Elon Musk, the world’s richest man, is a hair’s breadth away from purchasing one of the world’s most influential publishing platforms. That statement alone is remarkable. What’s disturbing about his deal to buy Twitter is the next part: He will be accountable to no one but himself. Musk can dissolve Twitter’s board when he takes the company private. If he doesn’t, any board that remains won’t have teeth. That’s nothing new in tech, where checks and balances are often passé. Even so, that trend is having damaging repercussions.
Big Tech founders like Mark Zuckerberg and Alphabet’s Sergey Brin and Larry Page have fashioned themselves as modern-day autocrats of business, thanks to the way they have structured their initial public offerings and voting shares over the past decade.
Zuckerberg owns most of Meta’s voting shares, while billionaires Brin and Page control 51% of a special class of voting shares of Alphabet, giving them ultimate control of Google and YouTube. This dual-class share structure is unusual in business, but common in the tech world, thought to give startup founders freedom to execute their long-term vision. The founders of Airbnb and Snap both have about 44% voting control of their companies thanks to dual-class structures. And while Musk owns just 20% of Tesla, his board is stacked with friends like Larry Ellison and Kimbal Musk, Elon’s brother. Zuckerberg’s board also has largely done his bidding over the years.
All of this runs counter to modern ideas of corporate governance, which insist on accountability. Without those checks, tech leaders are free to make highly capricious decisions without internal oversight.
Sometimes, those decisions can be good for business. For instance, when Zuckerberg bought Instagram for $1 billion in 2012, the tiny target had no revenue—and he didn’t ask his board for permission. Seven years later, Instagram was contributing $20 billion to Facebook’s annual sales.
But look at it another way. Many studies have shown that the rise of Instagram, under Zuckerberg’s stewardship, has correlated with higher rates of depression, anxiety and suicide among teenagers and teen girls in particular. The site has made oodles of money but also caused psychological damage to children and adults, which Facebook’s own research has corroborated.
Long-term, shareholders too can suffer from unfettered control. Zuckerberg steered Facebook into obsessively chasing an abstract business goal with the idea of a metaverse. While the initiative might eventually bear fruit, for now the move has already cost the company $10 billion. Meta’s stock has dropped 40% since the start of this year. Why isn’t he reshaping Facebook into a safer website that can thrive for years to come? Because no one, either from his team of sycophantic lieutenants or his deferential board, has pushed him to.
Musk’s move on Twitter also is hard to square 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 economics at all,” he recently said—but to realize his ideas about free speech. Tesla’s shareholders are paying the price. As Musk borrowed more than $25 billion against Tesla as collateral, the carmaker’s shares have lost almost a quarter of their value in the past three weeks. If Musk sells part of his stake to keep supporting his personal agenda, that will depress the share price even more.
Maybe it’s just hard to remember your obligations to make money when you’re a billionaire. Maybe when you are in an industry that idolizes visionaries, it’s easy to get lured into chasing the realization of your ideological or futuristic world view. Maybe the billionaires who control today’s social media platforms actually need stricter checks and balances.
That’s doable. Dual-class listings could eventually be phased out, as many institutional investors have already called for, but structural changes can take years. Regulators, meanwhile, have been talking tough, but they are also easily ignored by the likes of Musk. He has thumbed his nose at the US Securities Exchange Commission multiple times and will likely skirt the European social media laws that threaten, in theory, to disrupt his free speech plans.
For better or worse, the clearest remedy right now is other billionaires. The biggest impact on Facebook’s unscrupulous data-collection practices to date has come from Apple, helmed by billionaire Tim Cook, when it allowed customers to block Zuckerberg’s company from tracking them. ByteDance, run for years by billionaire Zhang Yiming, also threatens to lure users of Facebook and Musk’s Twitter away with its highly addictive TikTok app.
That is not how things should be, but in a world where social media is being shaped by freewheeling billionaires, their rivals may be our only hope.
Parmy Olson is a Bloomberg Opinion columnist covering technology