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Will Musk’s Faux Pas Change Twitter? Will it Affect Trump?

The spotlight has finally swung over to Twitter. Here’s Kara Swisher, in The New York Times, sharpening her pencil on who exactly she is talking about: “That would be Twitter,” she says, describing “the very platform that [Donald Trump] has used so well.”  It’s his favorite because it’s unmediated, he has his own audience, and the platform lets him do whatever he wants. No wonder it’s his go-to.

But how will this play out?

Perhaps by way of Elon Musk, whose tweet on Aug. 7 about taking his company Tesla private at $420 could force a legal definition of Twitter. That would then crank up the heat under Trump.

While Facebook held us in thrall for much of the past year, its lower profile confrere, Twitter, has managed to hide, mostly, in the shadows, until recently. Twitter’s central role is now coming to light.

(Image: Courtesy of Twitter)

Right along, Jack Dorsey, founder of Twitter and social media savant, has maintained a tight grip on the platform and enforced a regime weighted towards freedom of speech and away from censorship. However, law in this area is woefully behind. Twitter operates more or less as a common carrier and disavows responsibility for as much of its content as possible. A common carrier is not a publisher and is therefore not liable for the words and ideas promulgated on its platform.

As many internet trolls and others have pointed out, the First Amendment protects against only the intrusion of government censorship. The Constitution addresses nothing about private speech. The assumption has been that a host in a private setting may set the rules for its guests. All social media have such rules. They’re there in the fine print you cycled right through when you signed up. It permits Twitter to pretty much do as it pleases, since management decides how and whether rules are enforced or even whether they’ve been broken. The process is not at all transparent. Company policies remain just opaque enough to provide cover for the wielding of tremendous power. And all the while, Dorsey has remained terse and cryptic. He gets to decide. You have to live with the result.

Things have gotten a bit broken, however. Private platforms for distributing news and announcements have surpassed public ones in importance. Once upon a time, the government made its case via live events shown in real-time on broadcast television.  People sat down wherever they were and listened by the millions to what their government had to say. Press conferences were events to convey sometimes complex ideas quickly. Reporters asked questions to better understand, to clarify, and to defend the general public’s interest. Not so much these days.

No, our government doesn’t speak to us in a dignified open forum anymore. The actual White House press conference is a war zone. Policy—such as it is—comes via Twitter.

Thus, Twitter could be considered  an official channel. And yet it’s not.

So, back to Musk. That tweet of his may pop it all open. The problem is, the day he fired off his tweet, Tesla’s stock rose around 40 points to $380. As recently as a week before, the stock was clocking in below $300. Apparently, he made his public assertion without consulting his board of directors and without really having the financing lined up, even though he said he did. On Aug. 24, Musk released a statement (this time by the more-traditional method of a blog post on the company website) that he would keep the company public—at least for now. The stock had already been drifting downward at that point, with Musk’s erratic behavior adding to the pile of existing skepticism about his ability to pull off a private deal. Today, it trades well below $300.

All that sort of looks like stock manipulation: The CEO says something in public that has a strong positive effect on the stock, and when he rescinds his statement, the stock tanks. A trader who knew about it could make a fortune. Traders who didn’t (presumably but not necessarily everyone) could get destroyed by having either a long or short position, depending on timing. The Securities and Exchange Commission (SEC) has a specific rule, Regulation Fair Disclosure, adopted in 2000, about public release of material corporate information, which can cause market disruption.

And in fact, the SEC did subpoena Musk. The outcome is yet to be determined. At the heart of Regulation Fair Disclosure is the concept that a company cannot release previously nonpublic information unless the information is distributed to the public simultaneously. Some companies go to great lengths to meet FD requirements—publishing a press release, posting a blog, doing a video, and having top executives speak in a public forum with analysts and press—all at the stroke of noon (or whenever).

So, the question is raised, did Musk’s initial tweet meet Regulation Fair Disclosure? Only if you’re on Twitter, follow Musk, and happened to see his words fly by in your feed. So, is it an official channel or not? Musk was treating it, however casually, as if it is.

And so Musk leads to Trump. Musk’s subpoena indicates that Twitter is being examined as an official channel for purposes of meeting Federal Fair Disclosure regulations. If Musk is found to have improperly disclosed, then pressure could increase on Twitter to deal with the elephant in the room: the fact the Donald Trump uses Twitter, ex officio, as his own official channel.

Does Trump violate Twitter rules? Apparently. He engages in hate speech, makes ad hominem attacks on individuals, aims his ire at companies and countries, and promotes untrue conspiracy theories. Obviously, from a commercial perspective, Dorsey is delighted to have Trump use his platform. Does that mean the Twitter CEO puts his thumb on the scale to keep Trump from being banned by Twitter’s own rules and policies? If Dorsey and his company weren’t so opaque, we might know the answer to that key question.

Maybe I’m grasping at straws here, but it seems that Twitter has become an ex-officio official channel for Trump, through a “special exemption.” But this exemption is more implicit than explicit. Everyone understands that he is using Twitter to whip us, but for some reason, the channel itself is still in the shadows. The legal status of the tweet has not really been settled. If the SEC says Musk used it as an official channel, then that fact comes into focus for Trump as well.

 

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