U.S. exploring whether it has authority to review Musk’s Twitter deal


Large foreign investors will have access to confidential information about Twitter’s finances — and potentially its users — under the terms of Elon Musk’s deal to acquire the social media site, people familiar with the matter told The Washington Post. Told.

The revelation comes as Treasury Department officials begin to look into whether they have the legal authority to launch an investigation into the purchase because of Musk’s ties to foreign governments and investors, people familiar with those discussions said.

It was not immediately clear whether Treasury officials were aware of the conditions for granting rights to information to large investors. Finding out whether a review was needed is fairly routine, and such preliminary examinations often do not culminate in a thorough investigation.

White House officials have previously discussed the possibility of a national security review of the acquisition, according to another person. Additionally, FBI officials looked into potential counterintelligence risks posed by the deal last spring, according to two people familiar with the investigation — though it’s unclear whether the case has been studied by senior bureau officials or if those discussions are still ongoing. are also active. All spoke on condition of anonymity to discuss matters they were not authorized to publicly disclose.

A Saudi prince’s holding company and a subsidiary of the Qatari Sovereign Wealth Fund are among investors backing Musk’s Twitter purchase, as has Binance, a cryptocurrency exchange founded in China but has since moved its operations elsewhere. has given. Tesla, where Musk serves as chief executive, also has extensive ties with China.

Musk and his attorney Alex Spiro did not immediately respond to a request for comment.

The US government’s initial efforts to scrutinize the Twitter deal come as the billionaire introduces new changes to the structure of one of the world’s most powerful communications platforms.

Twitter will charge $8 per month for verification. What you need to know.

According to a person familiar with the matter, Treasury staff at the Committee on Foreign Investment in the United States (CFIUS) have yet to determine whether Musk’s purchase of the social media platform could trigger a national security review. Musk is a US citizen, and CFIUS reviews are commonly used to investigate investments by foreign nationals. So it is unclear whether they can initiate such a review, and policy experts are divided on whether it will be needed. Treasury employees regularly check whether purchases deserve more thorough scrutiny, often without full-blown reviews.

Also Read :  Here are the 25 lowest-paying education jobs in NYC, according to this study

A 2018 legislative update to CFIUS rules said the body could investigate not only foreign ownership, but minority stakes in critical sectors, including sensitive personal data held by businesses.

Preliminary work on the potential investigation has not yet reached the principals of the CFIUS committee – whose members include Treasury Secretary Janet L. Yellen, Attorney General Merrick Garland and Defense Secretary Lloyd Austin – and are in their early days. A person familiar with the matter stressed that it is still possible that the CFIUS has concluded that it does not have authority to initiate an investigation and that the investigation ends there.

“CFIUS is committed to taking all necessary actions within its authority to protect US national security,” a Treasury spokesman said. “Consistent with law and practice, CFIUS does not publicly comment on transactions whether it may or may not review.”

An FBI spokesperson declined to comment. A White House spokeswoman pointed to comments by Press Secretary Karine Jean-Pierre last week that she was not aware of any discussion about a national security review of the deal.

The matter could be complicated for the Biden administration. Biden’s aides have tried to counter Chinese influence, but don’t want to accuse Musk of weaponizing a national security process to attack, who says he voted for Biden in 2020 but recently Have recently become a political enemy.

As Elon Musk expands his reach, Washington worries

Musk has extensive ties with China through Tesla, a publicly traded electric vehicle company. Tesla’s “Gigafactory” in Shanghai has been its busiest production plant and serves as an important export hub. Tesla is also dependent on China for production needs – the country controls the global supply of lithium, the key component in electric vehicle batteries – through its vast processing and refining equipment.

Binance also has a stake in the new Twitter through an equity investment of $500 million. While it moved out of its initial home in China, the company has partnered with a Chinese-government-owned firm on a blockchain initiative. A Binance spokesperson previously told The Post that the effort had ended, that it had no presence in China and had never taken any investment from a Chinese government-controlled entity.

Also Read :  US employment growth cools in September

Saudi Arabia, another global power after Musk, is one of the biggest private investors in the new Twitter. The country invested nearly $2 billion in acquisitions, turning a previous stake in Twitter stock into the new privatized company. US relations with the kingdom have broken down under Biden, the Saudi-led grouping of oil-producing countries known as OPEC, recently announcing production cuts in direct rebuke to the White House. A subsidiary of the Qatari Sovereign Wealth Fund is also supporting the purchase.

Large investors in the deal have entered into confidential agreements that clearly spell out their potential roles and access to information, with priority being given to those who have invested $250 million or more, according to people familiar with the arrangement. According to the talk with the post. This limit would give Binance as well as Saudi and Qatari funds access to information that a bottom-up investor would receive. This is unless there are exceptions to their terms that explicitly prohibit sharing information with them, something CFIUS would like to investigate – and would require if deemed necessary for national security.

The US government had previously indicated that Saudi authorities had sought information on Twitter users, and a former manager of the platform was convicted in August of hiding payments from Saudi agents in exchange for access to confidential user data.

MAGA porn, hatred for Trump: China-based accounts fueled division

In recent days a growing number of Biden aides have called for the CFIUS to investigate how these nations might influence Musk. On Monday, Sen. Chris Murphy (D-Conn.) said on twitter That the federal government should investigate national security concerns associated with Saudi Arabian entities’ investments in social media platforms. Last week, the American Economic Liberties Project, a left-wing group, also said in a statement that both CFIUS and the Federal Communications Commission should investigate Musk’s acquisition of Twitter because of their “potential reliance on the Chinese government.”

“We should be concerned that the Saudis, who have a clear interest in suppressing political speech and influencing American politics, are now the second largest owners of a major social media platform,” said Murphy. said on twitter,

Also Read :  How to Tough It Out at Your Job Until You Find Something Better

Bloomberg News first reported last month that Biden administration officials were weighing whether the United States could conduct a national security review of Musk’s ventures on Twitter and SpaceX’s Starlink satellite network.

Andrew Grotto, the former senior director of cybersecurity policy under the Obama and Trump administrations who have focused on CFIUS, said access to information could prove to be a significant security concern.

“This is an area where I think CFIUS has some strong authority to ensure that Americans’ personal data is not nefariously exploited by a foreign government,” he said. “It stands in my mind as a prime vector for CFIUS to pursue at least one investigation.”

The CFIUS measures won’t necessarily block Musk’s takeover of Twitter, Grotto said, but the government could put restrictions on what kinds of information rights are given to foreign parties or the powers they have over the new company. want to limit.

“The CFIUS will have the authority to demand mitigation, including forcing the parties to rewrite,” he said, adding that the committee could “force an amendment.”

Additionally, “when a senator sends a letter to CFIUS requesting a review, the committee is going to move around a bit,” said Sarah Bauerle, associate professor at Indiana University and former CFIUS employee through the State Department. Danzman said.

To trigger a review, the Saudi investment must include special privileges – such as a board seat as an observer, or access to company information – beyond those granted to an ordinary small investor in a public company. “If Saudis are granted certain additional rights that go beyond what is normally expected, such as a board seat as an observer or access to non-public information,” that would give jurisdiction to the CFIUS, she said. . The terms of the deal described in the post will do so. But even then, a review would be unlikely to reverse the acquisition, Bauerle Danzmann said.

Two former advisers to CFIUS said Saudi Arabia’s investment was more likely to lay grounds for review than any relationship with China, even though China could gain more leverage on Musk through its Tesla stake. “I think they’ll have a hook if they want to take it,” a former adviser said on condition of anonymity to discuss the politically sensitive issue.


Leave a Reply

Your email address will not be published.