Illustration by Fernando Capeto for Forbes; Photos by Win McNamee/Getty Images; David Ramos/Getty Images
The Gulf State’s sovereign wealth fund put $375 million towards Elon Musk’s Twitter deal, giving Qatar a stake in the social media network just weeks before it hosts one of the world’s largest sporting events.
In his post-midterms press conference on Wednesday, President Joe Biden was asked if Elon Musk‘s $44 billion takeover of Twitter posed a threat to U.S. national security due to the presence of certain foreign investors, including Saudi Arabia’s Prince Alwaleed Bin Talal Al Saud and the Qatar Investment Authority.
“I think that Elon Musk’s cooperation and/or technical relationships with other countries is worthy of being looked at,” Biden said.
Biden isn’t the only one concerned about foreign investment in Twitter: Two weeks ago, Senator Chris Murphy (D-Conn.) called on the Committee on Foreign Investment in the United States (CFIUS), a unit of the Treasury Department, to review the Saudi and Qatari investment in the social media firm. “CFIUS must also review non-controlling investments in certain sensitive U.S. businesses, including companies that develop critical technologies and businesses that possess sensitive personal data on U.S. citizens,” Murphy said, pointing to the Department of Justice’s 2019 investigation into two former Twitter employees who were charged with sharing the private information of Twitter users with the Saudi government. (One of them was convicted by a federal jury in August.)
But while Prince Alwaleed was a Twitter investor when it was still a public company, Qatar’s involvement is a new—and somewhat unusual—investment for the tiny Gulf State’s $461 billion (assets) sovereign wealth fund. The investment first became public on May 4, when a filing with the U.S. Securities and Exchange Commission revealed that the Qatar Investment Authority (QIA) was putting $375 million into Musk’s acquisition, giving it just under 1% of now privately held Twitter. While the QIA’s stake in Twitter is very small, it could still lead to potential national security risks in the U.S.
Besides the former employees who were charged with acting as “illegal agents of Saudi Arabia,” Twitter has run into more controversies regarding its use of users’ private information. In May, the Federal Trade Commission and the DOJ slapped Twitter with a $150 million fine for “deceptively” collecting users’ phone numbers and email addresses and then sharing the data with advertisers who used it to target specific users.
If the Qatari government is able to access user data, that could pose national security risks to the U.S., according to Sanjay Patnaik, director of the Center on Regulation and Markets at the Brookings Institution. “Even though it’s a small investment, that doesn’t preclude CFIUS from looking into it if they believe that either the Qataris might get some influence over Twitter’s policies or might be able to access the data of Americans,” he says.
The timing of the deal also raises questions about the rationale behind Qatar’s investment. The acquisition closed on October 27th, less than a month before Qatar is set to host the 2022 FIFA World Cup, which starts on November 20th and will bring more than a million soccer fans to the country of 3 million people. Qatar won the hosting rights for the tournament in 2010, and the country has since been in the global spotlight for the deadly conditions for migrant workers at construction sites as well as its draconian media laws. Some suggest, not surprisingly, that there are non-financial reasons for the deal, giving Qatar potential influence on the cheap—at best—and a small write-off at worst.
“It’s hard to say what their goals are. They probably have different goals in addition to just commercial interests in investing in Twitter,” says Patnaik. “One…is probably to advance their own propaganda and narrative. And if they can get access to critical information through Twitter, they’ll have influence on the policies.”
“For Qatar, obviously, it comes at a good time ahead of the World Cup. That’s going to be a centerpiece of the Twitter world,” adds Dan Ives, an analyst at Wedbush. “It’s a significant investment and it definitely gets them a seat at the table.”
The question is whether Qatar will use that seat to squash free speech. Foreign ownership of Twitter has the potential to “result in increased censorship, misinformation or political violence,” says Senator Murphy, adding that foreign investors, including Alwaleed and the QIA, could use the platform to “silence government critics and human rights activists.” Qatar has a number of laws on the books that restrict freedom of speech online. Its cybercrimes law, adopted in 2014, sets a maximum penalty of up to three years in jail for anyone convicted of spreading “false news” or posting content online that “violates social values or principles.” In 2020, Qatar amended its penal code to impose penalties of up to five years in prison for broadcasting or publishing “false or malicious news.”
In May, Musk tweeted that his “preference is to hew close to the laws of countries in which Twitter operates.” Estimates on the number of monthly active Twitter users in Qatar range from about 600,000-700,000, but the country is expected to host as many as 1.2 million visitors during the World Cup—and many fans will use Twitter to share their experiences. Musk and a spokesperson for Twitter did not immediately respond to requests for comment.
“It’s not beyond the realms of possibility [that] there could be internal influence exerted in terms of who’s allowed on Twitter and what they’re allowed to say, what is censored and what is removed,” says Simon Chadwick, a professor of sport and geopolitical economy at Skema Business School in France, who has traveled extensively to Qatar.
The Twitter deal also appears to mark a departure from the QIA’s previous investments. Some of the wealth fund’s most prominent holdings include an 18% stake in Russian state-owned oil company Rosneft, 8% of commodities trader Glencore, stakes in Western banks (including Barclays and Credit Suisse) plus real estate in London and New York, including about 18% of the Empire State Building.
A Forbes review of the QIA’s SEC filings and investments on Pitchbook found that Twitter is the only social media company the fund has invested in. The QIA, which is a government-owned entity, declined to respond to a series of questions from Forbes on its investment in Twitter. It’s unclear why it chose to invest in the social media platform, even if its $375 million contribution is pocket change for a fund with $461 billion in assets.
Less than a week after the Twitter deal closed, several publications including the New York Times reported that Qatar’s Supreme Committee on Delivery and Legacy—the organization responsible for the World Cup—had asked some foreign fans who received expense-paid trips to the World Cup (funded by the Supreme Committee) to abide by a code of conduct. The documents and contracts seen by the Times required fans to “report any offensive, degrading or abusive comments” and “if possible, take a screenshot of those comments and promptly delete them.” Another part of the document reportedly said that the committee was “not asking [fans] to [be] a mouthpiece for Qatar, but it would obviously not be appropriate for [fans] to disparage Qatar.”
Qatar’s Supreme Committee issued a statement in early November calling the reports “absolutely false.” The statement said that fans participating in the program, known as the Fan Leader Network, “are under no obligation to post or share content provided by the [Supreme Committee], or to report content on [the committee’s] behalf.”
Still, Qatar has taken action in the past to crack down on social media posts that paint the country in a negative light. In May 2021, Qatari authorities arrested Malcolm Bidali, a Kenyan labor rights activist who was working as a security guard. Bidali tweeted about labor abuses in Qatar using a pseudonym and was the target of a phishing attack on his phone that led to his arrest, according to Amnesty International. Bidali was held in solitary confinement for 23 hours a day and had no access to legal representation, before eventually being released nearly three weeks later—but only after paying what Bidali said was an “exorbitant fine” and signing a non-disclosure agreement. In August 2021, Qatari authorities arrested seven people for “spread[ing] false news” after they spoke out on social media about the electoral law for the country’s first-ever parliamentary elections.
How Twitter operates during the World Cup—if it is still in operation then, given reports Thursday that the company may file for bankruptcy—will be a test of Musk’s leadership and a window into the influence Qatar may have on content moderation. “There’s going to be a bright spotlight on how this is all handled, because it’s a potential firestorm of controversy,” says Wedbush analyst Ives. “And when you add the World Cup situation, it just puts gasoline into the potential fire.”
In financial terms, the deal has already been a bad bet for the QIA: Forbes estimates Twitter is now worth $26 billion, based on the decline in an index of social media companies between the date the deal was signed in April and the closing date of October 27. Ives estimates that Twitter is currently worth even less—around $15-20 billion, a roughly 60% haircut on the $44 billion Musk and his co-investors paid for the company. But the $375 million invested in Twitter is such a small sum for the QIA that it’s unlikely they will be fazed by its poor performance so far. Even if Musk fails to revitalize Twitter, Qatar will still have gained a foothold in one of the world’s largest social media platforms.
“There are high-level discussions inside the Qatari government about what happens next to the Qatar Investment Authority,” says Chadwick. “And the fact that we have this breakout digital investment in Twitter, that could be a symbol of something to come.”
Additional reporting by Matthew Durot.