter. On April 21, he revealed his battle plan. The social network struggles, threatening to dilute the robber’s shares. In vain. Monday, April 25, the board of directors will accept the offer.

In a month, the project to set up a competing platform turns into an acquisition of Twitter. The case is handled smoothly. A friendly takeover is even less interesting for the SEC, the stock market regulator, as Musk wants to delete Twitter. And the FTC, the competition authority, is not involved either. Musk’s automotive and aerospace businesses have no apparent conflict of interest with Twitter. However, there is cause for concern…

Musk has already been accused of price manipulation

The first point is a matter of competition, as it is clear that Twitter has a monopoly on the microblogging market. With 217 million daily active subscribers, the network kills anyone who wants to challenge it. Even Trump’s Social Truth broke its teeth there. Linking this monopoly activity to industrial interests that can abuse it at the expense of competitors is typical of the economic violence of platforms. Especially if these interests concern the government. Our new western gives plenty of examples. Musk has also been made aware of price manipulation through tweets.

The second concerns the position of Twitter as an exceptional medium. Like all platforms, it falls under host status. In other words, it is not responsible for the comments of its users. But it has full powers over both editing algorithms and censorship rules. Which in the current model are aimed at maximizing audience and ad revenue, which is certainly not enough to alleviate them. But what will become of them if the company is scrapped?

A tool of power such as Citizen Kane never had

Musk therefore offers himself a means of power such as neither Randolph Hearst – the famous Citizen Kane – nor Rupert Murdoch ever had. The latter’s media did indeed remain competitive. In addition, when manufacturers take control of traditional media (Les Echos is part of the LVMH group), it is possible to know who is speaking, from what authority, in what event and editorial context. And to enable any coordination with the owner. In the case of Twitter, apart from removing highly visible accounts, it is impossible for the user, however clever, to understand the editorial choice that gives context to the posts. Faced with this, the good French souls crying out for the concentration of our media look like Tibetan monks.

And let us not believe that the DSA, passed with much fanfare by the European Commission, will be able to force Elon Musk to reveal what he is trying so hard to hide. Not to mention the antecedents, the asymmetries between the regulator and the companies are such that for years the Commission has been fooled by the emissions of the cars it has under its nose. How can we investigate conflicts of interest in a media as opaque and so compact as a platform of hundreds of millions of subscribers?

We have seen under Donald Trump’s mandate the damage that irresponsible media can do to the institutions of a democracy that prides itself on setting an example. The takeover of such monopoly media by industrial interests creates an unprecedented danger. It deserves to be avoided.

Olivier Bomsel is professor of economics and director of the chair of Media and Brand Economics at Mines ParisTech.

Rémi Devaux is an economist, doctoral student at Mines ParisTech.

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