Hacker News Reader

Comment by itsoktocry | Hacker News Reader

>He is asking for proof that spam and fake accounts are less than 5% of total users.

Considering he said this was a big reason for his purchase, you'd think the world's smartest man would have had his team do this due diligence?

Instead, he mad an offer on a whim and put the deal together in a couple days. Brilliant.

View on HN

> Considering he said this was a big reason for his purchase, you'd think the world's smartest man would have had his team do this due diligence?

How would he get access to that data beforehand?

… the company would provide it to their legal team under NDA since it’s material to the deal. Ya know, as part of due diligence. There’s a whole lucrative branch of corporate law (mergers and acquisitions) for this.

Isn't this what's happening right now?

No Elon waved due diligence and bought it as is.

it's what he should have done before signing the deal he signed

> the world's smartest man

Did you mean the richest? Or do you actually think he's the smartest?

I think it’s sarcasm

Aah thanks, I'm not the best at getting sarcasm lol

> Considering he said this was a big reason for his purchase

I guess that would be a function of how much Twitter had told everyone their percentage was. Improving Twitter’s 5% bot problem is different than improving it with 30% bots.

But, since we consider him the smartest man, he might actually be playing a game. He knew they would lie, or were for years, and put a clause in the contract about it and they fell into a trap.

Not sure who gets to pay the contract breakup $1B fee? It may be Twitter. That would be embarrassing. But then, they shouldn’t have been telling lies, if it turns out to be the case.

> and put a clause in the contract about it and they fell into a trap.

What a genius ... oh shit, there isnt a secret bot trap in the contract.

https://www.sec.gov/Archives/edgar/data/0001418091/000119312...

Let me guess, just searched for the word "bot" and didn't find it. Well, I guess they are off the hook then...

Extraordinary claims require extraordinary evidence. GP made a decent effort to try to find this clause, couldn't, and you're effectively claiming they're full of it because it's gotta be in there.

A more hacker-newsy way to approach this would be to either find the clause yourself (and earn your upvotes the hard way), or perhaps admit your baseless speculation was, indeed, baseless.

It's rather silly to assume the clause would be written that narrowly. I replied above with what would likely be a relevant clause, which covers any and all information supplied by Twitter.

> Extraordinary claims require extraordinary evidence.

Of course. But what's so extraordinary that a contract would have a clause about misrepresentation or providing false information in a purchase deal like this.

> A more hacker-newsy way to approach this would be to either find the clause yourself (and earn your upvotes the hard way).

Thanks, been here for 10+ years I am ok not harvesting upvotes. Maybe some other time. But ok, it's Friday, let's do a bit more search than just Ctrl+F "bot".

Twitter's 10-Q https://www.sec.gov/ix?doc=/Archives/edgar/data/1418091/0001...

(From page 5)

EX-2.1 AGREEMENT AND PLAN OF MERGER https://www.sec.gov/Archives/edgar/data/0001418091/000119312...

> [...] none of the Company SEC Documents at the time it was filed [...] contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, or are to be made, not misleading.

(Section 4.6.a)

> The consolidated financial statements (including all related notes) of the Company included in the Company SEC Documents fairly present in all material respects the consolidated financial position of the Company [...]

(Section 4.6.b)

> None of the information supplied or to be supplied by or on behalf of the Company or any of its Subsidiaries expressly for inclusion or incorporation by reference in the proxy statement relating to the matters to be submitted to the Company’s stockholders [...] [shall] contain any untrue statement of material fact or omit to state any material fact required to be stated therein ...

(Section 4.7)

> GP made a decent effort to try to find this clause

If Ctrl+F "bot" counts for a "decent effort", I don't know, I guess...

You can't just quote a part of a contract and specifically cut out the legal caveats that exists to avoid the risk of being considered material misrepresentation. The correct quote is:

> We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our mDAU during the quarter. The false or spam accounts for a period represents the average of false or spam accounts in the samples during each monthly analysis period during the quarter.

> In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated

It may hinge on them saying they "applied significant judgment" vs due diligence showing they knew they had much higher numbers. There is a difference to "we did our best to calculate it but we could have made a mistake" vs "we calculated, got a high number but purposefully put in a low number".

Elon didn't do any non-public due diligence of Twitter

Exactly. I think he may be reconsidering that, though it's probably too late. The whole thing is very baffling.

I actually think it's probably pretty simple underneath the facade - Musk offered to buy Twitter for a lot of money. The market tanked and Musk doesn't want to pay that price any more. He thinks he can strong-arm Twitter and either not go through with the purchase or force them to accept a lower price. The law does not support this, but Musk has a history of being unbothered by the law and there are examples (not Musk) where this tactic has worked to reduce the purchase price by hundreds of millions of dollars.

Everything else is just window dressing.

You're just wrong. This is what happens when you try to play lawyer on the internet.

You can crtl-f for "Specific Performance" and "Material Adverse Effect" in this thread for explanations of exactly how and why you're wrong

> You can crtl-f for "Specific Performance" and "Material Adverse Effect" in this thread for explanations of exactly how and why you're wrong

I assume you meant ctrl-f? So I did and still don't see it. Mind explaining a bit?

> You're just wrong. This is what happens when you try to play lawyer on the internet.

Worse things have happened, surely. Not trying to find any supporting statements, then there are replies of "You didn't even try". Then providing some support and it's "how dare you, you're not even a lawyer".

Of course they didn't write it that specifically. That would be extraordinarily silly. One writes the clause to be as general as possible, while also covering the primary concern. Witness, page 25:

> Section 4.7 Information Supplied. None of the information supplied or to be supplied by or on behalf of the Company or any of its Subsidiaries expressly for inclusion or incorporation by reference in the proxy statement relating to the matters to be submitted to the Company’s stockholders at the Company Stockholders’ Meeting (such proxy statement and any amendments or supplements thereto, the “Proxy Statement”) shall, at the time the Proxy Statement is first mailed to the Company’s stockholders and at the time of the Company Stockholders’ Meeting to be held in connection with the Merger, contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading at such applicable time, except that no representation or warranty is made by the Company with respect to statements made therein based on information supplied, or required to be supplied, by Parent or its Representatives in writing expressly for inclusion therein. The Proxy Statement will comply as to form in all material respects with the provisions of the Securities Act and the Exchange Act, and the rules and regulations promulgated thereunder.

What percentage spam accounts would qualify as untrue statement of material fact?

Any percentage that was not calculated using a methodology? As HillRat said:

* As long as they used _a_ methodology,

* and that methodology spat out 5%,

* and there's no material information to indicate that anyone thought the methodology was inaccurate or otherwise wrong,

Then there's probably nothing actionable there.

The SEC filing clause (4.6(a)) is probably more germane than the proxy materials when it comes to bot calculations, and page 5 of the last Twitter 10-K covers their methodology. One can argue with their calculation method, but they're clear about how they're doing it and, as long as nothing comes to light documenting that they internally believe their bot rates to be higher than what their filing shows, they're in material compliance with the contract. There's no due-dil out for Musk in this, only a material misrepresentation penalty that Twitter is highly, highly unlikely to fall afoul of.

Oh I 100% agree with you on the chances that this means anything. There would have to be some evidence that they just made up a number, or invented a methodology that they knew would drastically undercount, or some-such. Just running a different methodology that returns a bigger number is not sufficient to break these clauses.

I don't think I am alone when I say I can't remotely fathom what the F Musk wants out of this whole "buy twitter" ordeal.

Do people really think this was all a game to snag a $1B fee, publicly cause havoc and possibly precipitate the sinking of Twitter? Is that really what the world's richest man wants to drop everything to work on?

Seems like A LOT to go through for someone who has several very absorbing day jobs: Tesla + SpaceX + the micronauts rocket-tube thing + neuralink + ???

Is this mania?

People also said Trump didn't really want to be president, so it wasn't going to happen. Don't underestimate what people say they're going to do. It's usually better to take them at their word unless you have evidence otherwise.

Definitely mania. And being surrounded by “yes men” and a legion of fans pushing you forward. Until it comes time to produce the $billions and suddenly everyone is doing their due diligence and likes/retweets aren’t worth a damn.

He also had the bad luck to do this at the same time the bottom fell out of tech and people started questioning whether buying TSLA shares at $1000 was the best marginal use of their money.

Also interest rates going up significantly, making financing much more expensive.

Unless the contract had a clause requiring this to be demonstrated if requested. In which case it's a good way to get out of it at to he last moment: activate the clause and put Twitter in trouble if they disprove their own statements.

Noob question, but wouldn't it be fraud if the number is higher than they're saying?

The contract explicitly states the number could be much higher than their estimate, so although IANAL, I doubt it.

Fraud isn't about the contract, it's about if someone lies to obtain money. Saying the stats are x when they're y because x sounds better seems like standard fraud to me.

No. It would only be fraud if they knew the methodology was likely to be extremely flawed and there are receipts with executives saying “let’s choose this because of X nefarious reason.”

Twitter being wrong about the number, or using a methodology Elon doesn’t like, isn’t enough.

he knows it’s higher than 5%, everyone does

> would have had his team do this due diligence?

What makes you think he didn't? So his team has a number, their team has a number.

The numbers diverge wildly.

> Instead, he mad an offer on a whim and put the deal together in a couple days. Brilliant.

Do you think smart people don't make decisions quickly?

That is interesting.

Reply on news.ycombinator.com