• Elon Musk’s $44 billion Twitter acquisition was viewed by many as overpriced.

• However, the social media platform has helped give Musk close access to the Trump administration.

• Twitter, now X, was also a valuable source of data for Musk’s $50 billion startup xAI.

When Elon Musk bought Twitter for $44 billion, it was considered one of the worst tech acquisitions in history. Two years, an election and a generative AI boom later, it’s looking more like a bargain.

Shortly after the deal closed in October 2022, Dan Ives, technology analyst at Wedbush Securities, said it would “go down as one of the most overpaid technology acquisitions in the history of street M&A deals.”

On paper, the $13 billion Musk borrowed to buy Twitter, now X, has become the worst bank merger financing deal since the 2008 financial crisis.

Still, the deal has brought Musk significant benefits. He now wields significant influence over the new Trump administration after using X to rally his support for the former president’s re-election.

In addition to serving as Musk’s political megaphone, X was also a lucrative source of training data for one of the billionaire’s other companies: xAI, the startup that reached a valuation of $50 billion just 16 months after its founding.

This new valuation means that xAI will match Musk’s purchase price for

Musk launched xAI in July 2023 as a springboard to enter the AI ​​competition after co-founding ChatGPT maker OpenAI and then leaving due to differences with its CEO Sam Altman.

By using

In late 2023, Musk blocked other organizations from extracting X-data for free – but still gave xAI access. This gave xAI a decisive boost.

Ellen Keenan O’Malley, a senior associate at intellectual property law firm EIP, told Business Insider that xAI’s access to third-party information via

Although the number of X users has declined, there were 600 million monthly active users as of May, according to Musk.

“This is a level that neither OpenAI nor any other third party can access, or at least not easily, which provides a huge competitive advantage and therefore makes xAI a valuable company,” O’Malley added.

Access to 0.3% of data from

“The data from X, or any other social media platform, is clearly valuable,” Advika Jalan, head of research at MMC Ventures, told BI.

X marks the spot in the Musk-Trump alliance

Musk spent at least $119 million on a political action committee to support Trump’s campaign.

X also played a big role. Musk has long been an avid supporter of X, but he’s turned up the volume during the election cycle. An analysis by The Economist found that the share of Musk’s political posts on X rose from less than 4% in 2016 to over 13% this year. Since supporting Trump, he has posted more than 100 times on some days to his more than 200 million followers.

A study published this month by the Queensland University of Technology suggested Musk may have tweaked X’s algorithm to increase the reach of his and other Republican-leaning accounts.

Shmuel Chafets, co-founder of venture capital firm Target Global, told Business Insider that “X has become a powerful tool” in the Musk ecosystem, adding that it “serves as a platform for promotion and influence, much like Warren Buffett did with Berkshire.” Hathaway yearbook uses.” Annual General Meeting and his letters to shareholders.”

X didn’t always seem destined to achieve such influence in Musk’s hands.

In the months and years after Musk’s takeover, there was an advertiser revolt over content moderation concerns, the company laid off about 80% of its employees, and service outages disrupted users.

Musk’s co-investors have written down the value of their X shares over the past two years. In September, one of its investors, Fidelity, cut the value of its stake, giving X an implied valuation of $9.4 billion.

But Musk’s support for Trump, which came after an assassination attempt on the president-elect at a rally in Pennsylvania in July, gives the tech billionaire political influence that is difficult to quantify.

Musk, whom Trump called a “super genius” in his victory speech at the Mar-a-Lago resort in Palm Beach, was chosen by the president-elect to lead a new ministry alongside Vivek Ramaswamy, who was running in the Department of Government Efficiency Government Efficiency to Guide 2024 Republican Primary.

DOGE will pose a “threat to the bureaucracy,” according to Musk, whose duties in the newly formed department will include enforcing $2 trillion in federal spending cuts and slashing regulations he deems unnecessary to his corporate empire stands in the way. As a SpaceX representative told Reuters, Musk “sees the Trump administration as a tool to get rid of as many regulations as possible so he can do whatever he wants, as quickly as he wants.”

Since Trump’s election victory, the billionaire has been seen side by side with the president-elect at a UFC fight night, while reportedly taking on his calls for executives including Volodymyr Zelensky and Google CEO Sundar Pichai.

X-odus

It remains to be seen how long X will maintain a relationship between Musk and Trump and support the growth of xAI.

For example, Musk doesn’t always like Trump’s cabinet appointments; His choice of Wall Street veteran Howard Lutnick as Treasury Secretary was shunned for Trump’s pick Scott Bessent, which Musk dismissed as a “business as usual choice.”

X is also facing legal challenges where judges have raised concerns about how it manages user data. In May, a federal judge in California dismissed a lawsuit filed by X against Israeli company Bright Data. X claimed that Bright Data “used elaborate technical measures to impede to escape”.

Earlier this month, X partially reopened its lawsuit against Bright Data. Should X not be successful, this would raise questions about the value of the X-to-xAI data pipeline.

Elsewhere, there is renewed interest in X competitors such as Bluesky and Threads, causing Musk’s social media site to lose users who are both crucial to advertising revenue and provide key data sources for training future models in xAI . X is now in a situation where “a lot of people hate it because they see it as a weaponized tool of MAGA,” Calum Chace, co-founder of AI startup Conscium, told BI.

For now, however, Musk has a powerful tool in his hands with X.

“Critics may enjoy pointing out his missteps, but Musk’s ability to use

“Ultimately, this deal could prove extremely lucrative if he decides to sell or take the company public in the future.”

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