Elon Musk has decided not to buy Twitter and now the social media platform is suing him. What is he up to and what can Twitter do about it?
Chris Anderson: “So Elon, a few hours ago you made an offer to buy Twitter. Why?
[Laughter]
Elon Musk: “How do you know?”
[Laughter]
Elon Musk talks to the head of TED on 14th April 2022
Back in April the world’s richest man began trying to buy Twitter.
Elon Musk said he thought it was crucial to the functioning of democracy, serving as a “de-facto town square”.
And Twitter thought he was serious.
He’d already bought a majority shareholding in the company, and accepted an invite to join the board.
But the planned deal caused controversy.
Some were concerned that Elon Musk would pursue a free speech policy that would welcome all kinds of bigotry and hatred on Twitter.
And as the negotiations developed, Elon Musk raised his own concerns. That the platform he’d agreed to buy was rife with spam accounts and bots.
Now, 85 days after news of the deal first broke, Elon Musk has pulled out… leaving Twitter in disarray.
How did it come to this?
And what on earth prompted Elon Musk to send a poop emoji to Twitter’s chief executive?
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“There is a filing that includes a letter from Elon Musk’s attorney saying that Twitter has not provided the information that he has been requesting now for nearly two months and that is part of the reason why he is terminating this deal.”
CNBC
At the heart of the issue is corporate transparency.
Elon Musk thinks there are more bots and spam accounts on Twitter than Twitter does.
“A top priority I would have is eliminating the spam and scam bot, and the bot armies that are on Twitter.”
Elon Musk talks to the head of TED on 14th April 2022
According to Twitter’s own calculations, bots make up less than 5 per cent of active daily users, but Elon Musk suspected that figure was much higher.
He’s said he’s pausing the takeover until he can find out exactly how many of Twitter’s accounts are fake.
The problem is, Elon Musk didn’t read the special report on bots that Twitter sent him… and didn’t meet with the team that does the measuring.
Twitter’s chief executive Parag Agrawal posted that the process for estimating the number of spam accounts couldn’t be made public. Elon Musk responded with a poop emoji.
Afterwards, he posed a valid question: how can advertisers know what they are getting for their money on Twitter, if the number of spam accounts is non-public information?
Twitter responded by bringing in its lawyers to try to force him to follow through with the acquisition.
So what’s going on?
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“Melissa, Twitter is suing Elon Musk in a Delaware court for violating the 44 billion dollar merger agreement he made with the company.”
CNBC
Some think Elon Musk is haggling.
In the big tech bazaar, the original price of $54.20 per share looks pretty undesirable after the slump in Twitter’s valuation in recent months.
The problem of fake accounts and bot farms has damaged Twitter’s image, the uncertainty around the deal has driven a lot of employees out, and Elon Musk might be seeking a better price for a damaged business.
He might also genuinely want to walk away from the deal, using the bots as an excuse, in which case he’d likely have to pay a $1 billion break-up fee.
And an unspecified amount of climb-down fees to creditors and lawyers.
Or Elon Musk may just want to see the spam account data that he thinks Twitter’s withheld, and then carry on with the deal as planned if he’s satisfied.
“Just looking through the filing here, erm, it says quote, “Musk apparently believes that he, unlike every other party subject to Delaware contract law, is free to change his mind, trash the company, disrupt its operations, destroy stockholder value and walk away.”
CNBC
What Twitter wants is clear…
It insists that Elon Musk has violated the acquisition agreement and ultimately it wants to force him to buy the company.
The court could reach a decision as early as mid-September.
But in the meantime, Twitter faces more attrition, amongst its staff, and of its reputation.
And Elon Musk will keep being Elon Musk… when the Twitter lawsuit was announced he posted an image of Chuck Norris sitting at a chessboard with the caption: “Chuckmate”.
Today’s episode was written by Luke Gbedemah and mixed by Lewis Vickers.
