Tesla founder Elon Musk’s $44 billion bid to buy Twitter has led to a wave of concern that Tesla’s rapid expansion in China will make Twitter TWTR, -0.18% more vulnerable to pressure from the Chinese government.
China is, after all, Tesla’s second-largest sales market after the U.S. — accounting for nearly one-quarter of total revenue — and is key to the electric-vehicle maker’s growth strategy. Tesla delivered its first Chinese-made cars in 2019 after opening its first factory there the previous year.
Musk’s offer was accepted by the board of Twitter on Monday, a move that took many analysts by surprise. Shareholders still have to vote on Musk’s bid, and the deal is also subject to regulatory approval.
It did not take long for critics to raise red flags about the potential sale on Twitter. Even some of Musk’s own peers — Jeff Bezos, the billionaire founder of Amazon — initially expressed concern.
Bezos was, in fact, one of the first people to express unease with the bid. Responding to a reporter’s tweet about Tesla’s business relationship with China and Twitter being banned there, Bezos wrote: “Interesting question. Did the Chinese government just gain a bit of leverage over the town square?”
(Tesla TSLA, -0.77% did not respond to a request for comment.)
In response to speculation that China would seek to interfere with Twitter under Musk’s leadership, China’s foreign ministry issued a denial Tuesday, saying such speculation was baseless.
Twitter’s policy on state-affiliated accounts
In light of recent events, however, scholars and China watchers point out that the government has not given up hope that the platform could provide a way to burnish its own international image.
Throughout the years, they say, state-affiliated accounts appearing on Twitter in territories outside of China, including those operated by government spokespersons and government officials, promote Chinese culture and praise the government’s policies, especially during times of tension with the West.
In order to increase transparency and cut down on propaganda — and disinformation and fake news — Twitter flags accounts belonging to Chinese government officials’ and Chinese state-affiliated media, an approach applied to media outlets that the platform regards as lacking editorial independence.
Twitter does not label public broadcasters such as the BBC in the U.K. and NPR in the U.S. as “state-affiliated” because they have editorial independence.
“State-affiliated media is defined as outlets where the state exercises control over editorial content through financial resources, direct or indirect political pressures, and/or control over production and distribution,” Twitter’s policy says.
Twitter is in a constant battle to reduce fake news and propaganda by foreign governments on the site, including from China.
(Twitter declined to comment for this article.)
Still, observers wondered whether Musk’s long-time ties with the Chinese government would be a threat to the integrity of the social-media platform, including whether the company would remove state-affiliated media labels or — in a worst-case scenario — even remove negative China-related content or accounts.
In 2020, Twitter removed approximately 23,000 accounts it said were linked to the Chinese Communist party. In the aftermath of Russia’s invasion of Ukraine, Twitter also labeled tweets by RT and Sputnik as Russian-affiliated state media.
Mutually beneficial relationship
China has long been an important market to Tesla and Elon Musk.
Having the power to remove content from Twitter would obviously be an attractive, if crude, way for the Chinese government to control its own narrative.
However, Kecheng Fang, media scholar and assistant professor at the Chinese University of Hong Kong, said that’s highly unlikely given the fact that Tesla and China depend on each other. Tesla has invested billions of dollars in Chinese manufacturing, and China supplies Tesla with parts, including graphite for its car batteries.
“They wouldn’t use it as a bargaining chip unless they have to,” Fang wrote in an online newsletter this week.
Meta CEO Mark Zuckerberg once flirted with China in the hopes that the country would open its borders to Facebook, before criticizing the country’s strict regulation on internet access.
Will Elon Musk try to finish what Zuckerberg failed to do — and court Chinese officials in the hopes that China would allow even a censored version of Twitter?
If he did, Musk would have a hard time convincing Chinese officials that his “free speech” mantra could benefit them, observers say.
While the Chinese government clamps down on social-media at home — deleting controversial posts and restricting accounts on its in-land Twitter equivalent, Weibo — observers noted that China would be skittish about opening its internet up to Twitter.
What’s more, Twitter serves 217 million daily active users worldwide, and as the rise of TikTok has shown, social-media users can be fickle. They often switch allegiances. Millions of people would almost certainly express outrage if they noticed even subtle changes in Twitter’s editorial policy towards China.
A complex road ahead
For his part, Bezos has since clarified his initial response to Musk’s bid for Twitter: instead of Twitter buckling to pressure from Beijing, it is more likely to create complications for Tesla’s business in China, he said.
On the issue of Chinese-influenced censorship at Twitter, Bezos wrote (on Twitter): “My own answer to this question is probably not. The more likely outcome in this regard is complexity in China for Tesla, rather than censorship at Twitter.”
“But we’ll see,” he added. “Musk is extremely good at navigating this kind of complexity.”
Doing business in China is one way to gain access to the state’s political class, and there will be lots of opportunities for Beijing to put the squeeze on Musk, as the Australian Strategic Policy Institute senior analyst Fergus Ryan told the Wall Street Journal.
Using Musk’s electric-car business as leverage to gain more influence on Twitter is unlikely to be an immediate priority for China, Denis Simon, professor of China Business and Technology at Duke’s Fuqua School of Business, told MarketWatch.
Both sides are — for the most part — happy with their existing business arrangement in the electric-car space, he added.
Another, perhaps extreme, scenario: what if China believed Twitter accounts or discourse was a threat to national security? It’s “conceivable” that the Chinese government might express its displeasure and take some kind of action designed to pressure Musk, Simon said.
But, he added, that’s a big “if.”
Musk faces more pressing issues in the short-term if he succeeds in taking Twitter private, Simon added: “I think he’s going to have a big problem trying to figure out what he really means in terms of free speech.”