Elon Musk’s latest $7 billion Twitter funding might be scrutinized by US regulators.

Elon Musk's latest $7 billion Twitter funding might be scrutinized by US regulators.
Elon Musk's latest $7 billion Twitter funding might be scrutinized by US regulators.

The deal may be scrutinized by the Committee on Foreign Investment in the United States (CFIUS) for potential national security issues.

Elon Musk's latest $7 billion Twitter funding might be scrutinized by US regulators.
twitter logo

According to legal experts, Elon Musk’s plan to welcome certain foreign investors as part of his $44 billion (approximately Rs. 3,37,000 crore) purchase of Twitter risks drawing the same type of regulatory scrutiny over US national security that social media competitor TikTok experienced.

Musk said on Thursday that Saudi Arabia’s Prince Alwaleed bin Talal, Qatar’s sovereign wealth fund, and Binance, the world’s largest cryptocurrency exchange created by Chinese native Changpeng Zhao, are among the investors who would assist him in financing the acquisition of Twitter.

According to six regulatory attorneys who were not engaged in the transaction and were contacted by Reuters, this might provide the Committee on Foreign Investment in the United States (CFIUS) an opportunity to analyze the acquisition for potential national security issues. The Committee on Foreign Investment in the United States (CFIUS) is a group of federal agencies and departments that examines mergers and acquisitions for possible dangers to US security.

“To the extent that Musk’s planned acquisition of Twitter contains foreign investment, it very well might fall under CFIUS jurisdiction,” said Chris Griner, chair of the national security practice at law firm Stroock & Stroock & Lavan LLP.

The US Treasury Department, which chairs CFIUS, declined to comment on whether the national security council planned to investigate Musk’s Twitter transaction.

Musk, bin Talal, Qatar, and Binance representatives did not immediately answer to demands for comment.

In 2020, former President Donald Trump’s government moved to CFIUS to force TikTok’s Chinese parent company, ByteDance, to sell the short video app. His successor, Joe Biden, dropped the campaign when ByteDance agreed to improvements in how US consumers’ data is maintained and secured.

According to regulatory attorneys contacted by Reuters, the probability of CFIUS banning Musk’s offer is low because he will control Twitter under the proposed buyout and foreign investors are acquiring relatively tiny holdings.

They said that their evaluation would alter if Musk gave foreign investors a seat on the company’s board or other measures of influence.

The danger, however, is not insignificant, given that the business of processing personal data by social media businesses such as Twitter is often classified as essential infrastructure by CFIUS, according to the attorneys.

“Non-public electronic conversations are one of the types of sensitive personal data. That would be user communications via email, texting, or chat. Twitter makes it possible for you to do so “Richard Sofield, a partner at the law firm Vinson & Elkins LLP, stated.

According to the lawyers, one area of potential CFIUS scrutiny could be Musk’s business dealings with foreign governments hostile to free speech or eager to technologically overtake the US. Tesla, the electric car company he runs,, for example, relies significantly on China to produce and sell its automobiles.

Despite the fact that China outlawed Twitter in 2009, several Chinese officials have been engaged on the social media network. Some of them have argued that the company’s attempts to limit disinformation have unjustly targeted them.

“One of the factors would be whether or not China would be able to leverage its commercial activities to achieve a desired goal,” Sofield noted.


According to the attorneys, there is precedence for CFIUS rejecting a sale based on the danger that an acquirer’s commercial relationships may jeopardize them. After CFIUS highlighted reservations about the proposal, Trump vetoed Broadcom’s $117 billion (approximately Rs. 8,99,595 crore) acquisition of US competitor Qualcomm in 2018.

Broadcom was a publicly traded business with US shareholders based in Singapore, but the White House was concerned that Broadcom’s link with “third-party foreign organizations” would cause the US to fall behind China in the technological race.

According to Nevena Simidjiyska, a regulatory lawyer at Fox Rothschild LLP, CFIUS might investigate whether Musk or other US investors in the Twitter purchase can be influenced in a similar way by foreign companies.

“If they are controlled by foreign parties, CFIUS may find that even US investors in Twitter are subject to CFIUS assessment,” Simidjiyska added.

Musk’s Twitter bid does not face the most typical sort of regulatory risk in mergers and acquisitions: antitrust agency opposition. The world’s wealthiest man has no media assets, and regulatory experts say the acquisition will not face serious antitrust scrutiny.

Go home

Visit our YouTube Page

About Israel Ashaolu 2090 Articles
Israel Ashaolu is a graduate of electrical and electronic from Niger state Polytechnic. Am an article writter and the owner of techedgeict.com

Be the first to comment

Leave a comment