|Image of Elon Musk posted in front of the Twitter logo and the|
logo of his best-known company Tesla (Ohnsman, Nov.23, 2022).
Elon Musk has rapidly grown in popularity and wealth in recent years by investing and leading in technology, all while being an active presence on social media platforms by expressing his personal views on cultural topics of debate and politics. More recently, Musk was moved by many followers to purchase the social media platform “Twitter”. The deal was finalized on October 27th, 2022 requiring Musk to sell over $4 Billion in his Tesla stock to afford the $44 Billion price tag on Twitter (Isidore, 2022). Since then, Musk has made many changes to the company including massive layoffs of full-time employees and moving the company into the private sector with his other businesses. More recently, in the time leading up to and since the November 8th midterms, Musk began posting his political views and opinions on his newly acquired social media platform to sway voters in the direction he was planning on voting in the midterms. Elon Musk’s actions as CEO of Twitter have become topics of much ethical debate which I will be addressing in regard to how his actions as CEO have affected stockholders, employees, and Twitter users as well as a breakdown of the ethics of this case through lenses of individualism, utilitarianism, Kantianism, and virtue theory.
Ethics Case Controversy
The main controversy, in this case, is held between the following two sides. Musk’s responsibility as CEO of Twitter, a massive mainstream media platform, is to “project apolitical stances” (Satariano, Nov. 8, 2022). This is typical within a corporate culture in that high-ranking members of a company do not typically share their political ideas. CEOs and other high-ranking officers serve in a role where they are a representation of their companies and must act on behalf of that organization, which includes remaining neutral on political matters that could cause a divide among employees or shareholders. By making a political statement on his platform, Musk made some users turn away from the network because they saw that the CEO was expressing ideas that went against their own. In retaliation to his post, many employees of Twitter took to posting their own political opinions on the platform. This only led to more controversy within the company as many of the employees who Musk laid off after coming in were the same employees who took to the platform to speak out against him (Taylor, Nov. 4, 2022). The other side to arguments surrounding Musk’s actions is that he has the right as a user on the platform to be able to say anything he wants as long as his posts remain within Twitter’s user guidelines (Twitter User Agreement, as accessed on November 27, 2022). The idea that a CEO should project apolitical stances has always been the case for any business in the public sector. While Twitter has historically been a publicly traded company, its new positioning in the private sector makes it so that the CEO, Musk, has fewer responsibilities in terms of behaving in a way that benefits shareholders. Another benefit to Musk with taking the company private is that he no longer has to respond to a board of directors. A board of directors would normally hold a CEO to certain standards and to the idea that a CEO should remain “apolitical”. Since Musk does not have the looming threat of being replaced as CEO, he is able to act on the platform in whatever way he pleases so long as he still abides by Twitter’s community guidelines. Overall, Musk has been known to create ethical dilemmas through the management of his companies in the past due to his words and actions as CEO. Now that he is the CEO of the social media platform on which he is making questionable statements, though, the question of whether or not his actions are ethical must be revisited.
The first place to look to see how Musk’s actions have affected Twitter as a company is at the stakeholders. Upon purchasing Twitter, Musk made sure that he paid shareholders a fair market price for the stock. At the time the deal was made, he offered a per-share price that provided a 38% premium to the company’s shareholders (Willing, 2022). This proved to be massively beneficial to anyone holding shares of the company’s stock since before that the company had fallen massively in stock price and many investors were worried that they might lose their investments. These same investors were not only offered a price for their shares 38% above their current standings, but the news caused the price to shoot up over 30% soon after Musk’s announcement, indirectly allowing the worried investors an opportunity to sell in case the deal were to fall through. Since they are not the only investors that have business involvements with the company though, they are not the only people affected. Some big names affected by Twitter’s active user rates include Donald Trump, Apple, and Vanguard. Former President Donald Trump had previously been banned from the site but Musk reactivated his account on November 19, 2022, allowing him access to the 51.8% of polled Twitter users who wanted to see him back on the platform that he had previously used during his presidency to communicate with his large Twitter audience (Wong, 2022). Apple is another major company that Wong explained was affected by Musk’s Twitter takeover. Apple has always been the number one advertiser on Twitter, benefiting Twitter’s stakeholders and the company as a whole with massive Ad revenues. When Musk took over Twitter and began posting his personal opinions on the platform, Apple temporarily halted its advertising on the platform. They have since resumed their Ad campaigns on Twitter which benefits both parties by generating sales for Apple and keeping advertisers around on Twitter since many of the company’s other advertisers held concerns about keeping their advertisements on the platform. Vanguard is a fund management giant that was proven to be the largest shareholder of Twitter’s stock as of March 31, 2022, with 10.29% of the company’s shares (Willing, 2022). They were affected the most, based on pure share volume, by Musk buying out shares in his acquisition of the company.
Twitter revenue displayed over time leading into
Musk’s takeover. (Iqbal, as accessed December 6, 2022).
Individualism is an economic theory developed by Milton Friedman that states that “there is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits so long as they… engage in open and free competition, without deception or fraud” (Friedman, 1962). In other words, the main purpose of a business is to make a profit, therefore that should be any company’s most important responsibility and top priority (Desjardins, 2019). With Musk already being the wealthiest person in the world with many thanks to his very successfully run businesses, he made clear early on in the acquisition that he planned on running Twitter under these ideas of individualism. Since he took the company private, wherefrom he operates a number of his other businesses, he no longer has to worry about any interference from a board of directors or shareholders of the company. This freedom allows him to operate under whichever practices he sees fit as long as he remains within the legal confines that all businesses must operate under. The first major action Musk took toward maximizing Twitter’s profits was to lay off a massive amount of full-time employees as reported by Yu on November 5, 2022. Musk claimed that this was an essential step to making Twitter run more efficiently because the company had been losing $4 million at the time of his entry. This is where the ethical problem in this case regarding individualism arose. While Musk did in fact offer 3 months of severance to everyone that received the email that they were being laid off, “which is 50% more than legally required” (Musk, @elonmusk, 2022), he did so with only 1 week’s notice causing an uproar among those fired (Yu, 2022). The timeline of the layoffs became the main concern in question in this case. Although his actions were justified ethically by the idea of individualism, seeing as he was acting in the best interest of the company’s profitability, he did so in a manner that violated the legal limits within which he is bound to operate. Musk went about the layoffs in a manner that he thought to be excusable because he was offering the laid-off employees greater severance packages than what was legally required of him. This is still illegal though, raising the question of how ethical his actions were because mass layoffs on this scale need to be performed with more notice than he provided the employees regardless of how much severance was being offered (Taylor, 2022).
|Screenshot of Musk’s Tweet in response |
to criticism surrounding massive layoffs.
Utilitarianism is another ethical practice that many businesses adopt and do their best to stand by. The practice requires a business to address the consequences of its actions and measure how ethical they are based on the amount of “good” that action does (Desjardins, 2019). A company under utilitarianism should focus on maximizing the good that it does and attempt to reach as many people as possible with its good actions. In the case of Musk within Twitter, his action of laying off over half of the company’s full-time staff can be seen as unethical based on the idea of utilitarianism. Normally, a company could try and make the argument that it is doing good for its shareholders by maximizing profits and acting under ideas of individualism. Because Musk brought Twitter private as soon as he took over the company, the actions he takes to generate profits for the company have no way of benefiting any public shareholders. The thousands of employees who were left jobless after the massive layoffs, therefore, outweigh any good these actions might have done for the company. Outside of the financials associated with the company, it is important to assess the overall good of Musk’s tweets since becoming CEO. The full effect of these actions has yet to be weighed by any quantifiable metrics, however, they have still begun showing through the reactions of many Twitter users. It is also difficult to determine whether his actions have done more good than bad seeing as his politically based posts have caused a divide among the platform’s users (Satariano, 2022). This divide is made up of people who sided with the opinions Musk posted starting on May 18, 2022, which was later recalled for the November 8, 2022 midterms after he became CEO, and those who disagreed with his political opinions. Among those who sided with Musk’s tweets was former president Donald Trump, who was a representative of the Republican party that Musk had openly sided with in his message on the platform (Wong, 2022). Trump’s account, under Twitter’s previous management, had been banned due to disagreements with Twitter’s “User Agreement Policy” (2022). In response, the side of Twitter that disagreed with Musk’s posts was quick to halt their activity on the platform out of concern for how their own political views would be met by the new management. Although it is impossible to make a choice between which side Musk would have been able to do more good with by supporting, it is still a clearly unethical action for him to take based on utilitarianism because the most “good” would have been done to the most people if he had taken an apolitical stance in the midterm elections as CEO.
Immanuel Kant was a German philosopher who believed that people “should act only according to those maxims that could be universally accepted and acted on” (Desjardins, 2019). More simply put, when translated to business ethics, Kant’s ideas tell us that a business should operate in a manner that respects everyone. An important distinction within this idea is that while a business must respect the independent knowledge that customers and other involved parties have in their decision-making processes, the business also holds a responsibility to uphold the expectations that these parties have while doing business with them. An example of this would be the difference between an online drug retailer posting warnings for a new, possibly harmful drug on their website and respecting the customer’s ability to decide for themself whether they should purchase it and keeping the product off of their shelves altogether out of respect for the customer’s well-being (Salazar, pages 1-13). The question that Kantianism raises, in this case, is whether Elon Musk as CEO of Twitter should have acted more respectfully towards the ideas of all users on his platform. One way to accomplish this would be by abstaining from voicing his political opinion on how people should vote. Kantianism would argue that since Musk’s political views are not “universally accepted and acted on” (Desjardins, 2019. Page 39.), his responsibility as CEO of the company would be to not post his views because the company would be acting controversially. The other argument supporting his actions would be similar to the example of a drug retailer trusting customers to make purchasing decisions independently with the information presented to them by the company. His actions could have been ethically justifiable because users of the platform possess enough individuality and confidence to not need to listen to his opinions on the platform if they disagree with him.
Unlike the previously mentioned ethical theories, virtue theory focuses on the characteristics of a person to determine the ethics of that person’s “virtues” (Desjardins, 2019. page 26) instead of looking at actions taken by the company. Many use a person’s virtues to determine whether a person holds strong leadership characteristics that will allow them to behave ethically in a business setting. In order to determine if Musk is capable of leading Twitter in an ethical manner, his character must be broken down into the biggest virtues that make him a good leader and see if they outweigh the characteristics that make him a bad one. Many of Elon Musk’s followers believe him to be a virtuous character due to the actions he takes with his companies, specifically SpaceX and Tesla. With these companies, he makes many attempts at bettering technologies that are key to everyday life for many people. This is a feat that encompasses meaningfulness, which would help better the case that he is a virtuous CEO due to the good he is trying to do for a vast number of people. Another virtue that can be found in the case of Musk posting his political views on Twitter is his honesty. An honest person can be seen as virtuous, and Musk’s transparency with his followers when it comes to his tweets is ethically good since they do not have to worry about being deceived when it comes to his individual actions or the actions of his companies. Contrary to Musk’s actions which can be viewed as good and virtuous, those who have shied away from the platform may find him undisciplined and egoistic. These character traits are considered to be common in unethical behaviors as shown by Desjardins, 2019, page 26. The continual posting of his personal ideas and political standings after taking over the mantle of CEO demonstrates his undisciplined nature. His egoistic behavior can also be seen in these Tweets where he has commonly boasted about his personal achievements and even went so far as to poke fun at other users on the platform (Cassidy, 2022).
Justified Ethics Evaluation
After evaluating the case I feel that Musk’s actions while frustrating many Twitter users, were not unethical. He walks a very thin line as a man who holds so much wealth and influence in the world between acting ethically and irresponsibly. By buying Twitter with the intention of running the company better than its previous owners and promising to loosen restrictions on what users on the platform would be allowed to share, he was serving Twitter users by providing most of them with what they had been asking for from the platform. In this case, where he posted his own political opinions, I think he is demonstrating to the users that under his management people on Twitter will be able to speak their minds freely. Although this is unusual behavior coming from a CEO, not just that of a social media company, I would not go so far as to say that his actions were unethical. In the article “Elon Musk Puts His Own Politics on Display on Election Day”, author Satariano focuses on pointing out what Musk did wrong by voicing his opinions on election day. I think it is still extremely important, though, to acknowledge that Musk is speaking independently from the company in his Tweets. All he has done is exercise the freedom of speech that Twitter is supposed to provide users, therefore not acting unethically even if it was in the poor taste of some of the platform’s users and followers.
Although Elon Musk has become the topic of much heated ethical debate since becoming CEO of Twitter, his actions have become much clearer after evaluating them through lenses of individualism, utilitarianism, Kantianism, and virtue theory. While attempting to better the company financially, its users, and stakeholders, Musk made some personal choices that ended up negatively affecting the actions he was taking as CEO. So, although his actions as CEO have not been made unethically, his actions as a Twitter user on the platform have become arguably unethical due to the consequences they have had on everyone involved with the social media site.
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Cassidy, J. (2022, October 28). Beware Elon Musk's Takeover of Twitter. The New Yorker. Retrieved from https://www.newyorker.com/news/our-columnists/beware-elon-musks-takeover-of-twitter
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