Sen. Elizabeth Warren (D-Massachusetts) is raising alarm that Elon Musk is shirking legal responsibilities, misappropriating resources and ignoring potential conflicts of interest in his ownership of Twitter, saying in a new letter to Tesla’s board chair that Musk is treating the social media website as a “private plaything.”
In her letter sent on Sunday, Warren raised concern over the way that Musk has handled his purchase of Twitter and the way he has carried out advertising on the platform — actions that could harm Musk’s Tesla and other companies and which are already harming shareholders. She said there could be reason to believe that Musk has “failed to meet [the] legal duty” required of company owners to protect all of the businesses that they own.
“One key element of [company officers’ and directors’] duties is that every Board of Directors of a company with multiple shareholders — especially publicly traded companies — is responsible for ensuring that a controlling shareholder (especially one who is also a Chief Executive Officer, or CEO) does not treat the company as a private plaything,” she said.
“That responsibility includes ensuring that Mr. Musk is an effective CEO and that he fulfills his legal obligation to act in the best interests of Tesla and all of its shareholders, not just himself,” she continued.
Indeed, some shareholders have raised similar concerns, with Tesla’s third-largest shareholder saying last week that Musk has “abandoned Tesla and Tesla has no working CEO.” Tesla’s shares, which have already dropped precipitously this year, have decreased in value as shareholders have raised discontent over Musk’s Twitter ownership.
One issue is Musk’s “misappropriation of Tesla resources,” Warren wrote. That Musk reportedly pulled more than 50 employees from Tesla to work on Twitter “raises obvious questions about whether Mr. Musk is appropriating resources from a publicly traded firm, Tesla, to benefit his own private company, Twitter,” she said. It also raises labor concerns — of which there are many regarding both Tesla and Twitter — about whether those employees have been sufficiently compensated for their extra work.
“This use of Tesla employees raises obvious questions about whether Mr. Musk is appropriating resources from a publicly traded firm, Tesla, to benefit his own private company,” Warren wrote. “The [Securities and Exchange Commission (SEC)] imposes a legal obligation on companies to make public any ‘material definitive agreements,’ including employment agreements with executive officers, but Tesla to date has reported no such agreements.”
Another issue of concern for the senator is Musk’s failure to disclose or take into account conflicts of interest raised by his ownership of Twitter. In dealing with Twitter advertisers — the main source of revenue for the company — Musk has the power to suppress ads from other auto manufacturers that may compete with Tesla, while also being able to overcharge Tesla for ads on the platform in order to help pay off Twitter’s debts.
Warren urged Tesla’s board to take action to clarify these issues to themselves and to the public in order to hold Musk accountable.
Musk has been in Warren’s crosshairs before. This spring, as Musk was contemplating the Twitter purchase, she said that both the privatization and his ownership of Twitter would cause huge issues that could have consequences for democracy itself. Allowing Musk to buy Twitter — a platform that’s essentially a town square for journalists, activists and politicians — is tantamount to handing over huge political power to a single billionaire.
Indeed, Musk seems to be exposing his right-wing ideology more and more the longer he owns Twitter. During his few months of Twitter ownership thus far, Musk has reinstated anti-trans activists and neo-Nazis while banning Democratic and left-leaning journalists en masse.