Elon Musk’s juggling act

This is an audio transcript of the FT News Briefing podcast episode: ‘Elon Musk’s juggling act’

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, November 2nd, and this is your FT News Briefing.

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The Federal Reserve is set to raise interest rates again today. Meanwhile, Pfizer is figuring out how to keep revenues up as demand for vaccines goes down. Plus, Elon Musk now runs four companies, but can he juggle them all? I’m Marc Filippino and here’s the news you need to start your day.

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The Federal Reserve keeps trying to cool inflation. The Fed is expected to raise interest rates by 75 basis points for the fourth time in a row today. But despite that, the US economy isn’t slowing down. Last quarter, US gross domestic product increased by more than two and a half per cent. And demand for US workers rebounded in September. That’s according to a report the Department of Labor released yesterday. We’ll see if higher rates have cooled inflation when October’s Consumer Price Index report comes out next week.

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Demand for Pfizer’s Covid-19 vaccines is falling. Even so, Pfizer yesterday increased its 2022 sales forecast by $2bn. That’s because it has raised the price of its shots. The FT’s Jamie Smyth has more.

Jamie Smyth
Now, its rationale for doing that is that obviously it’s going to increase its own revenues by doing that work, compensate for the drop in demand somewhat. But also the US market is moving from one where the government purchase in bulk vaccines to supply to the population to one where commercial payers such as hospitals, medical groups, insurance companies, they’re going to be purchasing the vaccine directly from companies. So Pfizer is saying that because this, uh, the crisis phase of the pandemic is coming to an end, we’re moving to a commercial market, it should have the flexibility to increase the price of its vaccine considerably.

Marc Filippino
Now, is that going to be enough to prop up revenues in the long term?

Jamie Smyth
Well, really, the second part of Pfizer’s strategy is to develop new products and launch new products to try and bolster revenues over the next five to 10 years. And partly the reason for this is that it’s gonna see Covid sales moderating over that period. But also it has several big drugs which are coming off patent in coming years, and they’re going to lose exclusivity. So the amount of revenues it generates from these drugs is going to decline considerably.

Marc Filippino
And do we have a sense of how increasing the price of vaccines will impact public health?

Jamie Smyth
Pfizer insists that the public won’t have to pay any more money, mainly because in the US it’s saying that private insurance schemes will be forced by the government to cover this. Now, the negotiations between the government and Pfizer towards this end have not been concluded yet. So we’ll need to see as these negotiations progress and as we move into a commercial market, the exact impact that it’s gonna have on the public. But we’re not yet clear on what will happen in other markets around the world. And you would expect, for example, in Europe, governments would still end up being the majority buyers of these vaccines. And if they’re buying in bulk, there’s a potential that there won’t be the same scale of price rises that Pfizer expects to be able to make in the US.

Marc Filippino
That’s the FT’s US pharmaceutical correspondent, Jamie Smyth.

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Elon Musk is already making waves at Twitter. The world’s richest man closed the $44bn deal to buy the platform last Friday. Since then, he’s cleared out the social media company C-suite. And yesterday, he floated an outline for Twitter users to hold on to their blue verification checkmarks for $8 a month. Now, if Twitter wasn’t enough of a handful, Musk also runs three other companies; Tesla, SpaceX, and The Boring Company. Seems like a lot. So can he juggle it?

Ortenca Aliaj
How does it even fit in, like, a piece of the puzzle? I don’t think it really does. Obviously, like, he’s mostly run an electric car company and SpaceX company. So social media isn’t really his thing.

Marc Filippino
That’s the FT’s Ortenca Aliaj. She was part of a Twitter space discussion the other day about Elon Musk’s Twitter takeover and whether he’s up to the challenge.

Ortenca Aliaj
But he does have these people that he trusts who are in pretty prominent positions at these companies. And also we’ve spoken to shareholders who’ve basically said, look, companies like SpaceX, companies like Tesla run themselves. And therefore, this allows them to have time to focus on this sort of new toy that he’s gotten.

Marc Filippino
And Musk has promised to loosen content moderation rules on Twitter. He hasn’t released any concrete plans yet, but in the same Twitter space, the FT’s Sujeet Indap says that’ll be a big test for him.

Sujeet Indap
I think the one thing is obvious is that he hasn’t spent that much time. He’s brainstormed, but there’s not that much deep strategic planning into what he wants to do here. So he’s just making it up as he goes along. And I think that he’s about to find, and this is an important point, I think, is that social media companies are really complicated and that they deal with really difficult philosophical questions around free speech and moderation and how do you balance the two? And that’s a concept that we’ve seen. It’s a constant struggle at Facebook and Twitter before, and it’s hard to hard to reconcile those and still run a business.

Marc Filippino
Balancing free speech and content moderation on Twitter could have political implications. Here’s the FT’s Hannah Murphy.

Hannah Murphy
One big question and something that has already raised a lot of concerns is that he is now, in some ways, a bit of a political gatekeeper, given the sort of outsize importance of the platform to politicians and political campaigns. So, for example, he said, we’re going to allow all speech on the platform as long as it just follows the letter of the law in every country. Obviously, an issue that not just Twitter but any social media platform has to grapple with is that there are sort of autocratic governments out there that try to use and draw up social media laws that may be used to sort of sensor people or surveil people. And those social media companies have to decide whether they bend to those or whether they push back and what that looks like. Obviously, as the world’s richest man, Elon has business interests all round the world. And so there’s a question of sort of whether there will be conflicts in that respect and also just how he approaches that.

Marc Filippino
The other thing Elon Musk needs to consider when running Twitter is that he needs the company to make money or Tencent says there’s a lot at stake. If he doesn’t.

Ortenca Aliaj
This is a pretty big deal for him because the company now has close to $13bn of debt and a lot of his personal fortune is on the line. And he has to make interest payments, which are going to be probably like a billion a year on this debt. So he will have to find a way for Twitter to make money. And the easiest way to do that is with ad revenue, which he’s already sort of borrowed back on comments I’d made before about not wanting advertising on the platform. But I think the important point is that he is going to have to to make money. And it’ll be interesting to see how he does that, because I’m not sure how much people value that blue text, really.

Marc Filippino
That was the FT’s tech correspondent, Hannah Murphy, our Wall Street editor Sujeet Indap and our mergers and acquisitions correspondent Ortenca Aliaj. If you want to listen to the full Twitter SpaceX discussion, we have a link to the recording in the show notes.

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Before we go, Coca-Cola is one of the sponsors of the upcoming COP27 climate summit. That sponsorship was already controversial since the beverage company is one of the world’s largest plastic polluters. But new data show that Coca-Cola increased its non-recycled plastic use last year. That’s according to the Ellen MacArthur Foundation, which is an environmental charity. Coca-Cola and other multinationals have made a commitment to decrease their use of non recycled plastic by 2025.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.