Elizabeth Warren Raises Questions About Elon Musk and Twitter

December 19, 2022
Business

Elizabeth Warren has questions for Musk

Elon Musk’s chaotic tenure running Twitter has already drawn scrutiny from an array of international government officials, who have professed concern about his changes to content moderation, including the suspension of several journalists, and new restrictions on promoting rival social networks. (The Musk management style was again on display after his followers voted to give him the boot as the Twitter C.E.O. in a poll he ran overnight; more on the latest head-snapping developments later.)

Now, DealBook is first to report, Senator Elizabeth Warren, Democrat of Massachusetts, is taking aim at an issue with more serious potential legal consequences: whether Mr. Musk has created a series of conflicts of interest with and misappropriation of resources from Tesla, the electric carmaker he also runs.

“As you know, it is the legal obligation of Tesla’s board to ensure that its C.E.O. is meeting all his legal responsibilities and serving as an effective leader,” Ms. Warren wrote in a letter to Robyn Denholm, Tesla’s chairwoman, on Sunday night. (Ms. Denholm did not respond to a request for comment.) While the chaos at Twitter isn’t Tesla’s concern, Ms. Warren raised the possibility that many of Mr. Musk’s actions may be shortchanging Tesla.

Ms. Warren asked whether Mr. Musk’s diverting of resources from Tesla — including software engineers and senior executives — is harming the carmaker. In her letter, the senator also questioned whether Mr. Musk’s assertion that their being seconded to Twitter was purely voluntary, citing an anonymous employee who told CNBC, “most would also feel it was impossible to turn down a direct request from Mr. Musk without later facing poor performance reviews or other consequences.”

Ms. Warren also suggested the possibility of Mr. Musk intentionally shortchanging either Twitter or Tesla to benefit the other, including Twitter potentially overcharging Tesla for ads or tweaking the social network’s algorithms to benefit the carmaker. She also asked the board whether content appearing on Twitter under Mr. Musk’s new content moderation, including a rise in misinformation and what the senator said was hate speech, could end up hurting Tesla’s reputation.

Ms. Warren asked Tesla’s board a dozen questions about whether it was aware of the extent of the potential conflicts of interest and whether it had imposed guardrails to protect the carmaker and its shareholders. (That included asking if the board had gotten assurances that Musk wouldn’t tamper with Twitter’s algorithms to aid Tesla, to avoid antitrust violations.)

“The problems identified in this letter are not merely theoretical,” Warren wrote, noting that Tesla’s stock has fallen sharply this year and remains under pressure. That includes both the perception that Mr. Musk is distracted and his disclosure of billions of dollars worth of stock sales, with the prospect of more, which could be used to help out Twitter or meet margin requirements for loans he took out to buy the company.

It’s an argument that many Tesla investors have raised publicly, including Leo KoGuan, its third-largest individual shareholder, who tweeted last week, “Tesla needs and deserves to have working full-time C.E.O.”

Article source: https://www.nytimes.com/2022/12/19/business/dealbook/warren-musk-tesla-twitter.html