Twitter sinks due to US scrutiny of Elon Musk

government officials of Joe Biden are discussing whether the United States should subject some of the companies to Elon Musk to national security reviews, including agreement to Twitter and the Starlink satellite network SpaceXaccording to people familiar with the matter.

Twitter shares fell as much as 16% in pre-open trading in New York.

US officials have been uneasy about Musk’s recent threat to stop providing Starlink satellite service to Ukraine — he said it has cost him $80 million so far — and what they see as his increasingly pro-Russian stance after a series of tweets outlining peace proposals favorable to the president Vladimir Putin. They are also concerned about his plans to buy Twitter with a group of foreign investors.

The discussions are still at an early stage, the people familiar with the matter said on condition of anonymity. US officials and the intelligence community are evaluating what tools, if any, are available for the federal government to review Musk’s companies.

One possibility is that through the law governing the Committee on Foreign Investment in the United States, Musk’s deals and operations could be reviewed for national security risks, they said.

The interagency panel, known as CFIUS, reviews acquisitions of US companies by foreign buyers. It is unclear whether a CFIUS review, which would involve assessments by the Departments of State, Defense and Homeland Security, among others, would offer the government a legal way to conduct a review, the sources said.

Twitter is also facing reports that Musk intends to cut the workforce as part of his acquisition. The Washington Post reported that Musk’s plan for Twitter involves eliminate 75% of staff in a matter of months. BloombergNews confirmed that potential investors had been informed of the cut plan, along with an effort to double revenues in three years.

One of the elements of the $44 billion Twitter deal that could prompt a CFIUS review is the presence of foreign investors in the Musk consortium. The group includes Prince Alwaleed bin Talal of Saudi Arabia, Binance Holdings Ltd. — a digital asset exchange founded and run by a Chinese citizen — and Qatar’s sovereign wealth fund.

Joe Biden

The panel operates behind closed doors and rarely confirms when it is conducting reviews. The CFIUS is also empowered to review agreements that have already been consummated.

A spokesman for the US Treasury Department said CFIUS does not publicly comment on any transaction that may or may not be under review.

Musk, the world’s richest person, has taken to Twitter in recent weeks to announce proposals to end Russia’s war and threaten to cut off financial support for Ukraine’s Starlink internet network. His tweets and public comments have frustrated US and European officials and drawn praise from US rivals.

Musk later backed off his threat to stop deploying Starlink, saying he would continue to bear the costs of the service. Starlink has become an essential tool for communications in Ukraine during the Russian invasion. Musk has been providing the service for free, but has said that SpaceX loses $20 million a month providing it to Ukraine and that it cannot bear that cost indefinitely.

The US government would also use Starlink in the event of a telecommunications outage, according to people familiar with the matter.

Musk did not immediately respond to multiple email requests for comment. He tweeted in response to a reader’s reaction to the Bloomberg article. “Would I be hysterical if the govt stopped Elon from overpaying for Twitter????” the reader tweeted. “???????” Musk replied.

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Twitter sinks due to US scrutiny of Elon Musk