It’s still possible to undo the Twitter deal


Fig. 1. “Elon Musk shared a video of his entrance on his Twitter account.” Photograph attributed to Elon Musk, October 26, 2022, via the New York Post,[1] fair use.

I updated my analysis of Twitter’s prospects early this morning, and then have updated the update. One thing I haven’t weighed is that

one important aspect of Musk’s acquisition of Twitter has received less attention: The acquisition’s relevance to national security. Not only has Musk brought on a number of investors to help finance the deal, including entities with links to China, Qatar, and Saudi Arabia (see Table 1), but one of his other companies, Tesla, is increasingly dependent on the Chinese market and the goodwill of the Chinese government. Due to the critical position of Twitter as a platform for political discourse in the U.S., the Committee on Foreign Investment in the United States (CFIUS), a federal interagency committee tasked with reviewing the national security implications of foreign investment in domestic companies, should investigate the Twitter deal on the grounds of national security. According to recent press reports, Biden administration officials are indeed discussing whether the Committee should investigate the deal and on October 31, Senator Chris Murphy (D-Conn.) called for CFIUS to begin an investigation. Given evolving trends in CFIUS decisions in other cases, President Biden would have strong grounds for blocking Musk’s Twitter acquisition or at the very least compelling the minority foreign investors to sell their equity to parties that would not pose a national security threat. Importantly, while the business deal is technically completed, CFIUS has the authority to retroactively investigate and undo it, which it has done in other instances in the past. In 2020, for example, President Trump ordered the Chinese company Beijing Shiji Information Technology Co. to divest from U.S. cloud-based company StayNTouch Inc. following a CFIUS review over one year after the former had acquired the latter. . . .

When CFIUS has concluded an investigation, it may act upon its findings in several ways. If it determines that a transaction has no unresolved security risks, it informs parties to the transaction that it has completed all relevant action and issues a “safe harbor” letter that shields the transaction from most further investigation. If CFIUS does find national security risks, it may demand “mitigation measures,” which are either imposed or agreed upon with the transaction parties through negotiation. These measures may involve, for example, adding a CFIUS-approved director or implementing oversight measures. If CFIUS determines that no mitigation measures can sufficiently address the national security risks of the transaction, it issues a recommendation to the president saying that the transaction should be blocked. Parties typically abandon their transactions following such a recommendation rather than risking presidential intervention and the associated reputational damages. However, in rare cases, parties may want to proceed with a deal despite this recommendation, in which case CFIUS may refer the case to the president for a final decision. CFIUS itself can only impose mitigation measures or recommend that a deal be abandoned, but it cannot block a deal entirely—that power remains with the president, granted under the Exon-Florio amendment.[2]

The problems that make Committee on Foreign Investment in the United States investigation possible and perhaps even mandatory are that Elon Musk brought in foreign investors to finance his deal to buy Twitter, Twitter stores personal information on U.S. citizens, and Twitter is a medium for election misinformation and disinformation. Oh, and by the way, we probably won’t know right away if they’re investigating.[3]

Heather Kelly, “You’ve decided to quit Twitter. Here’s what you can use to replace it,” Washington Post, October 29, 2022,

Shonda Rhimes, “Not hanging around for whatever Elon has planned. Bye,” Twitter, October 29, 2022,

William D. Cohan, “Elon’s Clues and an M&A Hail Mary,” Puck News, October 30, 2022,

Alexa Corse and Salvador Rodriguez, “Twitter Is Drafting Broad Job Cuts in Whirlwind First Weekend Under Elon Musk,” Wall Street Journal, October 30, 2022,

Dan Milmo, “Twitter trolls bombard platform after Elon Musk takeover,” Guardian, October 30, 2022,

Dean Seal, “Elon Musk Ousts Twitter Board, Named Sole Director,” Wall Street Journal, October 31, 2022,

Nick Bonyhady, “Twitter is no LinkedIn. Charging for blue ticks won’t work,” Sydney Morning Herald, November 1, 2022,

Elon Musk, “Twitter’s current lords & peasants system for who has or doesn’t have a blue checkmark is bullshit. . . .” Twitter, November 1, 2022,

Elon Musk, “Price adjusted by country proportionate to purchasing power parity,” Twitter, November 1, 2022,

Elon Musk, “You will also get . . .” Twitter, November 1, 2022,

Elon Musk, “And paywall bypass for publishers willing to work with us,” Twitter, November 1, 2022,

Elon Musk, “This will also give Twitter a revenue stream to reward content creators,” Twitter, November 1, 2022,

Elon Musk, “There will be a secondary tag below the name for someone who is a public figure, which is already the case for politicians,” Twitter, November 1, 2022,

Suzanne Vranica and Patience Haggin, “Ad Giants Advise Brands to Pause Spending on Elon Musk’s Twitter,” Wall Street Journal, November 1, 2022,

Edward Ludlow and Kurt Wagner, “Musk Plans to Eliminate Half of Twitter Jobs to Cut Costs,” Bloomberg, November 2, 2022,

Naomi Nix, “Elon Musk says Twitter won’t restore banned accounts for weeks,” Washington Post, November 2, 2022,

David Frum, “Why I Logged Off Twitter,” Atlantic, November 3, 2022,

Mike Isaac and Ryan Mac, “Elon Musk, Under Financial Pressure, Pushes to Make Money From Twitter,” New York Times, November 3, 2022,

Catherine Rampell, “World’s richest man decides to set $44 billion on fire,” Washington Post, November 3, 2022,

Samuel Stolton, “EU Twitterati plot escape amid Musk takeover,” Politico, November 3, 2022,

Suzanne Vranica and Patience Haggin, “General Mills, Audi and Pfizer Join Growing List of Companies Pausing Twitter Ads,” Wall Street Journal, November 3, 2022,

Josh Eidelson, “Twitter Sued for Mass Layoffs by Musk Without Enough Notice,” Bloomberg, November 4, 2022,

Drew Harwell, Cat Zakrzewski, and Isaac Stanley-Becker, “Twitter layoffs gutted election information teams days before midterms,” Washington Post, November 4, 2022,

Sarah E. Needleman and Alexa Corse, “Elon Musk Says Twitter Has Had Massive Revenue Drop as Layoffs Begin,” Wall Street Journal, November 4, 2022,

Sanjay Patnaik, Robert E. Litan, and James Kunhardt, “The national security grounds for investigating Musk’s Twitter acquisition,” Brookings, November 4, 2022,

Faiz Siddiqui, Naomi Nix, and Will Oremus, “Advertisers fleeing, workers in fear: Welcome to Elon Musk’s Twitter,” Washington Post, November 4, 2022,

  1. [1]Thomas Barrabi, “Elon Musk barges into Twitter HQ as deal nears: ‘Let that sink in,’” New York Post, October 26, 2022,
  2. [2]Sanjay Patnaik, Robert E. Litan, and James Kunhardt, “The national security grounds for investigating Musk’s Twitter acquisition,” Brookings, November 4, 2022,
  3. [3]Sanjay Patnaik, Robert E. Litan, and James Kunhardt, “The national security grounds for investigating Musk’s Twitter acquisition,” Brookings, November 4, 2022,

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