Biden administration officials are debating whether the U.S. should subject some of Elon Musk’s businesses to national security scrutiny because of his deal with Twitter and comments about Ukraine.
Twitter shares fell 16% after the news.
US officials did not like Musk’s threat to stop the supply of the Starlink satellite service to Ukraine and his increasingly friendly position towards Russia and Putin (including a series of posts with proposals to give Crimea to Russia, hold referendums on occupied territories and give Ukraine neutral status). They are also concerned about his plans to buy Twitter with a group of foreign investors.
Discussions are still in the early stages, according to Bloomberg’s anonymous sources. U.S. government and intelligence officials are mulling over what tools would allow them to probe Musk’s businesses. One possibility is to scrutinize the billionaire’s deals and operations for national security risks through the law governing the Committee on Foreign Investment in the United States (similar to the Interagency Commission – CFIUS).
Twitter has also faced reports that Musk intends to lay off about 75% of its employees as part of the takeover. Bloomberg News has confirmed that potential investors have been told of the cutbacks plan, as well as an attempt to double earnings within three years.
One element of the $44 billion Twitter deal that could trigger a CFIUS review is the presence of foreign investors in Musk’s consortium. The group includes Prince Alwaleed bin Talal of Saudi Arabia, Binance Holdings Ltd. (a digital asset exchange run by a native of China) and Qatar’s sovereign wealth fund.
The commission works behind closed doors and rarely announces inspections. CFIUS also has the right to audit already concluded agreements. A representative of the US Treasury Department also said that the commission does not comment publicly on any transactions that are or may not be under review.
Elon Musk, the richest man in the world, has been using Twitter in a strange way in recent weeks: sometimes he offers his options for ending the Russian-Ukrainian war, then he threatens to stop supporting Starlink Internet in Ukraine. His tweets and public comments have frustrated officials in the US and Europe and drawn approval from America’s rivals
Musk later backtracked on his threat to end Starlink’s deployment and said he would continue to bear maintenance costs. The US government also plans to use Starlink satellite internet in the event of a blackout, according to people familiar with the matter.
Musk has yet to respond to Bloomberg’s request for comment, but responded to a user’s tweet with the publication’s article:
‘It would be hysterical if the government banned Elon from overpaying for Twitter,’ the man wrote. “100%,” answered Musk.
It would be hysterical if the government stopped Elon from over paying for Twitter 😂
— Nik “The Carny” Lentz (@NikLentz) October 21, 2022
💯🤣
— Elon Musk (@elonmusk) October 21, 2022
Musk, as CEO of Tesla and founder of SpaceX, is a big player in government contracts. The billionaire broke into the business of launching military and intelligence satellites after vigorously lobbying Congress and suing the US Air Force for the right to compete with the long-standing joint venture between defense giants Boeing and Lockheed Martin.
In 2019, the Pentagon said it was reviewing Musk’s federal security clearance after he smoked marijuana in a podcast, though the outcome of that investigation is unknown. A SpaceX official at the time, who asked not to be named, said the company was not affected by the inspection.
SpaceX also delivers astronauts to the International Space Station as part of a long-standing partnership with NASA and launches top-secret satellites for the Pentagon. The United States Agency for International Development (USAID) also paid for some SpaceX Starlink satellites that were delivered to Ukraine.
As for Musk’s statements about shutting down Starlink, today Defense Minister Oleksiy Reznikov said that Ukrainian high-ranking officials are in direct contact with the owner of SpaceX and are looking for ‘a way out of disagreements related to the payment of Starlink terminals.’
‘I know we won’t have any problems keeping the service up and running,’ says Reznikov, referring to ‘personal communication’ between Ukraine’s Minister of Digital Transformation Mykhailo Fedorov and Musk.
Reznikov also added that there are at least three sources that could pay for the service: funding could be part of an aid package from the Pentagon, an initiative to support Ukraine from private donors, or Europe (this week, Lithuanian Foreign Minister Gabrielus Landsbergis proposed creating a coalition of European countries to fund satellite Internet service Starlink in Ukraine).
