Michael Hiltzik: Why don't regulators stop Elon Musk from breaking the law?

Michael Hiltzik, Los Angeles Times on

Published in Business News

Musk has been enormously successful at creating the impression that everything he does is for the greater good of humanity, whether it's building the market for electric vehicles or finding a way to transfer human society to Mars.

If this were indisputably true, it might warrant giving him a little legal leeway, but by no means the broad indulgence that officials have allowed him.

Among the adversaries that Musk has browbeaten, count the board of Twitter. The board responded to Musk's disclosure of a 9.2% stake in April by reaching an agreement for him to take a board seat. He then refused the board seat and issued an offer to take over the company for $54.20 a share. The board quickly agreed.

But now Musk is acting as though he wants to bail out on the deal, leaving the Twitter board with few options: They could accept the $1 billion breakup fee written into the takeover contract, or try to force him to complete the deal on the agreed-upon terms.

Neither option would make the board look smart or even professional. That's part of Musk's secret — he gives his adversaries the impression that they have no choice but to give him what he wants.

Musk isn't the first entrepreneur, high-tech or otherwise, to act as though traditional rules and regulations don't apply to him.


Uber co-founder and former Chief Executive Travis Kalanick polished the technique to a high luster: When local officials tried to regulate or block his ride-hailing company's entry into their markets, he browbeat them with the accusation that they were standing in the way of a revolution that would bring cheap and reliable transportation to the people.

Often, the regulators backed down. In California, the Public Utilities Commission carved out a regulatory exception for Uber and Lyft, blocking local initiatives aimed at equalizing ride-hailing regulations with those of taxis, the drivers of which were generally subject to more stringent background checks and vehicle inspections than ride-hailing drivers.

The idea that the PUC could step in and oversee the companies' activities was nothing but a mirage. As former PUC President Michael Picker eventually acknowledged, ride-hail regulation was not "something we can do effectively."

As for the ostensibly indisputable benefits and virtues of the ride-hailing revolution, they're also highly illusory. Studies have found that when Uber and Lyft enter a market, their fleets are more polluting than autos on average; contribute to more traffic congestion, particularly in the central cities; undermine public transit systems; and devastate the local taxi industry.


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