National Review Online, April 4, 2022

How Twitter polices speech on its platform is, assuming it remains within the law, up to Twitter. If those who run the company wish to do so in a way that offends our notions of free expression, that is, with one crucial exception, solely up to them. Twitter is privately owned, and the U.S. government has no business regulating how legal conversations are supervised behind the company’s virtual walls. Nor, for that matter, should any “independent” body be set up under the auspices of the state to review Twitter’s speech policy.

That crucial exception? If Twitter’s shareholders — the company’s owners — would prefer a different approach. Under those circumstances, they can pressure management to take a new tack. And if management does not agree, and the board will not change management, then shareholders have, if a majority of them so choose, the power to change the board. A company is, at least in theory, meant to be run for the benefit of its shareholders, and it is up to the shareholders to decide how that benefit is defined.

But these days, there are some in the C-suite, government, the investment world, and elsewhere who argue that a company should be managed according to the interests of its “stakeholders” — a conveniently nebulous term with (in this context) no meaningful place in our corporate law, bar some special cases, as much that might dismay the panjandrums of Davos. Today’s fashionable alternative to shareholder primacy — an idea that rests as a key foundation of the free-enterprise system, and one that, tellingly, candidate Biden labeled an “absolute farce” — is corporatism, an ideology that, at its worst, makes a mockery of property rights, free markets, and freedom itself. Stakeholders should have no control over freedom of expression on Twitter.

On April 3, Elon Musk tweeted that he was “increasingly convinced that corporate ESG is the Devil Incarnate.” Harsh, perhaps, but ESG (a form of “socially responsible” investing) is closely intertwined with stakeholder capitalism.

Make of that tweet what you will, but I suspect that Musk believes that the best way to reform Twitter’s speech policies is for shareholders to take a stand. This makes the news that he has just bought a 9.2 percent stake in the social-media company of . . . some interest. As the Financial Times noted, that’s four times the holding of Jack Dorsey, a founder of the company and, until recently, its CEO. This purchase, moreover, makes Musk Twitter’s largest shareholder.

On March 25, Musk, asserting that “free speech is essential to a functioning democracy,” held a poll on Twitter in which he asked whether the company “rigorously adhere[d] to this principle.” The “consequences of this poll,” he wrote, “will be important. Please vote carefully.” In the end, 70.4 percent voted no. Over 2 million Twitter accounts (I hesitate to use the word “people,” given the presence of bots, the possibility that an individual can have more than one account, and so on) voted. No small thing.

On March 24, Musk had tweeted that he was “worried about de facto bias in ‘the Twitter algorithm’ having a major effect on public discourse.”

“How,” he asked, “do we know what’s really happening?”

In a later tweet the same day, he commented that the “algorithm needs to be open source.”

Musk’s politics are, like the man himself, hard to pin down. He has described himself in numerous ways, including “openly moderate,” the inevitable “socially liberal and fiscally conservative,” and even as a “socialist” (although with a characteristically eccentric definition of what that dreaded word means). It’s difficult to miss, however, the libertarian(ish) streak running through a good number of his pronouncements, albeit one lacking the dogmatism so often associated with capital-L libertarians. It’s safe to say that he gets free speech.

So, what now?

As someone who has purchased over 5 percent of a public company, Musk was obliged to file a statement with the Securities and Exchange Commission. There are different ways of doing this, but Musk reported his ownership using a Schedule 13G form — an option that requires relatively little disclosure, which is available to a purchaser who bought the shares without the aim of changing or influencing the control of the company in which the stake has been bought. This does not preclude a later bid for the company, although Musk changing his status from that of a “passive” investor for the purposes of Schedule 13G would mean additional, more-detailed filing and, following that filing, a time limit before he could buy more shares in the company or indeed vote those he already holds.

None of this would not stop Musk from, uh, chatting to Twitter — and when dealing with a large shareholder with billions at his disposal, management might do well to listen.

Meanwhile, the Financial Times quotes Wedbush analyst Daniel Ives:

It looks like Elon has his eyes laser-set on Twitter and we would expect this passive stake as just the start of broader conversations with the Twitter management that could ultimately lead to an active stake and a potential more aggressive ownership role of Twitter.

Obviously, I have no idea what Musk’s longer-term plans are. It may be that, simply by holding that huge stake — the equivalent, in some respects, of massing his forces on the board’s borders, so to speak — he will expect Twitter’s management to start paying attention to his concerns.

As mentioned above, these revolve around free speech, bias, and Twitter’s algorithm, and I’d be very surprised if Musk’s solution involves the state or state-approved “watchdogs.” On March 26, Musk tweeted that “Twitter serves as the de facto public town square.”

The magic words there are “de facto.”

De facto is not de jure. Parsing Musk’s tweets is not without its perils, but he appears to be signaling that, in his view, (again, existing laws aside) the state has no right to intervene in content moderation. Nor, in all likelihood, does he think that it has any duty to do so, either. If Twitter’s house needs cleaning, it seems he wants Twitter to do it, not, say, a posse led by Elizabeth Warren. And that’s how it should be.

So, we wait to see what happens next. Sooner or later, both populists and big government types (often overlapping categories) might well try to use the purchase of such a large block in Twitter by a figure such as Musk as an excuse to try to meddle. After all, he’s someone whose opinions do not fit comfortably in Washington. And as a billionaire, he is a member of a class we are all being taught to hate.

There are reasons enough, at times, to complain about Twitter. But when it comes to free speech, none of them are good enough to invite Leviathan in through its gates. That’s not to say it won’t try: Musk is probably going to find out that he has two battles on his hands: one within Twitter, the other within the Beltway.