Elon Musk, the richest man in the world, is a hair’s breadth away from buying one of the world’s most influential publishing platforms. This statement alone is remarkable. What’s troubling about his deal to buy Twitter is the next part: he’ll only be accountable to himself. Musk can disband Twitter’s board when he takes the company private. If he doesn’t, any remaining planks will have no teeth. This is nothing new in technology, where checks and balances are often outdated. Even so, this trend has adverse repercussions.
Big Tech founders like Mark Zuckerberg and Alphabet’s Sergey Brin and Larry Page shaped themselves as modern business autocrats, thanks to the way they structured their initial public offerings and voting stock over the course of the last decade.
Zuckerberg owns most of Meta’s voting stock, while billionaires Brin and Page control 51% of a special class of Alphabet’s voting stock, giving them ultimate control of Google and YouTube. This two-class share structure is unusual in business, but common in the tech world, supposedly giving startup founders the freedom to execute on their long-term vision. The founders of Airbnb and Snap both hold roughly 44% voting control of their companies through two-class structures. And while Musk only owns 20% of Tesla, his board is filled with friends like Larry Ellison and Kimbal Musk, Elon’s brother. Zuckerberg’s board has also done its bidding extensively over the years.
All of this runs counter to modern ideas of corporate governance, which emphasize accountability. Without these checks, technology leaders are free to make highly capricious decisions without internal scrutiny.
Sometimes these decisions can be good for business. For example, when Zuckerberg bought Instagram for $1 billion in 2012, the tiny target had no income and he didn’t ask his board for permission. Seven years later, Instagram contributed $20 billion to Facebook’s annual sales.
But look at it another way. Numerous studies have shown that the rise of Instagram, under Zuckerberg’s leadership, has been correlated with higher rates of depression, anxiety, and suicide among teenage boys and girls in particular. The site made a lot of money but also caused psychological harm to children and adults, which Facebook’s own research corroborated.
In the long term, shareholders can also suffer from absolute control. Zuckerberg pushed Facebook to obsessively pursue an abstract business goal with the idea of a metaverse. While the move may eventually pay off, so far the move has already cost the company $10 billion. Meta’s stock has fallen 40% since the start of this year. Why doesn’t it turn Facebook into a safer website that can thrive for years? Because no one, neither from his team of sycophantic lieutenants nor from his deferent council, pushed him there.
Musk’s decision on Twitter is also difficult to reconcile with the basic concept of fiduciary responsibility. He doesn’t want to buy Twitter to make it a better business — “I don’t care about the economy at all,” he recently said — but to make his ideas about free speech a reality. Tesla shareholders are paying the price. As Musk has borrowed more than $25 billion against Tesla as collateral, the automaker’s shares have lost almost a quarter of their value in the past three weeks. If Musk sells part of his stake to continue supporting his personal program, it will drive the stock price down even further.
It might just be hard to remember your obligations to make money when you’re a billionaire. Maybe when you’re in an industry that idolizes visionaries, it’s easy to get sucked into pursuing the realization of your ideological or futuristic worldview. Maybe the billionaires who control today’s social media platforms actually need tougher checks and balances.
It’s doable. Dual-class listings may eventually be phased out, as many institutional investors have already called for, but structural changes may take years. Regulators, meanwhile, have spoken tough, but they’re also easily ignored by the likes of Musk. He has thumbed his nose at the US Securities Exchange Commission on several occasions and will likely circumvent European social media laws that, in theory, threaten to disrupt his free speech plans.
For better or for worse, the clearest remedy right now is other billionaires. The biggest impact on Facebook’s unscrupulous data collection practices to date came from Apple, led by billionaire Tim Cook, when it allowed customers to block Zuckerberg’s company from tracking them. ByteDance, run for years by billionaire Zhang Yiming, is also threatening to lure Musk’s Facebook and Twitter users with its highly addictive TikTok app.
It’s not how things should be, but in a world where social media is shaped by free-wheeling billionaires, their rivals may be our only hope.
Parmy Olson is a Bloomberg Opinion columnist covering technology