The X/xAI Shell Game: When Musk Merges With Himself

Too Much Free Time

from the do-we-really-have-to-pretend-this-matters? dept

In what might be the most perfectly on-brand Elon Musk move yet, at the end of March on a Friday evening, Elon Musk suddenly declared that xAI, his AI company that was always connected at the hip with X (which we’d been calling ExTwitter to avoid confusion), was officially “acquiring” X at a valuation of $33 billion (or, actually, $45 billion minus the $12 billion debt).

Many people likely reacted by saying, “Wait, they weren’t the same company, already?” And that’s a fair question, given how intertwined they’ve been. But no, they were technically separate companies. Just ones that shared the same majority shareholder, as well as apparently employees who would move from one to the other, and at times access to technology that Tesla supposedly bought. Oh, and also, technically X owned some of xAI’s shares. (The fact that X owned some of xAI’s shares — initially 25% but apparently diluted down to 12% at the time of Musk’s announcement — just adds another layer of circularity to this corporate ouroboros.)

This “merger” represents something of a perfect capstone to Musk’s evolving relationship with traditional corporate governance. Where most companies at least maintain the pretense of following standard M&A procedures, Musk has essentially decided that even the appearance of proper process is unnecessary. It’s just too much hassle.

Of course, the second question once you understand this is… “huh?” And it’s a good question. After all, most of the investors in Musk’s boondoggle with ExTwitter had pretty much given up hope that the investment would ever be worth any actual money.

The best writeup of the deal comes from William Cohan at Puck, who asks all the good questions:

Did anyone know X was for sale? Was the company shopped around before deciding to sell out to xAI? Were any bankers hired to value the two companies and set an exchange ratio? Yes, the two companies are private and majority-owned by Elon, but there are plenty of minority investors at each company. Were they consulted? Was anyone looking out for their interests?

Also, on the governance front, were there special committees of the boards of directors set up to evaluate the deal and make sure it was fair to the non-Elon shareholders? Supposedly, Morgan Stanley represented both companies in the deal. (Morgan Stanley was also the lead advisor to Elon when he bought X in October 2022, and was the lead underwriter on the $13 billion of X debt.)

The conflicts here are almost comically perfect. In a normal merger, you’d have independent boards, fairness opinions, maybe even competing bids. The acquiring company would hire one investment bank, the target would hire another, and they’d duke it out over valuation. But here? Morgan Stanley is representing both sides while also being the lead debt holder on the original Twitter acquisition. It’s like having the same lawyer represent both the plaintiff and defendant while also being the judge.

But that’s actually the point. This isn’t really an M&A deal in any traditional sense. It’s more like a corporate shell game where Musk is moving his disappointed Twitter investors into the frothy world of AI by basically saying “look over here at this shiny new valuation!” The traditional guardrails of corporate governance — you know, those pesky things designed to protect minority shareholders — are treated as less than afterthoughts, rather than actual rules.

The valuations. The split. The permissions. The conflicts of interest. None of it matters. The creditors and the equity holders in ExTwitter aren’t going to complain because they’re better off now. The investors in xAI likely aren’t really complaining either because even though they likely just got shafted in overpaying for a toxic asset, they just ponied up for another chunk of Elon’s johnny-come-lately AI plan, and if someone’s investing in anything Elon-related now, they’re likely true believers that Elon can do no wrong.

Matt Levine’s conclusion is also correct:

Nobody cares. Musk has absolute control of (1) xAI, (2) X and (3) US government regulators. If he wants to smush X and xAI together, no one will complain, and it doesn’t mean anything. Surely Musk isn’t required to file forms or get regulatory approvals anymore. He is not required to abide by merger best practices or zealously protect the interests of minority shareholders, in part because all his companies have left Delaware, but in larger part because none of the shareholders of his private companies complain about anything he does. If you are giving money to a private Musk venture, it’s because you trust Musk to make decisions, not because you care about corporate formalities.

X/xAI is the largest M&A deal so far in 2025 in the sense that it values X at, you know, 33/80 of the value of xAI, and Musk announced that xAI is worth $80 billion, and all of that is reasonably plausible though not clearly validated by arm’s-length transactions with economically motivated counterparties. xAI last raised money in December at a $51 billion valuation; it was reportedly looking to raise more at a $75 billion valuation last month. X raised money at a $33 billion equity valuation earlier this month, but (1) some of that money came from Musk and (2) I wonder if this deal was already in the works at the time? In hindsight, X’s funding round looks a little like it might have been designed to validate a merger price.

In any case, it’s barely an M&A deal? Two companies that were owned by the same person (and some slightly non-overlapping friends) and shared employees and data and revenue and, you know, a name, are now one company. They were informally one company before, and they are formally one company now, and no money changed hands. It feels like a silly technicality to call this a big M&A deal.

Yeah. This is a unique… I hesitate to call it a “deal”… announcement. What makes it particularly notable is how it represents a sort of end-stage evolution of Silicon Valley’s already loose relationship with corporate governance. Earlier tech companies at least maintained the pretense of following standard M&A procedures. Here, Musk has essentially decided that even the appearance of proper process is unnecessary, because it’s really too much of a hassle.

In a normal world, this move likely benefits those who bet on ExTwitter and substantially harms some of the investors in xAI by diminishing the supposed value of their equity, but it’s all made up funny money anyway at this point. And that’s perhaps the most telling aspect of this entire situation: in an ecosystem where valuations are increasingly divorced from reality, where “funding secured” has become a punchline rather than a legal standard, and where the traditional rules of corporate finance seem optional, Musk has simply taken these trends to their logical conclusion.

The math here is particularly telling: xAI, barely two years old, is supposedly worth $80 billion because… well, because AI is hot and Musk says so. X/Twitter, which actually has users and revenue (though massively less of both than when Musk bought it), is worth $33 billion because… that’s a number that makes the deal work. None of these numbers mean anything in any traditional sense, but that’s kind of the point.

The genius of this deal, if you want to call it that, is how it solves multiple problems at once. The X/Twitter investors get to pretend their investment isn’t underwater by trading it for shares in a shiny AI company. The xAI investors get to pretend their inflated valuation makes sense because look, they just did a real big boy merger at that price. Musk gets to pretend he didn’t destroy tens of billions in value at Twitter because now it’s part of a bigger, more valuable company. Morgan Stanley gets to pretend its original Twitter debt might actually be worth something. Everyone gets to pretend!

And that’s really what makes this the perfect deal for 2025. In an era where corporate finance has become increasingly performative — where valuations are more meme than math, where conflicts of interest are features rather than bugs, and where traditional corporate governance is for the little people — Musk hasn’t so much broken the system as shown us its logical conclusion.

The financial world used to at least maintain the pretense that numbers meant something, that process mattered, that rules existed for a reason. But why bother with all that when you can just… not? When you can have the same bank advise both sides of a deal while holding the debt, announce whatever valuation makes your story work, and treat corporate governance like an optional DLC pack that you’ve chosen not to purchase?

It’s like the perfect “deal” for the Trump/Musk administration.

Welcome to the era where corporate finance is just another form of shitposting.

Filed Under: acqusitions, elon musk, fiduciary duty, governance, mergers
Companies: morgan stanley, twitter, x, xai

Yet Another Columnist Claims Bluesky Is A Liberal Echo Chamber Because Its Users Keeping Kicking Nazis Out Of The Bar

Say That Again

from the what-views,-motherfucker?! dept

Editor’s note: Mike Masnick is on the board of Bluesky, and took no part in editing or reviewing this piece.

Here it is: the dumbest take to date on Bluesky v. xTwitter. There’s been plenty of stupid offered up before by bitter xTwitter users who are trying to pretend they’re not still splashing around in white nationalist dumpster juice while surrounded by bots. Their favorite coping method is to claim Bluesky users are afraid to engage in the marketplace of ideas. But all they offer is a limited market in the darkest alley in town.

None of these arguments are being made in good faith. No one criticizing Bluesky users for routinely rousting Nazis and their fans from this social media platform is making intellectually honest arguments. They’re just bitter that the people they actively dislike (and actively harassed on xTwitter) are no longer willing to slog through the sewage just to have a meaningful interaction or two with their fellow, non-bigoted human beings.

This column for… um… Commentary, written by James Meigs, at least lets you know right up front you’re dealing with a dishonest broker in the marketplace of ideas. You’ll see it immediately in Meigs’ opening paragraph:

When Bluesky opened to the wider public in 2023, more left-leaning users flooded in, many of them hoping to escape the increased visibility of conservative views on Musk’s now laissez-faire platform redubbed “X.”

I mean, it’s right there. This is yet another person who thinks people are closed-minded because they prefer not to engage with “conservative views,” while failing to acknowledge that “conservative views” is a coded term that refers to open racism, white nationalist ideology, anti-trans hatred, bigoted beliefs covering pretty much every race, color, creed, or sexuality, and a general enthusiasm for MAGA-based autocracy.

These are not “conservative views.” These are bigoted views that far too many people hold — people who think they might be perceived as rational if they use this phrase, rather than something more specific that would reveal what these “views” actually are.

The bad faith argument continues, broad-brushing Bluesky users as liberal elites, skeeting from the relative safety of their ivory towers in the general direction of the internet’s peasantry.

Having emerged from the intersectional hothouses of academia, many progressives today view policy disputes through a therapeutic lens: They see themselves—and the marginalized groups they claim to speak for—as victims of trauma. The solution to that trauma is not rigorous debate. Quite the opposite; they need protection. Exposure to dangerous speech could threaten their mental stability. So progressives now treat opposing ideas not as errors that need to be rebutted with facts, but as dangerous contagions that must be quarantined.

Bro, there has been actual trauma inflicted by social media users. It happens on every social media platform, but Bluesky’s robust moderation tools (many of which are controlled by users themselves) — including a Block button that actually works — do offer protection to people who’d rather have a pleasant online experience, rather than one routinely interrupted by harassment from ugly trolls and outright bigots who seem to feel the “marketplace of ideas” obligates the harassed to indefinitely endure harassment.

At least Meigs says there’s some “dangerous speech” out there. That he won’t equate it to the “conservative views” he name-checked earlier is disingenuous. The entry fee for social media interaction should never be subjecting yourself to bigotry and hatred. If the bigots want a playground, they’ve got several to choose from. This just sounds like the whining of bullies who are finding fewer and fewer people to push around.

After a diversion into a bunch of stuff that’s so barely worth discussing even Meigs can’t be bothered to do it any length (and that’s in an op-ed that runs more than 2,400 words) — de-platforming, Biden Adminstration allegedly demanding accounts be blocked or removed, COVID origin conspiracy theories, the banning of Trump from Twitter after the January 6th insurrection) — he goes right back into pretending xTwitter is the only place real social media interaction still takes place. And, of course, he uses phrasing that glosses over the irredeemable shithole xTwitter has become under Musk’s ownership:

When Bluesky gave them an escape hatch from the increasingly freewheeling—and sometimes raucous—debates on X, many jumped through it without looking back.

Oh yeah. “Freewheeling.” “Raucous.” Those are some mighty fine words. But they don’t fool anyone who isn’t already deep in the throes of self-delusion. There’s no “debate” on xTwitter. What’s being referred to as freewheeling, raucous debate is just a steady stream of open racism, transphobia, sexual harassment, death/rape threats, and a bunch of dudes with philosopher bust avatars declaring that everyone calling them bigots are just low-IQ liberal NPCs. And that’s if you can even get past the massive ad load, Bitcoin hucksters, and emoji-laden responses that clutter every single thread on the platform.

There’s more of this throughout the rest of it. The guy speaking on behalf of his fellow “conservatives” continues to proclaim Bluesky is the platform of intolerance and fragility — again, using phrases that refuse to acknowledge the genuine ugliness that is the day-to-day business of xTwitter.

I don’t love X’s somewhat uglier vibe, but I accept the trade-off. I’m willing to tolerate a few angry or idiotic posts in exchange for knowing that right-wing views aren’t being deliberately buried.

[…]

I suspect that the progressives who feel threatened by right-wing “hate” have simply never experienced a cultural environment where conservatives speak as loudly as liberals.

“Right-wing views.” Hate in scare-quotes. “Somewhat uglier vibe.” But who’s really threatened here? It seems to be the “right-wing view” people who are running into a wall of resistance that’s no longer going to engage in the mutual lie of “freewheeling debate.” These are the same people whose “conservative views” make them angry about preferred pronouns, sexual identity, diversity, inclusion, women having personal agency, and any flag that doesn’t have a thin blue line, MAGA logo, or swastika on it.

Once again, Meigs goes back to his core complaint: Bluesky users don’t want our “conservative views” bullshit wrecking up their mostly-pleasant Bluesky experience. And, in doing so, Meigs accidentally advertises what makes Bluesky better than its competitors.

I quickly learned that the site’s core innovation is not finding ways to facilitate thoughtful conversations. Instead, Bluesky’s secret sauce is the powerful tools it gives users to shut down voices they disagree with. Block lists—featuring the names of people you will not permit to see your posts—are public and widely shared and discussed. “People make nasty lists and lists and lists there,” a Bluesky user in Germany explained to me. Many Bluesky regulars import other users’ lists wholesale, allowing them to block hundreds of people they’ve never even heard of.

That’s the real problem Meigs has with Bluesky: it won’t give him a platform to harangue people whose ideas he disagrees with. That’s always been the case, even back when “conservatives” were complaining about being muted, blocked, or banned from (original) Twitter and Facebook. They all carry the same sense of entitlement: a firm belief that if they’ve been given a platform to speak, everyone else should be forced to listen.

And this follow-up makes it clear Meigs is willfully ignoring what has already happened on xTwitter to pretend this is a uniquely Bluesky problem:

In real-world social circles, being a total flaming, um, jerk brings social costs. But in a hermetically sealed social-media bubble, it’s a way to build your status. Bluesky adds another perverse incentive: Anyone adding nuance or pushing back against violent statements risks being ridiculed and even mass-blocked by the online community. This combination of positive and negative rewards creates a one-way ratchet, always pushing users toward extremism.

Exactly. But you only like the bubble that includes you, rather than the one that doesn’t. That’s a pretty universal human trait — resentment towards any group that excludes you. Unfortunately, it’s also a pretty human trait to spend 2,400+ words trying to turn your personal bad experience with Bluesky (if this ever even happened — there doesn’t appear to be an account linked to Meigs on the service at the moment) into a universal experience that reflects a vast majority of internet users.

What’s never even considered in this column is that people are embracing Bluesky for all the reasons you’ve chosen to treat as negatives. Everyone can curate their own experience — something that’s definitely not possible anywhere else. Both Facebook and xTwitter allow pay-to-play amplification for posts, as well as sloppy, profit-first algorithms that shove whatever these sites think will increase “engagement,” rather than assist in curation by being more attentive to what users actually want to see on their timelines. What’s absolutely insane about Meigs’ assertions above is that he’s ignoring his own complaints about xTwitter so he can pretend the real problem here is Bluesky:

If you can’t see the embed, it’s a screenshot of Meigs on xTwitter in 2019 saying:

Twitter’s goal with every change is to have us spend less time doing what WE want to (interact with the people we actually follow) and spend more time doing what Twitter wants them to do (get sucked into “trends” and #StupidHastags and viral outrage mobs).

Here’s a platform that doesn’t pull that bullshit. And Meigs shits on it because “conservative views” (you know the ones…) aren’t gaining a foothold at Bluesky.

I’m a Bluesky user. I don’t mind honest debates. But I’d much rather have a timeline I can closely control — one that gives me access to what I’m looking for and allows me to remove any detritus I come across with a couple of swift clicks — than whatever’s passing itself as “social media” elsewhere.

What’s on display here is the amazing fragility of people who can dish out tons of abuse but just can’t take it. It’s also exposing the people who are facing the uncomfortable fact that lots of internet users don’t like what they post or the people they identify with. Worse, they’re finding out they don’t like they people they identify with much either. Echo chambers aren’t great, but I’m sure people would prefer an echo chamber where most people are polite, helpful, and supportive, rather than the alternative xTwitter provides: a dark pit filled with the worst people you know. Meigs, for some reason, prefers the pit. At least there, he can soak in some tepid applause for owning the liberal snowflakes currently enjoying a site he doesn’t feel obliged to listen to him speak.

Filed Under: conservative tears, content moderation, elon musk, james meigs, nazi bar
Companies: bluesky, twitter

After Killing USAID, MAGA’s Solution: Reinventing USAID, But Worse

Too Much Free Time

from the sophistication-isn't-a-conspiracy dept

The recent book “Character Limit” exposes a perfect case study in destructive arrogance: Twitter was already building more sophisticated versions of everything Musk claimed he wanted. But Musk and his sycophants were so convinced of their own brilliance, and so certain everyone at Twitter was an idiot, they didn’t even bother to understand what was already in place. Instead, they gleefully tore it all down — only to later attempt rebuilding worse versions of the same features, having learned nothing from the ruins.

Now we’re seeing the same thing play out with the US government. Just weeks after illegally killing an agency (which Musk never actually understood) that successfully promoted American interests abroad for decades, the MAGA crew is suddenly discovering they need… an agency that promotes American interests abroad. And just like at Twitter, their “solution” involves rebuilding a stripped-down, flawed version that fundamentally misunderstands what made the original work.

As we recently detailed, USAID’s genius lay in how it wove together humanitarian aid with commercial interests. Every dollar spent fighting disease or supporting development didn’t just protect American health and security — it helped create new markets for US companies. And critically, it did this while maintaining recipient countries’ independence, in stark contrast to China’s Belt & Road Initiative, which deliberately creates debt traps to tie countries to the Chinese economy (and was more directly tied to infrastructure initiatives, rather than broader development goals around health and stability).

The MAGA crew’s sudden amnesia about USAID’s value is particularly striking given their own recent history. Take Marco Rubio, now Secretary of State. Just three years ago, he was one of USAID’s strongest defenders, demanding increased funding specifically to “counter the Chinese Communist Party’s expanding global influence.”

For years, Rubio forcefully argued that USAID’s budget (less than 1% of federal spending) delivered outsized returns for American interests. “I promise you,” he declared in 2017, “it is going to be a lot harder to recruit someone to anti-Americanism and anti-American terrorism if the United States of America is the reason one is even alive today.” He even called out those who wanted to slash foreign aid as liars pushing false narratives about the budget.

But hey, that was three whole years ago. Ancient history!

The cognitive dissonance is reaching absurd levels. Just weeks after killing USAID, Fox News ran a segment bemoaning that America has no answer to China’s Belt & Road Initiative. Trump’s solution to this “crisis”? Apparently it’s Benjamin Black, son of hedge fund giant (and Jeffrey Epstein associate) Leon Black, who Trump is appointing to rebuild what’s left of USAID. Black’s revolutionary idea, as breathlessly reported by the NY Times? Investing in “pro-market” projects.

Here’s the punchline that makes this whole thing darkly comic: USAID was already laser-focused on market development. So focused, in fact, that some of its vocal critics have long complained it prioritized commercial interests over pure humanitarian aid. But USAID understood something Black and his MAGA compatriots don’t: creating sustainable markets requires playing the long game through stability, health, and development.

Black’s grand vision? Moving USAID’s resources to Trump’s pet project from his first term, the International Development Finance Corporation (DFC). His qualification for this role? A Substack essay co-written with Peter Thiel protégé Joe Lonsdale arguing that foreign aid should be… wait for it… market-driven.

It’s USAID all over again, just stripped of the sophistication, expertise, and strategic thinking that made it effective. Another case of destroying something complex to rebuild a worse version that fits on a bumper sticker.

In other words, here are the basics of Black’s revolutionary proposal, which I swear I am not making up:

1. Take USAID’s $44 billion budget
2. Give it to the DFC for “market-oriented investments”
3. ???
4. Profit! (No, literally — the proposal promises “returns that would fund future programs”)

The whole thing reads like someone discovered USAID’s actual mission statement, crossed out the sophisticated parts about development and stability, and added “but make it more Finance Bro.” It would be funny if it weren’t so predictable.

And while USAID had its critics on both the left (for being too market-focused) and right (for being “wasteful”), it had evolved sophisticated mechanisms to balance these concerns. The agency’s programs underwent rigorous evaluation and adapted over decades. The DFC, by contrast, largely operates as a standard investment vehicle without this institutional knowledge — it’s like replacing a surgeon with someone who’s played “Operation” once.

Just like Musk “discovering” features Twitter already had, MAGA is now “inventing” development strategies that USAID spent decades refining by actually understanding the realities and nuances of the larger world.

The parallels here are almost too perfect. Just as Musk replaced Twitter’s verification system — which created genuine value through carefully managed trust — with a simplistic “pay for checkmark” scheme, MAGA wants to replace USAID’s sophisticated development strategy with a crude, short-term, “invest for returns” approach. Both changes promise quick, measurable wins while destroying the underlying long-term value and strategic importance that took years to build.

This is the MAGA/Musk playbook in action: take a complex system you don’t understand, declare it broken because you can’t grasp its nuances, tear it down while claiming you’ll build something better, then deliver a simplified version that completely misses the point. Whether it’s Twitter’s trust systems or USAID’s market development strategy, these weren’t just programs — they were calibrated ecosystems built on years of learning and refinement, with longer term goals in mind.

But here’s what makes this pattern truly dangerous: it’s not just ignorance, it’s aggressive ignorance. The Musk/MAGA worldview doesn’t just fail to understand complexity — it treats complexity itself as evidence of incompetence or corruption. They’re not just incapable of seeing the sophistication in these systems; they’re ideologically opposed to admitting such sophistication could exist.

Filed Under: ben black, development, dfc, elon musk, foreign aid, usaid
Companies: twitter, x