Elon Musk is getting too big to avoid being left alone by governments as he enters the cultural and geopolitical realms

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Elon Musk’s empire is like an enormous, multi-layered cake. He is active in space (SpaceX), on the Earth’s surface (Tesla) and below it (The Boring Company). And now he occupies cyberspace with his US$44-billion purchase of Twitter.

The world’s richest man, equipped with one of the world’s biggest egos and authoritarian control of the companies in his portfolio, might just be getting started; he appears ready to expand in all directions. Already, he is effectively a major defence contractor through Starlink, which provides internet services to Ukraine’s military.

How long before governments everywhere and their regulators take the view that he must be reined in, that too big to fail does not apply to him?

Mr. Musk completed his purchase of Twitter late last month. It was a company he did not want after his initial bout of enthusiasm, in April, when he offered to pay U$54.20 a share for the microblogging site that has become a cultural force pretty much everywhere, especially in the celebrity, journalistic and political worlds (Barack Obama has 133 million followers, giving him a formidable global platform; Mr. Musk is not far behind, with 114 million.)

Under Mr. Musk, Twitter’s future as a viable long-term business is far from certain, in spite of his compelling successes in other businesses, notably Tesla, the electric car maker that is worth more than the combined stock market value of Ford, Toyota, Volkswagen and other top automotive rivals. Twitter has reported a net profit in only two years – 2018 and 2019 – in the past decade. By the end of this week, he had launched his campaign to grind down Twitter’s costs through firings that, reportedly, could see up to half of the 7,500 employees shown the door.

The firings may not be enough to fix the debt-laden company – the biggest leveraged tech buyout ever – in a world of soaring interest rates. In 2021, Twitter’s interest expense was a mere US$50-million. Saddled with some US$13-billion in debt after the acquisition, the interest expense will rise to about US$1-billion. Yet last year, Twitter generated only US$630-million in cash flow. Meanwhile, its advertising revenue, the main source of its income, is not climbing and actually fell 1 per cent in the second quarter. On Friday, Mr. Musk said that had been a “massive drop in revenue” since he announced his purchase of Twitter.

Elon Musk’s Twitter takeover: a timeline

To help fill the financial hole, Mr. Musk has ordered the launch of a US$8 a month subscription service that will have to be paid by any user who wants to keep his or her “verified” blue-tick status. But the potential gain is small. Twitter has about 400,000 of those verified users. Assuming all of them buy the subscription – dubious – they would generate a mere US$38-million in annual revenue for the company, hardly a gamechanger.

Fixing Twitter may be the least of Mr. Musk’s problems, for his influence is becoming phenomenal – culturally, financially, economically and politically. His power and reach will earn him friends, and enemies.

The man has a talent for wild provocations, such as the time he called the British cave diver who helped rescue a dozen boys in a flooded Thailand cave a “pedo guy,” or when he said he had secured funding to take Tesla private at US$420 a share, when he had not. Owning Twitter could help him make or break high-profile careers. Will he reinstate Donald Trump on Twitter (the former president had 89-million followers when he was yanked from the site after making false statements about election fraud)?

While the main source of Mr. Musk’s wealth is Tesla, which last year achieved a stock market valuation of US$1-trillion and is now worth US$680-billion, the company that probably buys him the most influence is SpaceX. His reusable rocket company (whose shares are unlisted) was the first private company to send a spacecraft to the International Space Station and astronauts into orbit. SpaceX has ample contracts with the U.S. government, including NASA and the U.S. Air Force, which may see SpaceX rockets as potential weapons delivery systems.

But it is the SpaceX subsidiary, Starlink, that has vaulted him into the political-influence big leagues.

Starlink uses a constellation of low-orbit satellites to provide internet service in dozens of countries, including Ukraine, where military forces consider it a crucial tool to fight Russian invaders, who consider the service a legitimate military target. The Ukrainians use it for battlefield communications and to guide drone strikes against Russian targets. Ukraine’s Starlink service, which is partly funded by the U.S. Agency for International Development and the governments of several NATO countries, is provided free of charge.

Mr. Musk is routinely photographed with American generals and Department of Defence officials. The point being that he and the U.S. military are getting intertwined and are relying on one another.

Where this goes is an open question, but it is evident that Mr. Musk is gaining geopolitical influence. Remember, he tried to broker a peace agreement between Ukraine and Russia, one that was dismissed as a joke by Ukrainian President Volodymyr Zelensky. Given Mr. Musk’s reputation for provocation, for meddling and for cavalier comments, his relationship with the U.S. military could go off the rails at some point.

If it does, how might the military, that is, the U.S. government, retaliate? Might they force Mr. Musk to sell Starlink to the Pentagon, in essence nationalizing the company? That scenario cannot be out of the question.

Owning Twitter will buy Mr. Musk a lot of cultural influence globally, but it is Starlink, through SpaceX, that could buy him the sort of geopolitical influence that goes too far. The American military colossus might not like being told what to do or who to buy from, especially from a South African billionaire.