Biden administration considers security reviews for Musk deals
Biden administration officials are discussing whether the U.S. should subject some of Elon Musk’s ventures to national security reviews, including the deal for Twitter and SpaceX’s Starlink satellite network, according to people familiar with the matter.
Twitter shares fell as much as 16 percent in pre-market trading in New York.
U.S. officials have grown uncomfortable over the Tesla CEO’s recent threat to stop supplying the Starlink satellite service to Ukraine — he said it had cost him $80 million so far — and what they see as his increasingly Russia-friendly stance following a series of tweets that outlined peace proposals favorable to President Vladimir Putin. They are also concerned by his plans to buy Twitter with a group of foreign investors.
The discussions are still at an early stage, the people familiar said on condition of anonymity. Officials in the U.S. government and intelligence community are weighing what tools, if any, are available that would allow the federal government to review Musk’s ventures.
One possibility is through the law governing the Committee on Foreign Investment in the United States to review Musk’s deals and operations for national security risks, they said.
The interagency panel, known as CFIUS, reviews acquisitions of U.S. businesses by foreign buyers. It is not clear if a CFIUS review — which would involve assessments by the Departments of State, Defense, and Homeland Security, among others — would offer the government a legal way to conduct a review, the people said.
Twitter is also confronting reports that Musk aims to gut its workforce as part of his takeover. The Washington Post reported that Musk’s plan for Twitter involve slashing its staff 75 percent in a matter of months. Bloomberg News confirmed that potential investors were told of the plan for cuts, along with an effort to double revenue within three years.
One element of the $44 billion Twitter deal that could trigger a CFIUS review is the presence of foreign investors in Musk’s consortium. The group includes Prince Alwaleed bin Talal of Saudi Arabia, Binance Holdings Ltd. — a digital-asset exchange founded and run by a Chinese native — and Qatar’s sovereign wealth fund.
The panel operates behind closed doors and rarely confirms when it is conducting reviews. CFIUS also holds the power to review deals that have already been consummated.
A U.S. Treasury Department spokesperson said CFIUS does not publicly comment on any transactions that might or might not be under review.
Musk has taken to Twitter in recent weeks to announce proposals to end Russia’s war and threaten to cut financial support for Starlink internet in Ukraine. His tweets and public comments have frustrated officials in the U.S. and Europe and drawn praise from America’s rivals.
Musk later backed down from his threat to stop deploying Starlink and said he would continue to bear the costs of the service. Starlink has become an essential tool for communications in Ukraine during the Russian invasion. Musk has been providing the service for free but has said SpaceX loses $20 million a month providing it to Ukraine and he cannot be responsible for that cost indefinitely.
The U.S. government would also use Starlink in the event of a telecommunications outage, according to people familiar with the matter.
Musk did not immediately respond to multiple e-mailed requests for comment.
He tweeted in reply to a fellow reader’s reaction to the Bloomberg article. “It would be hysterical if the government stopped Elon from over paying for Twitter ????,” the reader tweeted. “????????,” Musk replied.
Musk is no stranger to Washington, where he is a major player in government contracts.
Musk forced his way into the business of military and intelligence satellite launches after lobbying vigorously in Congress and suing the U.S. Air Force for the right to compete with a longstanding joint venture of defense giants Boeing Co. and Lockheed Martin Corp.
In 2019, the Pentagon said it was reviewing Musk’s federal security clearance after he smoked marijuana on a podcast, though the results of that investigation are unclear. A SpaceX official at the time, who asked not to be identified, said the review had not had an impact on the company.
SpaceX flies astronauts to the International Space Station as part of a long-standing partnership with NASA and launches top secret satellites for the Pentagon. The U.S. Agency for International Development, or USAID, has also paid for some of SpaceX’s Starlink satellites that have made their way to Ukraine.