Why one expert says the U.S. gov't has good reason to investigate Elon Musk
Twitter's disastrous relaunch, including an $8/month blue checkmark system leading to impersonation and loss of advertisers, makes its vulnerabilities more salient.
Summary: It’s not politics. The U.S. government has good reason to investigate Elon Musk’s purchase of Twitter over his potential violation of FTC agreements and his companies’ ties to foreign governments, David Karpf of George Washington University tells me.
Questions outweighed answers for me over the U.S. government potentially investigating Elon Musk over his purchase of Twitter, especially after President Biden gave the appearance of blessing such an inquiry last week by saying Musk’s ties to foreign entities is “worthy of being looked at.”
On the one hand, the reporting about the U.S. government potentially investigating Musk seemed a little too consistent with the left’s anxieties over his ownership, including signals he won’t play ball with the U.S. government in policing what it deems misinformation. On the other hand, Musk indisputably has ties to foreign governments with unsavory leaders, including the continued Saudi investment in Twitter, and has flirted with pro-Russia forces by threatening to cut off satellite services to Ukraine.
David Karpf, an associate professor in the School of Media & Public Affairs at the George Washington University, has written extensively about the issue and graciously spoke to me yesterday to address my questions about a potential U.S. government inquiry.
Media reports on a potential investigation in recent days, Karpf said, suggest the government isn’t so much “responding to the left, as much as the government responding to Twitter.”
Karpf pointed out Twitter in 2011 agreed to a consent decree with the Federal Trade Commission, which was set up over security and data privacy violations. When the company continued to have issues, Twitter was forced just this year to enter into another consent decree and pay $150 million in civil penalties. Of course, that was before Musk acquired Twitter.
The consent decree, Karpf said, stipulated Twitter must before making any big changes, such as the new blue checkmark system as initiated by Musk, would have conduct risk analysis and consult with the Federal Trade Commission. Musk, however, by creating the blue checkmark system willy-nilly appears to be on the path of bucking the terms of those agreements, Karpf said.
Musk’s essentially fired everybody who was involved with the consent decree, Karpf said. One top staffer before departing, Karpf pointed out, told employees the self certification in the blue checkmark system would violate the agreements, and employees can be individually endangered with potential legal risk. Musk’s own lawyer, in the days since, issued a statement to employees telling them the company, not employees, would be on the hook.
“That's leading the government to say, ‘OK, we need to take a serious look at what Twitter is doing and which rules it's breaking,’” Karpf said. “Some of that's going to the FTC, some of that’s going to Congress, and some is going to analysis of whether or not the purchase can go through or be stopped.”
The FTC also appears to have taken notice and issued a public statement about “tracking recent developments at Twitter” — a rare move for the agency before making any formal inquiry, according to Politico.
I’ll get into more about what Karpf told me, but first a little more background and greater context about news developments in recent days, which went into our discussion.
Musk’s relaunch of Twitter has gone off to disastrous start, so those questions are even more meaningful now. I was essentially defending Musk and disparaging his critics on the left who couldn’t handle him owning Twitter as contemptuous of free speech principles, but evidence in the days since that time suggests he’s making freedom of discourse worse and not better.
The new blue checkmark system, Musk’s brainchild to increase the revenue for Twitter by charging $8 a month for authentication, has been a fiasco. In theory, the system was a novel, but justified way to make users pay for making use of a social media platform that has had issues with financial sustainability. But Musk’s idea to extend the verification to any and all people willing to pay $8 a month has made it too easy to impersonate someone on Twitter, which has reduced confidence it users are who they actually say they are and caused advertisers to bolt.
The Washington Post had a great story yesterday on a pharmaceutical company, Eli Lilly, being impersonated by account with a blue checkmark declaring: “We are excited to announce insulin is free now.” The actual company was displeased went that went viral, to say the least, and ordered a halt as part of its $300 billion budget to all advertising on the social media platform.
Another prominent example: A Washington Post writer experimenting with the new system was able to obtain a blue checkmark for fake accounts as comedian Blaire Erskines and Sen. Edward Markey of Massachusetts. All it took, according to the Post’s Geoffrey Fowler, was “a spare iPhone, a credit card and a little creativity.” When the real Markey took to Twitter to demand answers on enabling the fake account, Musk responded in his characteristic fashion by throwing out a Twitter bomb: “Perhaps it is because your real account sounds like a parody?”
It doesn’t help Kathy Griffin’s account on Twitter was suspended after the comedian mocked Elon Musk by impersonating him. By suspending her account while enabling other impersonators to crop up, Musk gives the impression he’s being selective about which impersonations are appropriate and overly insensitive about an impersonation of himself.
Bad actors seeking to disrupt the system and cause confusion by impersonating others on Twitter, however, are engaged in fraud, which isn’t free speech. Under the First Amendment, there’s extremely limited kinds of speech when the U.S. government can interfere and penalize an entity for engaging in discourse. Fraud is one of them. A system allowing users to engage in fraud, therefore, degrades the critical institution of free speech.
That kind of behavior, Karpf said, is exactly the thing that gets attention from the U.S. government. Musk’s potential violations of the FTC agreement — in addition to account impersonations like the one of Sen. Edward Markey, companies and other public figures — should be expected to warrant the attention of government review.
“That's coming from the government looking at how he's been running Twitter and saying, ‘All of this is a level of chaos that wasn't there before, and given existing concerns about both misinformation and also about foreign countries being able to impersonate and hack through major social media services, we got to take a serious regulatory look,’” Karpf said.
The “Twitter Blue” option for users to create a paid account is no longer available on the social media platform. Really, it just strikes me as an easy fix to wed the legacy verification system with the requirement to pay $8 a month. Then again, Musk’s vision for these paid accounts was for everyday users to have access to blue checkmark access as opposed to only users with some degree of notoriety, so requiring verification and $8 a month may be too small a pool to be worth the effort.
Musk has been open about Twitter having a “massive” drop in revenue, blaming activists for pressuring advertisers from bolting the company. Unsurprisingly, Musk has had to move money around his businesses in apparent effort to keep Twitter afloat in the near term. As announced by Musk himself, a new advertising investment in Twitter has come in from SpaceX, another company Musk owns, although he characterized the purchase as a test run as opposed to financial salvation.
“SpaceX Starlink bought a tiny — not large — ad package to test effectiveness of Twitter advertising in Australia & Spain. Did same for FB/Insta/Google," Musk tweeted on Monday.
Musk moving around money from other companies into Twitter was right on point in my talk with Karpf in determining whether a U.S. government investigation of Musk is warranted in terms his foreign ties, especially when Twitter is now financial beleaguered and Musk is dependent on cash flow elsewhere.
Foreign investment in Twitter, including the continued $1.89 owned billion by a holding company with ties to the Saudi royal family, was among my questions for Karpf. The Saudi investment was the basis earlier this month for Sen. Chris Murphy’s call for investigation from CFIUS, an arm of the Treasury Department on foreign investment. In many ways, that would make sense given the history of Saudis and questions about why they would be making an investment in Twitter other than to expert political influence.
Karpf, however, downplayed the Saudi investment, saying he’s unsure why they made the investment in Twitter as he pointed out they had the holding in the company before Musk’s purchase and made significant tech investments across the board.
“They've got large piles of money that they invested a lot of tech stuff,” Karpf said. “So in that sense, it's not necessarily nefarious that they're invested here.”
The issue with foreign entanglements, Karpf said, isn’t so much foreign investment in Twitter, but Musk himself. That’s because Musk has taken ownership of Twitter while having ownership in other companies like Tesla, which has significant foreign ties with Saudi Arabia, China and India and is “creating a set of potential conflicts.”
“These are countries that have already tried to pressure Twitter, just like they try to pressure every other tech company, but now they have the additional attack surface,” Karpf said. “China, I think is where half of Tesla's sales come from. If they decide nationally that they have demands on Twitter, then that is an awful lot of exposure that he has that Jack Dorsey didn’t have.”
As a result, Karpf said, foreign governments, including those with authoritarian leaders, may seek to influence Musk to make Twitter work consistent with rules under which those companies operated.
“That’s a threat for any international social media service that becomes much more threatening and much more concerning for public officials when the CEO of Twitter is also CEO of other companies that those nation states can then pressure,” Karpf said.
I can envision a scenario where the impact on foreign government isn’t within its own borders, but calls for changes in the way Twitter operates globally, including on what kind of information can and cannot be disseminated. If Musk is going to run Twitter in a way that leaves the company strapped for cash, that's going to make the problem of influence by foreign governments all the more acute and worthy of review, whether that oversight comes from the U.S. government or elsewhere.