Technology

US government would block Elon Musk’s offer

Elon Musk took an important step yesterday by getting the support of multiple companies and investors to buy Twitter. Although the tycoon secured a $7.1 billion backing, the presence of certain investors would represent a new obstacle. In accordance with Reutersthe Committee on Foreign Investment in the United States (CFIUS) could open an investigation into whether the deal poses a national security risk.

According to six regulatory attorneys, the presence of Qatar Holding LLC and Binance are enough to get the attention of the CFIUS. The first is a subsidiary of the Qatar Investment Authority, the sovereign wealth fund of Qatar which has a stake in companies such as Volkswagen, Iberia, Miramax Films and the Al Jazeera chain. For its part, Binance It is one of the largest cryptocurrency exchange platforms in the world. founded by Chinese-Canadian Changpeng Zhao.

Another important name in the operation is Prince Alwaleed bin Talal of Saudi Arabia, one of the most important shareholders of Twitter. Although the Saudi opposed the initial offer, Elon Musk would have convinced him to maintain his investment in the social network.

Experts believe that the CFIUS will review the Twitter purchase to determine if there is any risk to national security. Despite this, the lawyers consider that the committee is unlikely to block the operation since the participation of these investors is small.

Who is the CFIUS and why would they block Elon Musk’s purchase of Twitter?

The Committee on Foreign Investment in the United States is a panel made up of government agencies. The list includes the Departments of Defense, Commerce, State, and Homeland Security. The committee reports to the Treasury Department and reviews foreign investments in US companies to possible implications for national security.

Although companies are not required to notify CIFUS when they have foreign participation, the committee can initiate a review and stop the operation. Among the most recent cases are the veto of the purchase of Qualcomm, for which Broadcom offered 130,000 million dollars, as well as the attempt to block TikTok which forced ByteDance to get rid of it.

China was enemy number one during the Trump administration and any investment from that country drew government scrutiny. Although Biden is more interested in Russia, regulators are not neglecting an in-depth analysis of the CFIUS. The committee considers personal data as critical infrastructure and Twitter handles a large volume.

Richard Sofield, attorney at Vinson & Elkins LLP, believes that Elon Musk’s relationship with China would put the purchase of Twitter under the magnifying glass. The United States does not get along with countries that try to surpass them technologically, so if there is any indication of an advantage for the Asian giant, the CFIUS would take advantage of its powers to stop the operation.

At the moment Elon Musk can breathe easy, since there is no confirmation that the CFIUS will examine the Twitter purchase agreement.

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