• Elon Musk's $44 billion Twitter buyout was seen by many as overpriced.
• However, the social media platform has helped give Musk close access to the Trump administration.
• Twitter, now X, has also been a valuable data source for Musk's $50 billion startup xAI.

When Elon Musk bought Twitter for $44 billion, it was panned as one of the worst tech acquisitions in history. Two years, an election, and a generative AI boom later, it's starting to look like more of a bargain.

Shortly after the deal closed in October 2022, Wedbush Securities tech analyst Dan Ives said it would "go down as one of the most overpaid tech acquisitions in the history of M&A deals on the Street."

On paper, the $13 billion that Musk borrowed to buy Twitter, now X, has turned into the worst merger-finance deal for banks since the 2008 financial crisis.

Yet the deal has provided significant benefits for Musk. He now wields considerable influence in the incoming Trump administration after using X to throw his support behind the former president's reelection.

Not only has X served as Musk's political megaphone, but it's also been a lucrative source of training data for one of the billionaire's other ventures: xAI, the startup that's rocketed to a $50 billion valuation just 16 months after launch.

That fresh valuation means xAI has surpassed Musk's purchase price for X. It came with a $5 billion funding round, which The Wall Street Journal reported was backed by the Qatar Investment Authority and Sequoia Capital.

Musk launched xAI in July 2023 as a springboard to get in the AI race after cofounding and then leaving ChatGPT maker OpenAI due to differences with its CEO, Sam Altman.

The startup has made up significant ground on its rivals by using X as a source of third-party data, one of the key avenues for training large language models.

In late 2023, Musk blocked other organizations from scraping X data for free — but gave xAI continued access. That gave xAI a crucial 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 through X is the potential kryptonite to ChatGPT's edge" and a potential driver behind the rising valuation of Musk's startup.

Although the number of X users has been falling, it had 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 as easily, which provides a huge competitive edge and therefore makes xAI a valuable company," added O'Malley.

Access to 0.3% of X's data costs around $500,000 annually, which prices many out, Wired previously reported.

"Clearly, X's or indeed any social media platform's data is 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 played a large role, too. Musk has long been an avid poster on X, but he ramped up the volume during the election cycle. Analysis by The Economist found that the share of Musk's political posts on X has risen from less than 4% in 2016 to over 13% this year. Since endorsing Trump, has has posted more than 100 times on some days to his more than 200 million followers.

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

Shmuel Chafets, cofounder of venture capital firm Target Global, told Business Insider that "X has become a powerful tool" in Musk's ecosystem, adding that it serves "as a platform for promotion and influence, similar to how Warren Buffett leverages the Berkshire Hathaway annual shareholders meeting and his shareholder letters."

X didn't always seem destined to attain such influence in Musk's hands.

In the months and years following Musk's takeover, an advertiser revolt ensued over content moderation concerns, the company laid off about 80% of staff, and service outages disrupted users.

Musk's co-investors have been writing down the value of their X stakes in the two years since. In September, Fidelity, one of its investors, slashed the value of its holding, giving X an implied valuation of $9.4 billion.

Yet Musk's support for Trump, which came after an assassination attempt against the president-elect at a rally in Pennsylvania in July, gives the tech billionaire political sway that is hard to put a price on.

Musk, who Trump said was a "super genius" in his victory speech at the Mar-a-Lago resort in Palm Beach, was selected by the president-elect to run a new Department of Government Efficiency alongside Vivek Ramaswamy, who ran in the 2024 Republican primary.

DOGE will be a "threat to bureaucracy," according to Musk, whose remit at the newly formed department will include driving $2 trillion in federal spending cuts and slashing regulations he deems superfluous and in the way of his corporate empire. As one SpaceX official told Reuters, Musk "sees the Trump administration as the vehicle for getting rid of as many regulations as he can, so he can do whatever he wants, as fast as he wants."

Since Trump's election win, the billionaire has been seen side-by-side with the president-elect at a UFC fight night while reportedly joining his calls to leaders like Volodymyr Zelensky and Google CEO Sundar Pichai.

X-odus

How long X maintains a Musk-Trump bromance and supports xAI's growth remains to be seen.

Musk, for instance, isn't always getting his preference for cabinet appointments chosen by Trump; his choice of Wall Street veteran Howard Lutnick as Treasury secretary was shunned for Trump's pick Scott Bessent, dismissed by Musk as a "business-as-usual choice."

X also faces legal challenges in which judges have expressed concerns over gatekeeping user data. In May, a federal judge in California dismissed a lawsuit filed by X against Israeli firm Bright Data. X claimed Bright Data was "using elaborate technical measures to evade X Corp.'s anti-scraping technology."

Earlier this month, X partially revived its suit against Bright Data. Should X be unsuccessful, it would raise questions about the value of the X to xAI data pipeline.

Elsewhere, the renewed interest in X rivals like Bluesky and Threads risks seeing Musk's social media site lose users who are both key for advertising revenue and providing vital sources of data for training future models at xAI. X is now in a position where "lots of people hate it because they see it as being a weaponized instrument of MAGA," Calum Chace, cofounder of AI startup Conscium, told BI.

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

"Critics may enjoy pointing out his missteps, but Musk's ability to leverage X for both personal and business purposes reinforces his reputation as a visionary entrepreneur who consistently thinks several steps ahead of his contemporaries," said Target Global's Chafets.

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

Elon Musk is calling F-35 makers "idiots" for building manned jets while drone technology soars. Here's what experts say on the subject.

• Elon Musk and Vivek Ramaswamy, co-heads of DOGE, are figuring out how to cut the federal government.
• Both men admire Javier Milei, the Argentine leader elected on a pledge to slash the state.
• Milei closed nine ministries, firing thousands of officials, and the economy is feeling the effects.

About a year ago, standing in front of a whiteboard with a gleam in his eye, Javier Milei started pulling apart Argentina's government.

"Ministry of Culture — Out! Ministry of Environment and Sustainable Development — Out!" he yelled with escalating joy, shredding an org chart of the state.

Soon after, he was elected his nation's president and started to make good on his program of massive spending cuts.

Watching admiringly were Vivek Ramaswamy and Elon Musk, the men now charged with a similar task in the US.

Both men have praised Milei repeatedly, seeing in him a model for their Department of Government Efficiency.

So, how has Milei's hack-and-slash agenda played out? And what could it mean for the federal government?

'Just cut to the chase'

Milei's program was swift and brutal.

Within days of taking office, Milei shut down half of the country's 18 ministries by presidential decree.

He fired some 25,000 public employees, and is working through 75,000 more.

Cuts of a similar scale in the US, with about seven times Argentina's population, would mean shedding 700,000 government workers.

Milei also hacked back the Argentine equivalent of Social Security by an estimated third, canceled infrastructure projects, and froze budgets at the surviving ministries.

This week, in an interview with the podcaster Lex Fridman, Milei said DOGE should act with speed too.

When prompted for advice, he said, "Just cut to the chase."

Milei described a physical timer in Argetina's deregulation ministry meant to focus minds by counting down days.

Harsh medicine

His measures helped tame a crisis: Argentina's inflation was 25.5% when Milei took office, and as of October, it was 2.7%.

The government ran its first surplus in 12 years, and trimmed tens of billions from its national debt.

It also spurred a recession and mass civil unrest as hundreds of thousands of people took to the streets and unions held regular strikes across the country.

Economists told Business Insider that major differences in the US and Argentine economies make the two tough to compare.

First — Milei took power in an economic meltdown where inflation of 25.5% was hammering the economy.

Milei solved that, said Maria Victoria Murillo, director of the Institute of Latin American Studies at Columbia University.

But "the consequence was a deep recession that facilitated controlling inflation but has been very painful and is accepted because inflation was terrible and people do not want to go back."

"I am not certain that would be the case in the US," she said.

Kimberley Sperrfechter, Capital Economics' Latin America Economist, noted that President-elect Donald Trump's policies mostly point to more state spending, not less. He explicitly ruled out changes to Social Security, the government's single biggest budget item.

The US balance of power is also different. Milei was able to make his changes mostly by executive decree. As BI reported, Trump would have to contend with Congress, where Republicans have only slender majorities.

The toast of Mar-a-Lago

DOGE's leaders don't seem blind to that — in August, Ramaswamy touted Milei as an inspiration but said Argentina was "much less complicated" an economy to overhaul.

It hasn't dimmed Milei's popularity in Trumpworld.

Milei was a guest of Trump's at Mar-a-Lago, the first world leader to meet him since his election victory, where he called his victory "the greatest political comeback in history."

On the Fridman podcast, Milei advised Musk and Ramaswamy to go "all the way" in cutting US federal spending.

Since Election Day, Ramaswamy and Musk have posted about Milei more than a dozen times: DOGE is readying its work with at least one eye on Buenos Aires.

• Elon Musk and Vivek Ramaswamy, co-heads of DOGE, are working out how to cut the federal government.
• Javier Milei, the Argentine leader who both men have praised, advised cutting to 'the very limit.'
• Milei closed nine ministries, firing thousands of officials, and cut spending by an estimated 31%.

Argentina's president says Elon Musk and Vivek Ramaswamy should all go "all the way" in cutting US federal spending.

Javier Milei made the comments in an episode of the Lex Fridman podcast released on Tuesday.

"My advice would be for them to go all the way, to push it to the very limit, and do not give up," he said. "Do not let down their guard."

Milei has presided over sweeping spending cuts in Argentina, firing tens of thousands of public employees, shutting down half the country's 18 ministries, and cutting state spending by an estimated 31% in his first 10 months in office.

The measures have helped bring inflation down from 25.5% when he took office in December 2023 to 2.7% in October.

But they have also ignited a recession and mass civil unrest, with hundreds of thousands of people taking to the streets and unions holding regular strikes across the country.

"Just cut to the chase. Cut to the chase," Milei told Fridman when asked what advice he had for Musk and Ramaswamy.

Both Musk and Ramaswamy have repeatedly praised Milei and taken inspiration from him for their Department of Government Efficiency.

On Wednesday, Musk said Argentina had made "impressive progress,'" while Ramaswamy said on Monday that the US needed "Milei-style cuts on steroids."

On Sunday, Ramaswamy told Fox News that he expected the wholesale closure of some federal agencies — a measure that mirrors that taken by Milei in Argentina.

Milei and Musk have long spoken admiringly of one another and were together at President-elect Donald Trump's Mar-a-Lago resort last week.

The two men met for the first time in April at Musk's Tesla plant in Austin, where they discussed free markets and their opposition to bureaucracy, according to a statement from Milei's office.

In an X post in September, Musk said his companies were "actively" looking for ways to invest in and support Argentina after the two men met on the sidelines of a United Nations summit in New York held at the time.

While Milei has achieved most of his sweeping cuts via executive decree, US spending cuts would likely involve working with Congress, where Republicans will hold just a slim majority.