Selling Censorship: Could the Twitter Board Trigger Shareholder Lawsuits Over ESG and Anti-Free Speech Policies?

Twitter LogoLast week, Twitter’s Chief Executive Officer Parag Agrawal sounded more like Ukrainian President Volodymyr Zelenskyy in rallying his troops to defy the existential threat of Elon Musk while pledging that they will not be “held hostage.” The threat, however, was not a private buyout but the threat that Twitter might be forced to respect free speech on the site. The problem for the Board members is that they could find themselves in court if their anti-free speech stance continues to stand in the way of shareholder profits.  Such a lawsuit could be a bellwether for shareholder opposition to boards pursuing Environmental, Social, and Governance (ESG) policies over profits.

The Board responded to the Musk offer with what sounded like a suicide pact to swallow a “poison pill” to sell new shares to drive down share values. While a standard tactic to fend off hostile takeovers, Twitter made it clear that it would not be forced into free speech after making the company synonymous with censorship.

They were joined by liberal commentators who declared that it was not just Twitter but democracy itself that could fall if free speech were allowed to breakout.  The Washington Post’s Max Boot declared that “for democracy to survive, we need more content moderation, not less.”

Former Clinton Labor Secretary Robert Reich went full Orwellian in explaining why freedom is tyranny. Reich insisted that “every dictator, strongman, demagogue and modern-day robber baron” pushed free speech to oppress people and that, while good for Musk, “for the  rest of us, it would be a brave new nightmare.”

Twitter CEO Parag Agrawal has maintained that he wants to steer the company beyond free speech and that the issue is not who can speak but “who can be heard.” The question, however, is whether shareholders will be heard by a Board that has decided to make censorship (or “content modification”) a critical goal of the company.

As I discussed earlier, boards are legally obligated to act in the best interest of shareholders. That fiduciary duty has long been ignored as Twitter undermined its own product by writing off conservatives through openly biased censorship. The managers and employees seem to view the company as a vehicle of their anti-free speech values despite artificially driving down users who have either been banned or deterred by its intolerance for dissenting views.

This fight is coming at a time when many academics are questioning the traditional view that boards and management should be committed to the overriding purpose of maximizing value for shareholders.” Rather they argue that corporate figures should focus on advancing Environmental, Social, and Governance (ESG) principles. The result can be aligning corporate identity with controversial political positions like Disney’s recent opposition to Florida’s parental rights bill on education, a move that has led to boycotts and possible retaliatory legislation.  Such political agendas come at a cost and some shareholders may allege that they are being asked to effectively bankroll the social or political agenda of corporate officials.

The company has long been criticized under Agrawal for pursuing a woke agenda over corporate advancement. There is little cash flow or monetization from sales growth at Twitter with forecasts of sales rising to $1.23 billion while the company posts sharply declining earnings.

Now a whale comes along with an offer of $54.20 a share (54 percent premium over the share price before Musk invested in the company). The Board’s response is to pass out the poison pills. The question is whether this is a standard maneuver to force negotiations or whether the company would prefer taking losses for shareholders over allowing greater freedom for users.

ESG policies have already led to litigation, including shareholder demands for greater transparency or ESG commitment from companies. Conversely, shareholders could argue that the political views of corporate officers are being pursued over the profits of the company.

Such lawsuits on both sides can be difficult. Shareholders may allege a breach of the “duty of loyalty,” but must show that the officials acted in a self-interested manner or in bad faith. Alternatively, they could argue a breach of the “duty of care,” which requires a showing that the officials acted in a grossly negligent manner.

Twitter may be getting precariously close to such a breach if Musk improves his offer as the Board continues to pass around the poison pills.

For Twitter employees, there is a sense that they actually might prefer corporate suicide to free speech.

Employees panicked at the very thought of Musk bringing free speech back to Twitter. In Twitter’s headquarters in San Francisco, employees are reportedly so traumatized that leadership had to offer emotional support to just “get through the week.” One employee decried that such a takeover would be “horrifying for the company’s reputation.”

Another employee complained that “Hey this is a focus week at Twitter, this is not helping,” referring to weeks where employees are given time off to “focus” on projects. Apparently, the last thing that employees want to focus on is free speech.

The tweets make it sound like Twitter employees are the modern equivalent of the defenders of Masada, the Jewish fighters who chose mass suicide over capture by the Romans in 73 C.E.  Of course, shareholders may not be as eager to embrace financial suicide. Moreover, when it comes to free speech, Twitter is the encircling hostile army. This is like the Roman army threatening suicide.

That is why this fight could prove so important. Twitter’s CEO and Board decided a long time ago to pursue woke policies over profits. They are selling censorship to a public that wants more free speech. They are not alone. Facebook is actually running commercials trying to convince people to embrace censorship as a new generation that wants their views modified by corporate guardians.

Yet, there has never been a bull market for selling censorship. Musk could now force a showdown on whether companies are captive to the management or whether the company can be forced into greater profits even if it comes at the “horrifying” cost of allowing free speech.

197 thoughts on “Selling Censorship: Could the Twitter Board Trigger Shareholder Lawsuits Over ESG and Anti-Free Speech Policies?”

  1. Weak mindedness is one large terminating problem with this nation. “Employees panicked at the very thought of Musk bringing free speech back to Twitter. In Twitter’s headquarters in San Francisco, employees are reportedly so traumatized that leadership had to offer emotional support to just “get through the week.” One employee decried that such a takeover would be “horrifying for the company’s reputation.” But I would say; Gen Patton should not have slapped said soldier.

  2. “That’s how bizarre things have become in FL under DeSantis.”

    The Left wants state-mandated sexualizing of children. It does not want the government to protect children from predators. It wants those predators in the classroom.

    Is there a perversion or abomination that the Left does *not* endorse?

  3. Glenn Greenwald hits it out of the ballpark.

    “Former Intelligence Officials, Citing Russia, Say Big Tech Monopoly Power is Vital to National Security”

    A group of former intelligence and national security officials on Monday issued a jointly signed letter warning that pending legislative attempts to restrict or break up the power of Big Tech monopolies — Facebook, Google, and Amazon — would jeopardize national security because, they argue, their centralized censorship power is crucial to advancing U.S. foreign policy

    Here is the letter:

    “Open Letter from Former Defense, Intelligence, Homeland Security, and Cyber Officials Calling for National Security Review of Congressional Tech Legislation”
    April 18, 2022

    “In the face of these growing threats, U.S. policymakers must not inadvertently hamper the ability of U.S. technology platforms to counter increasing disinformation and cybersecurity risks, particularly as the West continues to rely on the scale and reach of these firms to push back on the Kremlin. But recently proposed congressional legislation would unintentionally curtail the ability of these platforms to target disinformation efforts and safeguard the security of their users in the U.S. and globally.”

    1. I am inherently distrustful of all government regulation – including this.

      I have not read this bill – but I am inherently distrustful of regulation.

      Historically US Antitrust law has been disasterous and net harmful to consumers.

      That does not make me even the slightest fan of Big Tech.
      But we are best served if the government stays out of this.
      Glenn notes how these national security letters have smeared $hit all over themselves with the hunter Biden laptop letter – not that there is any limit to the examples of idiocy and lack of intelligence from the national security crowd.

      This begs the question of why aren’t we reforming the institutions these people came from and lead.

      Many of these are purportedly the best and the brightest in government. They are certainly the ones we most trust with our most precious secrets.

      And they are OBVIOUSLY too stupid or too machevellian to hold that trust.

      Lets regulate what needs to be regulated – the deep state. Put these people out of business.

      Without protection from government – our big tech problems will solve themselves.

      But the check on bad government that comes after congress is another January 6th – with guns.

    2. It seems that “intelligence” types like open letters, their last said Hunter’s laptop was Russian disinformation.
      As opposed to what? Open letters from the intelligence community?

  4. Thank you Mr. Turley, all of us who love our Bill of Rights and the freedoms they guarantee Must support Musk’s effort to change twitter.

  5. Woman Behind ‘Libs of Tik Tok’ Revealed

    And ‘Yes’, She Appears To Be A QAnon Sympathizer

    Libs of TikTok has become an agenda-setter in right-wing online discourse, and the content it surfaces shows a direct correlation with the recent push in legislation and rhetoric directly targeting the LGBTQ+ community. Last Thursday, the woman behind the account appeared anonymously on Tucker Carlson’s show to complain about being temporarily suspended for violating Twitter’s community guidelines.

    Throughout its increasingly popular posts and despite numerous media appearances, the account has remained anonymous. But the identity of the operator of Libs of TikTok is traceable through a complex online history and reveals someone who has been plugged into right-wing discourse for two years and is now helping to drive it.

    Chaya Raichik had been working as a real estate salesperson in Brooklyn when, in early November 2020, she created the account that would eventually become Libs of TikTok. Under her first handle @shaya69830552, she minimized covid, cast doubt on the election results and promoted a dubious story about a child sex trafficking ring.

    On Nov. 23, 2020, Raichik changed handles, this time going by @shaya_ray and identifying herself publicly as a real estate investor in Brooklyn. She began doubling down on election fraud conspiracies using QAnon-related language.

    In January 2021, Raichik started talking about traveling to D.C. to support Trump on Jan. 6 at the Stop the Steal rally. Later that month, Raichik cycled through two more Twitter names, this time focusing on state politicians. On April 19, 2021, she pivoted her account once again, this time to Libs of TikTok.

    Just four months after getting started, Libs of TikTok got its big break: Joe Rogan started promoting the account to the millions of listeners of his hit podcast. He mentioned it several times on the show in August, then again in late September. “Libs of TikTok is one of the greatest f—ing accounts of all time,” he said. With his seal of approval, Raichik’s following skyrocketed.

    As the account has grown in prominence, Raichik has taken steps to obscure her identity. Though she has done numerous high-profile media appearances, she’s appeared anonymously. However, when registering the domain last October, she used her full name and cellphone number linked to her real estate salesperson contact information.

    On Saturday, software developer Travis Brown (who is working on a project with support from Prototype Fund, an organization that backs open-source projects) unearthed the account’s Twitter history and posted a thread detailing information about its profile changes.

    1. Anonymous has a recognizable pattern. If someone doesn’t agree with her she calls them a racist or a member of QAnon. Anonymous’ evaluation of a QAnon member is anyone to the right of Lenin. The libs on tick tock discuss their teaching of gender fluidity to their elementary students. One would think that a women who is helping the gender fluid community speak out would be considered a hero by the left. The left is just angry because their little secret is being exposed for the nation to see. Previously for the people on the left it has been an open secret. They know it but they don’t want you to know it and they are disturbed that the narcissistic teachers among them are revealing what they are doing. To Anonymous it must be that the gender fluid teachers among them must be members of QAnon because they are letting the cat out of the bag and they might be hurting the cause.

      1. Lorenz is a crybully.

        The only issue is why do her and her evil minions have so much power ?

        Cancel her!!!

    2. As far as I can tell Libs posts TikTok videos freely out on a public forum. No editorial comment is added. Just people thinking out loud. But for the most part now all of a sudden they want to castigate and threaten the person who helped make them ” famous”. by using their own words. How that translates into becoming a Qanon sympathizer escapes me. These
      Lib morons should be thanking her for increased exposure.

    3. A very strange argument.

      LibsOfTickTok publishes the public utterances of leftist public figures.

      It is leftists in their own words and deeds.

      If it is anti-xxx – Gay, or racist or whatever it is doing nothing beyond exposing leftists for who they really are.

      I do not care so much that you have Doxxed the curator of LibsOfTikTok, as that it is certain that you will subject her to smears, insults, violence, interfere with her life, her carreer and her personal security.

      NOT because as you say she is a Qanon follower or radical right winger – who would beleive such claims from the likes of you anyway?

      But because she exposes YOU for your own bat$hit crazy views, and as hypocrites.

      Regardless, ad homineam is a logical fallacy. The history – real or immagined of the curator of libsofticktok is irrelevant to the truth of the content she posts. Her motives are irrelevant to that truth.

      A growing portion of the country actually hates you. Not because you are black or female, or an immigrant or gay or trans or …, but because you are badly educated idiots who seek to impose incredibly bad ideas – that you often do not actually beleive yourselves on all the rest of us by force.

      If you do not want hated – stop behaving hatefully and selling hatred of those who disaggree with you, and stop trying to FORCE your values on others. And finally – own up to the fact that LibsOf TikTik reflects badly on you because of who YOU are – not because of who the curator is.

      You are responsible for the way the world sees you – not those who hold up the mirror.

    4. OK Groomer, your propaganda story is way off. You appear to post propaganda and lies with accusation and zero proof.

      Libs of Tik Tok posts videos uploaded to the public domain, and that is all. LOL you can spin it all you want but the fact is these freaks posting their own videos of them teaching children sex at pre school and kindergarten etc., need to be called out and scrutinized for their grooming of children. It is interesting YOU defend the grooming.

      As for your sources of the hacked info, it has already been outed as a hacker group.

    5. Why are you anonymous? Perhaps because you want the freedom to express your opinion but believe it’s important to separate your personal views with those of your employers?

      WAPO, and you here, are conflating LOTT creator online identity with her private online presence. I doubt very much she cares what the left thinks of her views, just as I would guess you also do not care was the right thinks of you. She probably has hit send on a dumb tweet here and there, like all of us, but I very much doubt she’s embarrassed of her personal interest in QAnon (if she has any,) J6 protests, Donald Trump – despite the attempts by the left to expose these interests. She can probably intellectually defend these interests with no problem, without ad hominem usage.

      By RE-posting videos on LOTT, she’s exposing the foolishness of these people who have NOT separated their professional life from their personal views.
      They therefore left themselves open to the scrutiny of not only their employers, but to parents of the kids who have been entrusted to their care. They’ve also made other parents hyper-vigilant to such behavior from their kids’ teachers.

      That employers scour the internet when hiring or evaluating their hirelings is NOT news.

      Your tactic (if it is yours and not regurgitation of another’s) is a misfire. God forbid you should ever be on the receiving end of what you’ve done here.

  6. Censor the media called BBC. They have a news article out today saying thousands of Ukrainians are in a shelter in a steel mill in a certain town. The Russians will bomb them.
    Thanks to the media.

  7. It’s likely impossible to have a genuine free speech site until the U.S. Supreme Court corrects faulty rulings like “Terry v. Ohio” in 1968 (even if Musk does everything right).

    Rulings like “Terry v. Ohio” essentially amended the 4th Amendment illegally – without a constitutional amendment. These “War on Drugs” rulings gutted the letter & spirit of the 4th Amendment.

    The result is today, officials view LEGAL 1st Amendment activity as essentially “probable cause” or “reasonable suspicion” to search your computer, search histories, etc. without obtaining a judicial-warrant from a judge. Ignoring the warrant requirement mandated by the 4th Amendment.

    Today in 2022, illegal hacking of your computer might be perpetrated by the U.S. Department of Justice or DHS in addition to conventional criminals. So even if Musk does everything right, your computers will still be searched illegally for legal 1st Amendment activity and many will be punished for legal speech.

    The possible good news: the “surveillance clause” and “result clause” of U.S. Supreme Court ruling “Carpenter v. US” makes warrantless-surveillance itself a “search” governed by the 4th Amendment. In other words the warrantless-surveillance itself now requires a judicial-warrant from a judge if the “result” creates a personal map of any person.

    In 2022, there is little compliance by local, state and federal officials of the “Carpenter” surveillance clause but hopefully the U.S. Supreme Court will mandate enforcement. Until that happens, there will never be free speech online free of illegal searches and illegal punishments by constitutionally oath sworn censors.

  8. What will Twitter do in Canada?

    Canada PM Justin Trudeau seeking to forcibly silence news outlet

  9. If the board wanted to take the company private they could then run it as they please and ignore other shareholders. But those board members don’t even own that many shares now. Being publicly traded comes with obligations to all those pesky shareholders.

  10. Jonathan: Talk about “selling censorship” let’s talk about what is happening in Florida. Under Gov. DeSantis the DOE has rejected more than 50 math textbooks for K-12. Why? Because they allegedly contain prohibited topics such as CRT. Although when asked the DOE could not point to one area in these textbooks promoting CRT. DeSantis says this book banning is push back against liberal cultural values and what he calls “woke indoctrination”. Yesterday Rex Huppke wrote a satirical piece in in USAToday lambasting the governor’s move. Huppke says he is moving to Florida with his kids because DeSantis “has taken a bold stand against fiendish liberal attempts to use math textbooks to transform young American students into woke and genderless soy children”. Huppke adds in jest: “I’m sure these banned textbooks included pages of nonsense about Critical Rhombus Theory, which asserts that square supremacy is a social construct embedded in Euclidean geometry. There’s no way I’ll allow some teacher to make my kids feel guilty about the history of squares”.

    So, under DeSantis’ policies, some FL parents can feel secure that their kids are safe at home not being exposed to mind-warping math textbook CRT trash while their kids are busy watching XXXPorn on their laptops closeted in their bedrooms. That’s how bizarre things have become in FL under DeSantis. What is more bizarre is that you think “censorship” and “woke” policies at Twitter are more egregious than censoring what students are allowed to read in math textbooks in Fl. We are headed to a very dark place when teachers and students are told what they can discuss or read. When books are banned that’s the world Orwell complained about. If Musk buys Twitter we will be faced with more of “big brother”!

    1. Under Gov. DeSantis the DOE has rejected more than 50 math textbooks for K-12.

      Every single year schools look at a large menu of textbooks. They choose from that menu, those books best suited for the task at hand.
      Stop lying about what is going on.

      twitter is all aflutter over the ‘libs of tik tok’ . I am only vaguely informed about the rift. But the core of the problem seems to be the libs of tik tok, are curating all the talking point the left is using to justify grooming K-5 graders about queers and trans, life style. The libs of tik tok are giving the left wider exposure of the message the left is pushing. But that exposure is making the left mad. Whys that?

      1. Because they were hoisted on their own petards. I imagine it hurts a bit?

    2. Big Brother is the government in” 1984″. Not a private company. Hence Musk buying Twitter cannot be ” more of Big Brother”.

    3. “what is happening in Florida.”

      Politics injected into education — happens all the time, all over the country. If that’s a problem, then get education out of politics.

      Or is it that the Left only objects to right wing politics influencing education?

    4. That’s some strong partisan spin there. The textbook review commission didn’t reject those books over CRT. CRT was one of several overtly non-math political topics that they were looking for. The education industry overall is leading a charge of reworking curriculum to include an increasing variety of irrelevant (to the subject at hand) topics, CRT being only one of them and probably not the primary one.

      Desantis is using the size/power of the Florida education market to send a message to the textbook industry – stay in your lane. If your teaching math, TEACH MATH, not political indoctrination. Count apples, not labels. And by excluding political textbooks, Desantis does ALL of us a favor by making these textbook providers realize that the education industrial complex, overwhelmingly run by university “educators” with a very explicity lefty agenda, that we’re not buying.

      1. You think textbook companies are “run by university “educators” with a very explicity lefty agenda”?!

        They’re mostly run by corporatists with an explicitly profit-making agenda.

        1. Does it matter who runs them ? Or who writes the books ? Does it matter whether they act for profit ?

          Though you are wrong in several assertions – it does not matter.

          Schools Indoctrinating children is morally wrong – particularly with respect to sex.

  11. The miniscule fig leaves of Twitter stock owned by board members reveal a clear incentive-compatibility problem with allowing these clowns to make decisions for shareholders. The board has a fiduciary duty to safeguard and grow the value of shareholder investment, management preferences be damned. This has been long standing case law and shareholders (many of whom own through diversified funds) would do well to assert their interests on these boards, which consistently go broke getting woke.

  12. All this talk about Twitter being censorious toward conservatives overlooks one important issue. Most were not censored or removed from the platform because of their views. Most were censored or removed because they broke the rules they agreed to abide by when they signed up. Turley’s blog has rules too and so does truth social.

    Turley sure seems to forget that platforms like Twitter and Facebook also have first amendment rights and Turley seems to support forcing these platforms to carry messages and posts contrary to their policies.

    The real issue is not free speech as many conservatives claim. They demand that it’s a right that their speech deserves attention. That it shouldn’t be ignored. Twitter is a private company or any other company is not obligated to keep speech on its platform that violates its policies because they are not getting the attention they want.

    1. What “First Amendment right” of Twitter’s is under attack? Who’s preventing them from spouting their twaddle? Twitter is not a private company – its shares are traded, you know, on the very public NYSE.

      1. Twitter is a private company. Whether they trade shares or not is irrelevant to the fact that Twitter also has free speech rights. Forcing a private company to carry the messages of others in violation of their policies is unconstitutional.

        1. The First Amendment applies to private companies all times when they are coordinating with the government. Otherwise, every government would have a private company on retainer to do their dirty work.
          Much like contractors fighting proxy wars, but that’s another story…

          1. Your argument is mistaken.

            The government cannot hire a private company to censor on the government’s behalf. But private companies, including those that contract with the government, have their own First Amendment rights.

    2. “. . . because they broke the rules . . .”

      You omitted a key point: Those “rules” are intentionally vague, and are applied capriciously.

      If they were intellectually honest, their rules would state: “We reserve the right to ban anyone whose opinions disturb the Establishment.”

    3. Twitter allowed every post about Trump’s collusion with Russia. Still do. It’s all lies.
      Twitter banned every post about Hunter’s laptop. It was the truth.
      Twitter bans every post that the 2020 election might have been rigged. At this point, nobody can say with certainty that the election was not rigged.
      Twitter allows all posts claiming every election of a Republican president since Eisenhower was rigged.

      Are you starting to notice a trend? Hint: It has nothing to do with truth…

  13. C’mon Prof! Tell us the process to sue boards and give us a list of good guys willing to take such cases.

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