Virtual public goods and Musk's purchase of Twitter
Musk's purchase of Twitter suggests that society might need virtual public squares besides private social media sites
Elon Musk’s purchase of Twitter was the biggest act of philanthropy in history: his decision to purchase Twitter was not a decision based on profit-seeking; that is, he did not purchase Twitter to make money since from a return-maximizing perspective; it pretty much made no sense to pay 44 billion for that website. The fact is that his purchase was a philanthropic enterprise: he decided to purchase Twitter because he thought that Twitter was an important platform for the public communication of information, and he thought that if he managed it, he could improve the quality of the platform, causing positive social externalities.
In economic terms, what Musk is doing is providing a public good using his private fortune. A public good is a type of good that can be consumed by many people at the same time, and it is not easy to constraint its consumption to customers who purchase it while excluding others who do not purchase it. A typical example of a public good includes a bridge that connects a town to the rest of the world, this bridge benefits all inhabitants of the town, and therefore it is not possible for a firm to privately constrain its benefits to its customer base of “bridge subscribers.” As it is hard for firms to sell these goods, these kinds of goods tend to be provided by profit-seeking businesses in smaller quantities than ideal. It appears to me that a virtual public square is a kind of public good, and Musk is trying to provide it by purchasing Twitter and transforming it into this public square.
From a profit-maximizing enterprise to a philanthropic enterprise
Before Musk’s purchase, Twitter functioned as a private website that catered to a specific audience. Its business model was to provide this specific audience with an environment that made them comfortable. However, while Twitter is a private website, its social function now evolved to provide a public square for the communication of journalistic, political, and academic information. In fact, it is the most popular social media for politicians, political pundits, academics, and journalists.
Since communication in these fields has political implications, and a healthy democracy is based on free-speech, Musk decided that purchasing Twitter and enforcing a free-speech policy would be a good thing.
However, enforcement of free-speech means that Twitter must stop focusing on catering to its customer base: instead, Twitter shifted from a profit-maximizing firm that sought to maximize engagement of its customer base to become a true virtual public square, where people are free to express ideas, even ideas that are considered distasteful by Twitter’s traditional customer base. That represented a radical shift in the policy of the website, from a profit-maximizing firm that sought to satisfy their customer’s desires to a virtual public square, which explains why many Twitter users got upset that Musk purchased the site.
Also, I should add that his attempt to make the site financially self-sustainable does not imply profit-maximizing behavior. In fact, by reducing the site’s dependency on advertising, he hopes to be able to reduce the influence of advertising pressure on the moderation policy exerted upon the users of the platform, allowing the site to operate closer to the ideal of a public square with freedom of speech.
The provision of virtual public goods
In the real world, while most land is privately owned, there is an important role for public land in providing space for transportation and communication: cities typically have roads and public spaces that are open to all citizens, spaces where they can talk about things without fearing expulsion by the owner of the land. In a privately owned piece of real estate, the owner can not allow certain people in if the owner dislikes that person’s opinions. Since there is plenty of public lands that allow for transportation and communication across privately owned pieces of real estate, these restrictions are not a social issue: certain ideas that are unpopular can still be discussed in the public square.
Over the past few decades, as more and more of people’s time has been spent looking at screens and navigating on virtual spaces of the internet, private websites have become massive public places: websites like Facebook, Twitter, Instagram, and Youtube, have billions active users and much, perhaps most, political discussion today occurs virtually in these privately owned platforms.
Therefore in the virtual world, the function of public spaces for the communication of information has been privatized. Is that a good thing? I am not sure; one problem I see is the issue of content moderation: as Twitter operated as a profit-maximizing business catering to its customer base, its moderation policy imposed severe restrictions on freedom of speech, which resulted in a very ideologically biased environment and as Twitter operates as an important virtual “public” square of political discourse, this bias can cause substantial damage to democratic institutions worldwide as people become used to an environment with heavy censorship imposed upon a substantial fraction of the political spectrum. Indeed, the aggressively upset reaction of many Twitter users (even highly influential public intellectuals) to Musk’s purchase and a few changes made to the website over the past two weeks shows how easily people can become used to the absence of freedom of speech.
Thus, Musk’s purchase of Twitter was made in order for him to use his massive wealth to privately provide the public good of a virtual public square with freedom of speech. It shows that currently, States provide no supply of this public good and that I think is the big issue that this situation has revealed. In fact, his purchase is a net good as it increased freedom of speech in the world’s most important virtual platform for communication regarding politically relevant issues.