Twitter analyst on Musk acquisition: ‘Change is coming’

Third Bridge Global Sector Lead for Technology Media and Telecommunications Scott Kessler joins Yahoo Finance Live to discuss what Tesla CEO Elon Musk’s Twitter takeover means for the platform's users, upcoming changes, and looming free speech concerns.

Video transcript

AKIKO FUJITA: We've got Scott Kessler, Third Bridge Global Sector Lead for Technology, Media, and Communications. Scott, you are a busy man weighing in on this. So let's start with that question. A lot of users are saying, what does this mean for me? How is the Twitter experience going to change?

SCOTT KESSLER: I think it's a super important question, probably one that users have been considering. I've seen a lot of posts on Twitter today assuming that the transaction is already closed. So clearly, people are very well aware of and interested in what's going on here.

I think initially, assuming Musk is able to consummate this transaction, and I think at the all-hands meeting yesterday they talked about a six-month timeline or so-- the company yesterday also indicated by the end of the year-- so we're talking at or around the winter time 2022. So I think people are wondering, what's going to change?

I think initially, you're probably going to see people that may have been banned from Twitter being allowed back on. You're going to see content that was previously removed from Twitter being allowed on the platform. I think those are initial changes. I think people are looking for other changes.

Musk has tweeted about an Edit button. He's also tweeted about verifying all the people on the platform. I think those types of things can come relatively quickly, it's just going to be a question as to what the potential backlash might be to all those changes.

DAN HOWLEY: Yeah, Scott, the idea of verifying people, obviously, that's a problem in and of itself just because if there are dissidents from countries that don't necessarily allow free speech, that's going to be a problem when they lose their anonymity and their ability to speak. But I guess as far as what we could see from users, will they actually ditch the platform like they say-- we've seen these hashtags going around, RIP Twitter, or Delete Twitter-- things along those lines. We've seen those before, right?

We've seen it, I mean, it feels like we've seen it countless times. So is this actually something where people are going to leave the platform? Or is it just people who don't like Elon Musk, who are saying, I'm going to jump off and, really, it has no impact on it?

SCOTT KESSLER: Boy, I don't know to what extent people, because they don't like Musk, are going to depart Twitter? I don't know about other options, right? I think one of the things that probably has attracted Musk to Twitter-- and I'm not talking, obviously, about the platform per se, because he's been on it and been one of the most followed accounts on it for some time, but I'm talking about the company-- is, in fact, how it is such a universally understood kind of platform from the perspective of, as you were talking about, the town square and where real time news is broken and made.

I think that's a fair way to describe the platform and its unique position among social media platforms. That being said, there are undoubtedly going to be, I think, a lot of challenges in terms of how to balance Twitter's mantra of health and safety over the last couple of years against how Musk has been talking about his priorities, as you highlighted, being free speech. There's a pendulum that sits somewhere in the middle.

I think a lot of people feel like it swung too far to the health and safety side of things. But I think ultimately, if you look at what's going on here, I think there are a lot of uncertain aspects to what we're going to see next. But I think it's fair to say that change is coming. And, frankly, change is overdue.

And so we'll see how quick that change happens and how people respond. But I am not one who believes that you're going to see people, you know, exiting Twitter stage left en masse. I think people are going to understand that it's a unique platform, they get value from it, and they'll wait and see what the changes hold.

AKIKO FUJITA: Well, I guess the question is also, if it is about removing the ads, as Elon Musk has said previously, and having some kind of subscription model, how much are people willing to pay for it? I want to talk about the market perspective here, though. We were showing just some of the stocks for social media companies.

We've got one of the big names now going private if this transaction goes through. How does that shift the landscape from a markets perspective? And does one company benefit as a result?

SCOTT KESSLER: Yeah. You know, that's a question that hasn't really been asked very much, to be honest. And I think it's a good one to ask at this point. I'm not sure how much it really changes things. And I say that for a couple of reasons. One is we're in a really unique time. I guess people might think that every time is distinct in its own way. But it's distinct in that, number one, we're coming out of hopefully COVID in most of the world. And that means that in 2020, 2021, people, to some extent, were in their homes, they were using social media more and more.

And we saw, frankly, bumps and spikes in users and usage and the companies benefit. We're coming out of that. So that's, obviously, a headwind from a fundamental perspective. The second thing is those comparisons are pretty tough, right?

Suddenly, you're looking at a comparison to an environment where there was maybe artificially enhanced operational and even financial metrics. And then I think the other thing is IDFA, right, which was essentially implemented last summer. It's had an adverse impact on a lot of internet media and social media companies. And so it's not a great environment.

And frankly, we speak to experts every day about a variety of topics, including internet and social media. And we have one person saying that this is really a game-changer. And it's not necessarily going to go away just because we're a couple of quarters in or we're going to anniversary the deployment and implementation of IDFA.

So that being said, look, I mean, late last year, we saw talk of PayPal looking to buy Pinterest. There obviously has been interest in and around snap and Snapchat over the years. You look at LinkedIn was bought by Microsoft.

So there has been no shortage of kind of interest and activity here. I don't know, though, that it's going to cause some kind of watershed where you're going to see more activity. And what I would say on that front, and the best indication of that, is it doesn't seem like there was a lot of other interest in buying Twitter. So that, to me, says maybe there is the equivalent of a buyer strike and we'll see what happens with Musk's purchase here.

AKIKO FUJITA: OK, we'll be watching closely.