Musk SEC Filing
sec.gov
sec.gov
How many Twitter accounts were created in automated fashion, but designed to look authentic, and haven't yet been removed by anti-spam measures? That could conceivably be around 5% of active accounts if Twitter is doing its job.
If you wanted to inflate that number you could include account takeovers, which are a little harder to measure (created by a real person, but taken over by a botnet using hacked/easy-to-guess credentials).
And if you want to inflate the number further, don't just count account numbers — instead look at the % of total activity (likes, retweets, follows) that those accounts represent. You can reasonably expect that number to be higher, given how many dormant accounts Twitter has.
Elon has alleged that his followers include lots of bots. That's not necessarily surprising as "follow Elon's account" is the sort of thing a bot developer might program in to look authentic.
You would measure it in terms of MAU - not total created accounts - right?
Sometimes bot accounts will do organic-looking behaviour for at least a month to evade automatic detection, before doing explicit bot-like things (following particular accounts en-masse).
Any data you do provide will be based on some sort of analysis and/or sampling.
It's the data being requested that's a privacy violation, not the place where that data is viewed.
It is 100% legal and ok for them to look at every piece of information they have about every account and analyze it for bot activity, or allow Elon's team to look at the same data.
Secondly, I'm specifically responding to GP's assertion that letting people access the databases on-prem would make any privacy concerns go away. I'm expressing no opinions on the matter of the first place of if those privacy concerns are warranted.
Thirdly, at this point, I would personally be highly skeptical that an NDA would actually provide any meaningful protection when Musk is the one signing it. His recent actions indicate to me a very high disregard for any contractual obligations he enters on, in the apparent belief that he will face zero material repercussions for anything he violates.
The comment you were referring to says "because that data includes a ton of PII."
But PII isn't a concern here. Unless we're talking about sharing usernames and passwords, there aren't really any protections in Twitter's TOS for the information you willingly provide to them.
PII doesn’t just mean usernames and passwords (which the OP seemed to suggest is the case). It’s anything — or any combination — of data that could be associated with someone and identify them.
I own my data, Twitter is merely handling it. Stop with this presumption that data is Twitter's. Even California has similar provisions on data privacy.
Yes they can? Why can't they? Citation needed. Not sure where you get this idea from.
I don’t think automatic analysis with a 5% false positive rate and materially significant false negative rate is that easy even when the subject doesn’t have an incentive to be subversive — last time I downloaded my Twitter data, turned out they incorrectly thought I understood Indonesian(!), and incorrectly thought my interests included beer, blues, college basketball, cricket, DJs, dance, guitar, hip hop and rap, horror, ice hockey, Japan, luxury, men’s pants, men’s shoes, metal, motorcycles, NFL football, offroad vehicles, olympics, pop, “power and motorcycles” (apparently that’s a single category), rock, skateboarding, South America, sporting goods, talk radio, and wine.
Further, Musk is a hypocrite. There are proven bots, potentially even directly sponsored or controlled by Musk or Tesla, that are pro-Tesla and have been shown to correlate with Tesla’s stock price and active correlated with negative Tesla sentiment on Twitter.
This whole thing is a circus orchestrated by him to either make money on his stock purchase or seed discontent on Twitter through his free speech and bot rhetoric or both.
Is it not a conspiracy theory if only one person, "him," is doing it?
The merger announcement [1]. Consummation of the Merger is subject to approval by Twitter's shareholders and the U.S. government. No boilerplate diligence clause.
That "the acquisition proposal was no longer subject to the completion of financing and business due diligence" was also cited by Twitter in its proxy statement [2].
[1] https://www.sec.gov/Archives/edgar/data/1418091/000119312522...
[2] https://d18rn0p25nwr6d.cloudfront.net/CIK-0001418091/ee07b45...
(b) (i) each of the representations and warranties of the Company contained in this Agreement (except for the representations and warranties contained in Section 4.2(a) and Section 4.2(b)), without giving effect to any materiality or “Company Material Adverse Effect” qualifications therein, shall be true and correct as of the Closing Date
[1] https://www.gibsondunn.com/wp-content/uploads/2019/06/Becker...
Twitter is obligated to provide, information and data for, inter alia, “any reasonable business purpose related to the consummation of the transaction” (Section 6.4). Twitter must also provide reasonable cooperation in connection with Mr. Musk’s efforts to secure the debt financing necessary to consummate the transaction, including by providing information “reasonably requested” by Mr. Musk (Section 6.11). Mr. Musk’s requests for user data not only satisfies both criteria, but also meets even Twitter’s narrowed interpretation of the merger agreement, as this information is necessary to facilitate the closing of the transaction.
The proxy statement sent out with the merger agreement was signed off on by Musks's lawyers. Musk waived his diligence rights. This isn't a fact anyone informed about this is debating. Elon's legal team aren't idiots; they aren't arguing the diligence rights they waived are being denied or that an MAE occurred--both are predictably losing arguments.
Instead, he's arguing that debt-finance facilitation line. The one you quote. That's not a diligence out. Nothing in the data would give him an excuse to kill the deal. But if he can get a lender to say they would have lent had they been given those data, and Twitter won't hand it over, he has an out. Again, not on the basis of the content of the data, but its provisioning per se.
There's a deal to be worked out. Elon is one of Twitter's biggest users. That's a boon and a curse for both sides.
I did some research and found this statement from Twitter’s Schedule 14A proxy statement filed on May, 17, 2022:
> Mr. Musk also disclosed that his acquisition proposal was no longer subject to the completion of financing and business due diligence.
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001418091/ee07b45...
https://investor.twitterinc.com/financial-information/sec-fi...
"Hey, I can solve FSD. And I could have solved the Twitter bot problem, but apparently the latter is just too big a hurdle if there's more than 5% of bots."
It makes zero sense.
It seems like people are working really hard not to understand this situation.
Now: "Woah, there's too many bots on Twitter. I don't want it."
Because all these numbers come from their SEC filings, and specify caveats, etc.
So that's a pretty serious allegation.
However Twitter's board seems to be a bunch of uninterested pushovers who don't care about the company or the product, so they'll probably just give Musk what he wants to make the PR headache go away.
What he's doing is pretty transparent; based on my Monday morning quarterback view of this situation, he simply believes that the price he agreed to for the company is too high given the state of the market.
His letter isn't made in good faith and if this gets litigated, I bet the Delaware courts will relish making an example of him.
The SEC is a civil agency. Court orders are super different. The former can't put anyone in jail. The latter can. They can also, worst case, transfer his assets into receivership and have a court-administered trustee perform from there.
However, given the dickishness that he has already displayed, I quite like the (completely unrealistic) idea of the penalty being that Twitter acquires ownership of Tesla instead, whereupon they kick Musk out as CEO.
I truly respect Tesla engineering and wish them no ill will but what a hilarious outcome that would be.
When there’s a defect in other cars that cause deaths the cars are recalled. Tesla hides behind a “beta” smokescreen to excuse their defects, which they never really intend to fix (if they did, they wouldn’t have had two consecutive decapitations due to the negligent design of product)
As a robotics engineer myself, it makes my brain bleed to watch Teslas operate autonomously (because watching them operate reveals how terribly they are engineered), and it makes me furious to think that these things are allowed to operate on public roads around people.
> they challenge conventional norms about how a specific part or process is typically done ... introducing so many cool things that we would not typically see in the car industry.
Tesla can keep whatever changes they would like to make to the car industry, imo. Challenging norms is sometimes okay but other times not. For example, when the norm is "we shouldn't beta-test autonomous machines on the general public because it is dangerous", maybe we should leave that one alone.
Tesla, especially Musk, is responsible for irreparably damaging the culture of safety that was created around autonomous cars circa 2007 at the DARPA Urban Challenge. Back then safety was a top concern -- beta-quality autonomous cars were equipped with flashing lights, had safety kill switches, were operated by trained technicians, and everyone in the vicinity were aware of their existence and more importantly consented to be a part of the test.
Today, thanks to Tesla, buggy driverless cars are operating covertly on public roads without the public's consent, by clueless people without any training. What an improvement, and definitely something we all asked for!
This has lead to people dying, as everyone has predicted. But does that deter Tesla? Of course not. They continue undeterred and even doubled down. If your friend loses their head or gets run over by a Tesla, will you thank Tesla's engineers for their high-quality products? Will you thank Elon Musk for his "move fast and break things" attitude when it comes to 2 ton death machines rolling around in your town?
> Plus the cross pollination between SpaceX and Tesla is introducing so many cool things that we would not typically see in the car industry.
This reminds me a of a story I heard of SpaceX engineers having to be brought in to Tesla to teach them the proper way to use pointers. Probably not the kind of cross-pollination you were thinking of. I guess that's a testament to Tesla's engineering prowess.
Same dumb attitude I witnessed when I was deep within the skeptic community during 2016-2019(/r/RealTesla and the major players on Twitter). Tesla's engineering has proven themselves time and time again but the skeptic community has devolved into nothing but conspiracy theory nonsense with the explicit goal to bash everything that Tesla has done just because it is a MuskCo. They are not capable of objectively looking at the organization as a whole and all the amazing things going on over there but instead let their bias focus them on nothing but the failures.
There is no reasoning with the skeptic community and as a result, major innovations will be missed and will instead creep up as surprises when they inevitably have longer term impacts on the automotive industry.
> focus them on nothing but the failures.
To be clear, the failures I'm speaking of here are deaths due to Tesla's negligent engineering. Actually I take that back. The real failure here of Tesla's engineering is not the first decapitation but the second one. That's a process problem, and is indicative of rot in the entire corporation (starting at the top; Musk's ego is the whole reason Teslas self-driving group is kneecapped). You want to look at the corporation as a whole? Start with the fact that their product killed someone, and they didn't fix the failure mode which resulted in that death, which then resulted in a second death in the same way. And they still haven't fixed it, so it's only a matter of time until the next decapitation. What kind of sick organization lets this kind of problem persist? I'll tell you: one where it's more important to be right (we don't need no stinking LIDAR!) than safe (LIDAR are safer than what Tesla is using). That's an ego problem right there.
Anyway, I see you didn't address any of my points except to say that there's no reasoning behind my words and my attitude is "dumb". So unless you want to respond to an actual point instead of just asserting without fact that Tesla is so amazing, so innovative, and so proven (I mean, yeah, they are certainly proving themselves, but maybe they are building the wrong reputation...), then I think we're done here.
I guess it comes down to this Frank Wilhoit quote:
"Conservatism consists of exactly one proposition, to wit: There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect."
https://crookedtimber.org/2018/03/21/liberals-against-progre...
Materiality with respect to MAE/MAC clauses is way more demanding.
The first (and to my understanding, only) time Delaware found an MAE was in 2017. That was after a material fall in revenue alongside ignored (and hidden) whistleblower complaints and the company scaling back basically all QA spending right after signing the merger agreement [1]. So 33%+ drop in revenue and 300% drop in operating income + fraud + negligence rivaling sabotage.
[1] https://www.gibsondunn.com/wp-content/uploads/2019/06/Becker...
The letter doesn't allege materiality about user counts. It alleges that Twitter's failure to provide certain information is a "material breach" (term of art) of the covenant for Twitter to provide information during the period between signing and closing.
There's nothing about user counts at all in the agreement. Musk is hanging his hat on a tortured, 5-step argument:
1. Twitter represented in the Merger Agreement that their public filings with the SEC were materially accurate and not misleading. Standard enough, and no reason Twitter can't make this rep since if they filed false information with the SEC, the SEC would come down on them.
2. Musk alleges Twitter's disclosure about user counts in their public filings may have been wrong, so they might have filed false information with the SEC. (Why he didn't verify these public claims before signing the agreement is the smoking gun that this is all a pretext.)
3. He's purporting to request information from Twitter that would help him verify those allegedly false claims with the SEC.
4. Twitter is allegedly not providing this requested information.
5. That failure to provide information is a material breach.
Musk could have negotiated for much better protections than he got, but he ended up signing a very seller-friendly agreement because he was so sanguine to do the deal. In my opinion, he's resorting to these contortions because he doesn't have any outs here.
Why is a big shoe law firm offering up their name to sign it then? Don't attorneys have a duty to only raise good faith arguments and not mislead others with claims that have no reasonable basis of holding up. Not like the big name lawyers on the other side will actually be mislead, but still.
There is a possibility that Musk's tactic will work here. I just think it's unlikely because the Delaware courts will see this for what it is: a pretext for buyer's remorse.
Because of this (small) possibility of success, there isn't any reason why Mike & Skadden can't ethically represent Musk here.
Four months ago, Musk wanted to destroy Twitter by starting a competitor. Two months ago he wanted to buy it, now he wants to back out of the deal.
Seems to me a dance is taking place.
Here is Elon Musk responding to that thread with a poop emoji: https://twitter.com/elonmusk/status/1526246899606601730
The problem isn't that no one has bridged this divide, it's that Elon Musk is acting in bad faith to derail the deal that he fucked up by signing. There's no point talking about spam accounts because that's literally not the issue. The issue is that Musk signed a deal valuing Twitter at a premium at the peak of the market with no real escape clauses, and since there are no legitimate ways for him to renegotiate he needs to come up with a pretense.
Money has amazing perception bending properties.
It's hard to have 100% confidence in Twitter's ability to classify bots accurately for mDAU purposes, given their terrible accuracy for anti-spam purposes. It's a slightly different problem (because ads can be counted after the fact while anti-spam has to be immediate) but it raises enough doubt about the mDAU numbers that I'd want to see more data.
Also, when buying public companies, you have to be extremely careful not to let word get out before it's publicly announced. It's easy to imagine a Twitter employee tasked with sending logs to E.M. Acquisition Corp leaking this particular bombshell to the press.
So it's normal to make an acquisition bid based only on their publicly reported numbers. The acquisition contract provides for a due-diligence phase that happens between when the deal is announced and when it's final (ie, now) where the buyer can verify that there aren't material misrepresentations in the public filings. If there are, they can back out.
Everything about this process is normal, except the hyperventilating press.
It would have been reasonable to dig into during due diligence, but Musk waived due diligence.
- bots, as you say
- "legit" bots e.g. customer service
- inactive accounts
- accounts that use some alternate client (tweetdeck or whatever)
- API users
- possibly web accounts using ad block (depending on whether twitter measures literal ad views vs. "users logging in with a client that could show ads"
- ...
> Elon could be right that over half of Twitter's users are fake, and Twitter could be right that only 5% of the MDAUs are fake. While both could be right in their assertions, Elon is in the wrong in the big picture. All of this has been disclosed publicly and Twitter never claims that only 5% of users are bots, just 5% of monetizable users. Elon's claims of malfeasance or obfuscation are wrong.
That's exactly my conclusion as well
Which is a real shame because I’d have loved to work for Space X but what a way to put people off.
That's not true.
They were already working on a proprietary motor that would go on to become the basis of the Tesla motor.
They got Series A funding from Musk and other sources (though Musk was the largest funder) at the start of 2004.
He also wasn't really involved in day to day ops, but provided "vision" for the Roadster from 2007 onwards - that's when he became more involved.
https://www.consumerreports.org/cars/tesla/model-3/2022/reli...
Consumer Reports states that Tesla’s Model 3 has average reliability. The Model Y still has body hardware issues with the tailgate and door alignment, paint defects, and multiple other problems. The Model X and Model S have body hardware, climate system, and in-car electronics problems. All three models are well below average.
https://insideevs.com/news/549130/consumerreports-tesla-reli...
Tesla cars are quite reliable but their unreliability is over reported giving the perception of a higher unreliability than is actually the case.
When is FSD coming? According to Musk, he's said every year for the last seven years running that it is coming "this year" or "months away", and the only "caveat" he's ever mentioned is "subject to regulatory approval", and that is clearly factually incorrect. FSD is not, and certainly was not "complete but for legal approvals".
Unless you have some other explanation for what "You will be able to drive coast to coast, with zero driver interventions, this year".
At some point repeatedly "aiming big" becomes a caricature, and then eventually seen for the BS/hype it is.
I disagree. There are different incentives at play. I'll list the few I see.
When does FSD come? You can't say stuff like "10 years out". That'd be a hard sell in academia and an even harder sell in business. Moreover, Tesla is trying to move as fast as possible. The other issue is that they have to give a deadline estimate. As we all know, the business world cannot operate without any deadline estimates. So Elon gives them. If it sounds vaguely familiar to software engineering that's because it's the same misaligned incentive at play here, but then at a larger scale.
Also, he aimed big, and some of those big aims actually became reality. Isn't it the case with R&D and innovation that you have to fail a lot? It isn't easy.
So now we're in a situation where there are people that demand: whatever Tesla decides to innovate on must be a success and accurately estimated time-wise. No organization in the world has ever been able to do that, so to expect that is a fool's errand, IMO.
Elon constantly says "it's months away", "it's this year", "no, really, this year". Hell he just recently pushed a date back from June to September because "we might be able to announce something".
Having seen the issues with FSD versions dropping today, no-one can seriously think that some September announcement is going to be a "solution".
I get what you're saying. And it's not about being "aspirational". It's repeatedly, to the point of eye-rolling, over-promising, and underdelivering.
Space X is good place to work for if you’re willing to put 80h per week for below average pay, while working for wealthiest person in the world. Cool place to possibly jump start your career in the industry, but not a great place to be for any significant amount of time.
If you really would like to write space-bound code, I would suggest reaching out to the grad students directly. Nearly all space science programs have dozens of students currently working on instruments or platforms that will be going into space in the next few years.
To get you started, here's the faculty page for ASU: https://sese.asu.edu/people/faculty You can chose any other university any where on the planet too.
Look through some of the labs there. Find a project you may like to work with. Contact the grad students on the PI's homepage directly. You do not need to talk to the professor beforehand. I'll repeat, there is no level of politeness that says you need to talk to the professor beforehand; talking to the grad students directly is perfectly acceptable. See if the grad student needs a hand and what with.
I will warn you, they are scientists that begrudgingly code, they are not coders. Their code is downright cringe in it's simplicity. That's because they are scientists first. Do not try to introduce complex concepts like git to them.
I would really really encourage you to reach out and lend a hand, they need it.
Disclaimer: I'm the vice-chair of the organization, and I might be biased.
That's pretty much most of the world today, every wants to post pictures on social media for likes, appreciation, comments etc.
>>his shit posting on Twitter,
Well again the same thing, we are just in these times where everyone wants to voice their opinion.
>>his backwards attitude to remote work
Well you can't make cars at your home, nor can you make rocket/components. Kind of makes sense that you need to be there at the plant.
> Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement. This is a clear material breach of Twitter’s obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.
My guess is the intention is to delay the transaction for some reason.
- Because Twitters stock price dipped, he's trying to renegotiate.
- This whole thing wasn't a good faith bid to begin with, and Twitter should insist he pays the $1B exit clause.
Ultimately if he exits without paying this has done Twitter (and their stockholders) harm without any benefit, and it almost feels like a stunt to distract from unrelated controversy surrounding Musk.
It would be nice to see this table turn for once; the 1% shouldn't always be able to have their cake and eat it too. Hopefully this bankrupts Musk in a stark turn of sweet, sweet karma deliverance.
This man told 110,000 of his employees to return to the office or find another job, during a still-surging pandemic. This is immoral and reckless from any angle.
If his net worth is reduced, it will reduce the impact of his actions on people and the environment.
We all share this planet. It is not a free-for-all stomping grounds for the highest paid capitalists.
I don’t know where you live or what goes on around you. But people are probably not as evil or greedy as you think.
Though if you believe the headlines, everybody probably should be hanged, and the planet would be better off without all of us.
It’s almost funny that this philosophy sells as well as it does. People rather will the “nothing” than give up willing, said Nietzsche. Like the kids in kindergarten rather destroying the toy than letting the other have it.
I believe it’s not greed we need to look out for. It’s envy. The ability to not waste your time focusing on things you hate, and to rather apply your intelligence and your humanness where it mashes a difference, and does good for others.
Though that’s a lot more difficult than passing judgement. Especially when there is an entire industry supplying you with bite sized pieces that allow you to pass judgment, around the world, across social boundaries, and from the comfort of your bathroom even. Make you feel all special and important... while they FEAST on your SOUL.
Resentment for the wealthy/elite is not a new concept, nor is it being "fed" to anyone with half a brain. [0]
I am a mild to moderate anti-capitalist; some may mischaracterize this as envy, greed, or hate.
It's important to point out flaws (and by association, pass judgement) in people and systems; that is how we make them better!
But isn't what you describe precisely what Musk did himself? He passed judgement on companies like GM, for instance when they killed the EV1. But he did one step further, and actually started his own company. One that works according to those rules he thinks make more sense.
I mean, even if you disagree with the rules he has come up with... wouldn't you at least have to respect that he did something about it? Isn't that, in a sense, an encouragement for your own values, also? Because it shows you that you, too, can make a difference? And that, even if you don't do it, people with ideas generally do have a chance of rising to the top, where their ideas can have an impact?
If we were talking about some dude who inherited all of his wealth and power from his parents, it would be a different thing.
[1] https://www.businessinsider.com/spacex-paid-250000-to-a-flig...
[2] https://www.newsweek.com/amber-heard-elon-musk-cara-deleving...
This would be a win for Elon. The problem is, it's not clear he has the right to back away and just pay a break-up fee. So the game emerges around how problematically he can position himself to be perceived to be, so Twitter prefers settling versus initiating what will likely be a multi-year court battle.
Twitter can further sue for "specific performance" and a court could, worst case for Musk, order that the deal go through as agreed.
Twitter stock price is down ~5% today after this. I think it’s pretty clear that Musk wants to walk from the Twitter deal because of the crash in Twitter’s stock price along with the issues he’s had finding funding for the deal. Twitter was required to provide information that will help close the deal, but claiming that Musk needs the algorithm that they use to determine if an account is spam frankly sounds like a bad excuse. Especially since countering spam bots was the reason he gave for doing a deal in the first place.
By the way, Hindenburg took out a short position against Twitter early in May, and their position was that the deal no longer made sense and would only go through at a lower price. https://hindenburgresearch.com/twitter/
Knowing the current practices to combat spam is highly relevant for improving upon it.
[1] https://www.forbes.com/sites/sergeiklebnikov/2022/04/29/elon...
[1]https://www.sec.gov/Archives/edgar/data/0001418091/000110465...
But here, I think, he is just trying to get out of the deal.
The high percentage of bots was exactly the reason why he wanted to buy Twitter in the first place. Because removing the bots would have been a relatively straight-forward way of increasing Twitter's valuation. IIRC he even tweeted about it.
[See my clarification below in a comment]
As much as Elon annoys me, it hard for me to say he does not know what he is doing. Even the WFH tweet was timed seemingly to lower the cost of severance payments from announced 10% workforce reduction.
(I just don't believe him regarding the bots. He always knew bots are a problem and likely under-reported.)
https://www.carscoops.com/2022/06/elon-musk-backtracks-on-te...
That said, if the message is confusing then either messenger does not know what he is doing or wants the confusion. In his case, I think the latter is more likely.
I think he's first and foremost an entrepreneur, and people overstate his engineering ability. In many cases, he shows total ignorance for the realities of engineering (see e.g: hyperloop). I suspect in those cases he is just surrounded by yes-men who don't want to tell him he's wrong.
In general, I get the impression that his success over the years has been contingent on the people he has surrounded himself with. That, in itself, is a skill, though, granted.
Engineer? What exactly has Musk ever engineered? You could maybe argue "designer" but even that may be generous.
A public persona that he's now diligently working to destroy?
There's also a possibility he'd just like to ensure the deal closes in a certain later time window. The composition of his personal wealth is complex and highly dependent on his equity holdings which have grown volatile recently.
There's also a possibility he'd just like to ensure the deal closes in a certain later time window. The composition of his personal wealth is complex and highly dependent on his equity holdings which have grown volatile recently.
You actually disagree with him, but just the fact that you admire him triggers people.
It's not like you can go digging around in their databases looking for bot accounts until you have official access.
EDIT: Clearly people feel strongly about this so feel free to look at the comments below for some great answers. I'd ask for you to read before commenting though. I keep getting emails rehashing similar things.
“Temporarily on hold” is not a thing. Elon Musk has signed a binding contract requiring him to buy Twitter. Legions of bankers and lawyers and Twitter employees and special-purpose-vehicle promoters are working to fulfill his legal obligation to get the deal closed. “The parties hereto will use their respective reasonable best efforts to consummate and make effective the transactions contemplated by this Agreement,” says the merger agreement. (Section 6.3(a).) He can’t just put that “on hold.” That contract does not allow Musk to walk away if it turns out that “spam/fake accounts” represent more than 5% of Twitter users. We discussed this last month, when Twitter admitted in a securities filing that it had (slightly) overestimated its daily active users for years. The merger agreement contains a provision that allows Musk to walk away if Twitter’s securities filings are wrong — and this 5% number is in its securities filings — but only if the inaccuracy would have a “Material Adverse Effect” on the company. (See Sections 4.6(a) and 7.2(b).) That is an incredibly high standard: Delaware courts have almost never found an MAE. An MAE has to be something that would “substantially threaten the overall earnings potential of the target in a durationally-significant manner,” the courts have said; there is a rule of thumb that an MAE requires a 40% decrease in long-term profitability. If it turned out that 6% or 20% or 50% of Twitter accounts are bots, that will be embarrassing and might even reduce Twitter’s future advertising revenue, but will it be an MAE? No. “Pending details supporting calculation” is not how this works. This disclosure — that “the average of false or spam accounts ... represented fewer than 5% of” Twitter’s monetizable daily active users — has been in Twitter’s securities filings for many years, always with a caveat that “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.” Musk had the opportunity to read these filings before offering to buy Twitter, and he had the opportunity to do due diligence on these numbers before signing the deal. (He declined.) He can’t now go to Twitter and say “actually now you need to prove that your user numbers are right.” If he wants to walk, he has to prove that they’re wrong, and also that they’re wrong in a way that has a material adverse effect on the business. Which he obviously can’t do.
Now if the board lied, in writing, in a 10K filing, it is a Very Big Deal(tm).
[1] From their 2022 10K: We define mDAU as people, organizations, or other accounts who logged in or were otherwise authenticated and accessed Twitter on any given day through twitter.com, Twitter applications that are able to show ads, or paid Twitter products, including subscriptions. Average mDAU for a period represents the number of mDAU on each day of such period divided by the number of days for such period. Changes in mDAU are a measure of changes in the size of our daily logged in or otherwise authenticated active total accounts. To calculate the year-over-year change in mDAU, we subtract the average mDAU for the three month sended in the previous year from the average mDAU for the same three months ended in the current year and divide the result by the average mDAU for the three months ended in the previous year. Additionally, our calculation of mDAU is not based on any standardized industry methodology and is not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. Similarly, our measures of mDAU growth and engagement may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology.
So let's talk about the legal leg to stand on part. From his 13d language (amendment #8, filed June 6th, which is public, but I read it on bloomberg and can't find the link to the gov site this second) it doesn't sound like he has an issue with the definition.
He wants to rerun the numbers and see for himself. He is asking for the underlying data. Twitter pushed back to say that is not in the scope of what was asked for (apparently, based on his letter).
Not taking sides because I was not in the negotiations and know nothing about what each side, indicated, what the legal contract says and so forth. Just saying, the issue is whether they should provide the data for him to run his own calculations.
That's easy to do though - his offer is unconditional. It's like offering a cash amount to buy a house while waiving inspections and all contingencies, but when it comes time to close, insisting your inspector can go into the basement and look at the foundation. You don't have that right, you made an unconditional offer.
The time for 'running his own calculations' was before he made an offer to buy the company. You might think; "Surely you can't expect him to buy a company when he doesn't know how many accounts are bots." Which is a fair point, but that's precisely why people rarely make unconditional outside bids for companies!
He's making a specious argument that the detail is needed to line up his financing, but to continue the homebuying analogy; After offering cash to buy the home without contingency, he's going back to the seller claiming that he's going to take out a personal loan from his friend and that friend wants to know about the state of the foundation but that only your inspector can satisfy him. Really not the sellers problem!
Let's just say I share your intuition about this hypothetical real estate transaction but I am not convinced that it is an appropriate simile. As I read it, his claim is that he didn't waive inspections but relief on the prior inspection report which he is beginning to question.
But whether even that is the right metaphor almost doesnt matter. I think we would have to be steeped in what the standards are in the industry to have a productive discussion.
This is where someone in HN says: I am an M&A lawyer for 30 years and there are four standards. The X v Y standard whereby the effect of the change has to be material but material is not defined, however...
(Matt Levine has, as always, my favorite elucidation)
https://twitter.com/nycsouthpaw/status/1533820324214611969
What Levine is referring to is that the deal is subject to Twitter not making any representations that amount to "material adverse effects" which is a very high standard that Twitter definitely hasn't broached -- but financing statements are often subject to detail that covers "all material respects" which is a much more broad standard that Elon could plausibly litigate.
It's deeply cynical on Elon's part - he knows what he signed and he knows what he got himself into - which is why he's doing this dumb dance to back out now. It might even work, but it's against the spirit and (IMO) the letter of the contract.
He's relying on section 6.4 to make his case that they need to provide him the bot detail - it's short and sweet:
https://www.sec.gov/Archives/edgar/data/1418091/000119312522...
But he's clearly going to use what they provide him to attempt to back out of the deal which is explicitly against the terms of that section.
"material adverse effects which is a very high standard that Twitter definitely has not broached"
I guess my question is how do we know -- from the outside -- that they definitely have not broached it? Elon seems to think the bots issue (roughly, that they miscalculate it) does broach the standard. Everyone I have read thinks seems not to think so and shares your view. But for a naive person on the outside, couldn't it be plausibly argued that this bot thing is a material breach?
I am in the awkward position of not knowing either party. I take each at their word, and the dispute seems pretty "sensible" to me.
The "material adverse effect" standard isn't that the bots would have a materially adverse effect on the deal or transaction, but that they'd have a materially adverse effect on Twitter's profitability for a long duration. Levine laid it out already;
> That is an incredibly high standard: Delaware courts have almost never found an MAE. An MAE has to be something that would “substantially threaten the overall earnings potential of the target in a durationally-significant manner,” the courts have said; there is a rule of thumb that an MAE requires a 40% decrease in long-term profitability. If it turned out that 6% or 20% or 50% of Twitter accounts are bots, that will be embarrassing and might even reduce Twitter’s future advertising revenue, but will it be an MAE? No. “Pending details supporting calculation” is not how this works. This disclosure — that “the average of false or spam accounts ... represented fewer than 5% of” Twitter’s monetizable daily active users — has been in Twitter’s securities filings for many years, always with a caveat that “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.” Musk had the opportunity to read these filings before offering to buy Twitter, and he had the opportunity to do due diligence on these numbers before signing the deal. (He declined.) He can’t now go to Twitter and say “actually now you need to prove that your user numbers are right.” If he wants to walk, he has to prove that they’re wrong, and also that they’re wrong in a way that has a material adverse effect on the business. Which he obviously can’t do.
Advertisers don't really care about how many bots are on Twitter - at least not in the way you might naively expect them to care. Of course they want their ads to be shown to humans, but over a long timeline, it doesn't actually matter what percentage of their views are to humans or bots - only the performance of those ads. If you spend $1 on 100 ads and it leads to $1.25 in sales, you don't really care if it was shown to 95 people and 5 bots, or 90 people and 10 bots, or 50 people and 50 bots. There was a positive ROI for your campaign, so you're going to do another one. You'd prefer it was shown to 100 people and 0 bots, but everyone in the business knows the bot problem is an extremely difficult one to solve, so you just weigh relative performance and adjust the price you're willing to pay while maintaining that ROI.
It's silly for Musk to claim that the deal can't go through because he needs to know how many bots are present to determine potential advertising revenue because he knows how much advertising revenue they have today, regardless of the specific percentage of bots -- if Twitter's wrong about the way they calculate bots, that actually gives the future "bot-free" platform a higher revenue ceiling because then all of the advertisers campaigns would get substantially more performant.
However, I think your pointing out that whatever the bot count is, as long as the ROI is there the advertiser will continue is a good point. It seems obvious now, but I was assuming that the bot count would be a big deal to the advertiser.
You could turn this point into a twitter thread.
I insist on buying the house. The owner is reluctant to agree. They delay. I continue to insist that I purchase the house immediately. The owner says, hey let's stop and think about this, let's do due diligence and inspections, let's take our time. I say screw you, there is no due diligence allowed, there is no house inspections allowed, you must accept my offer now. NOW. I insist that the house owner has a legal fiduciary responsibility to their family to sell the house, because my offer is above the assessed public value of the house. This house must be sold to me!
They give in to pressure and accept the sale. I sign all the contracts, I waive all the inspections.
"What, the house has termites? What a surprise! I want my money back."
Elon Musk the Termite master ... I LOLd
"I can solve Twitter's bot problem!"
"Oh wait, they have 10%* bots, not 5% bots? Oohh, that's a bridge too far, too hard."
*Arbitrary number chosen
Yes, but you wouldn't put yourself in his position. This is an entirely unforced error on his part.
Lets suppose it is not only 5%.
Maybe 20%.
Would it be fair to buy a company that 20% of its "customers" are fake?
He is forcing twitter to be honest or to at least audit it.
> If our twitter bid succeeds, we will defeat the spam bots or die trying!
> And authenticate all real humans
It's a bit weird to now have him go "I'm backing out on the bid because Twitter has many bots and does not authenticate real humans"
Yes. for a number of reasons.
1) You carry the investigation BEFORE filling to buy (he waived the investigation).
2) Twitter never said 5% are bots, they said 5% of monetasible daily users are bots. Thats a very important distinction, and one Musk is well aware off. Because he has used bots to affect tesla stock price before.
3) No one forced him to put a 40 billion offer on the table, but once its on, it affects the market so you cannot back away willie nilly. Thousands of people made choices based on him filling that offer, he has to deal with the responsability and the consequences.
> He is forcing twitter to be honest or to at least audit it.
No, he is trying to use public sentiment. Like your comment, to not have to pay the 1,000,000,000 fine if he doesn't buy it. And he will have to pay it because he company is now worth much less and he is trying to find a way to weasel away.
I used to worry what would happen to Tesla if they lost Musk. Now I worry what will happen to happen to Tesla if Musk sticks around.
He'll either get a much lower price for TWTR or all his money back to put back into TSLA or some other venture.
Twitter has overstated it's DAUs previously by 1.9m per quarter[1]. If this has a direct impact on the price, is this therefore fraud? I think we wouldn't be in this situation if the rules were clearer.
[1] https://www.theverge.com/2022/4/28/23046170/twitter-miscount...
Musk is probably using their aversion to a legal deep dive on the topic to renegotiate the price. Which would be good, if brutal, business.
In Musk's case? Half of what he does is openly trolling.
"Assume good faith" means "assume good faith until reason to do otherwise", not "assume good faith no matter what".
I'm not asserting that Musk would do anything illegal in this case, just that there's a reason the Twitter board may not want to give him private data. It's not obvious that he wouldn't disclose, either directly or implicitly, anything he's given.
I pity the poor engineers who get the task. ”Hey Claire we need a report by tomorrow 8am that shows we only have under 5% bots. If there are more, just figure out a way to hide them. PS We are not telling you to falsify data, we are just making it very clear that these are the numbers we need, and you are indeed easily fired”
Evaluating bots seems like the sort of thing you'd want IP addresses for; should he get an export of everyone's IP list, including journalists and other critics he's publicly feuded with?
If this went to court, Musk definitely has the weaker legal position here: he signed a deal that obligates him to buy Twitter at a certain price contingent pretty much only on being able to actually obtain financing, and (despite recent market events), that financing doesn't look hard for him to get.
This could end up as endless argument about the correct methodology of determining real vs fake/bot account.
[1] https://www.sec.gov/Archives/edgar/data/0001418091/000110465...
Outside of just bots, I think Twitter's revenue per user is fairly low.
Then again a correction has just started, so it's understandable he wants out
Musk was ready to buy (say) 100 million users with 5% fake at a market value of $44B, so call it something like $463 per user that he thinks is fair. He said he has a plan to eliminate all the fake users and push the number of users up to a billion or something. Let's say that works and therefore he's able to drive the company's value to to $463 * 1 billion = $463 billion. Tidy return.
But as an exercise, consider what would be the case if all but 10 million current accounts are fake/spam/bots? Now each user would be worth $4,000. So if Musk could grow the site to 1 billion users at the same economics, it would be worth $4 trillion. This is nearly a 10x better return than under the scenario where there are fewer fake users.
If you think his strategy will work, he's getting a better deal if most of the users on the site now are fake, because it means a better economic profile of the existing users.
And the 10% layoffs were much misreported. The layoffs were only among salaried employees with the release simultaneously saying that they will be increasing hiring for non-salaried production employees. A 10% layoff of only salaried workers isn't that large of a layoff.
How many people does this amount to?
I thought he had to seek additional funds because tesla stock dropped.
It's somewhat wild to posit this given how much of his balance sheet is public knowledge. He doesn't have the liquidity, sure. But there's a wide gap between illiquidity and insolvency, and he's not particularly leveraged.
Sure, but given the facts on the ground, he has more than enough capital to personally fund the equity. (The debt, LBO style, is held on Twitter's books.) We know there remain commitments from other investors for the equity, so that alone should draw a line under such discussions.
Elon Musk absolutely can fund this deal. He may not want to. And that isn't true in every state of the world. But currently, and in any proximate world state, him not having the money isn't an issue.
These reports are wrong (Reuters is not reliable when it comes to leaks from Tesla).
Tesla intends to lay off about 10% of salaried workers, which make less than 50% of the company's headcount (mostly managers). The company confirmed they're still hiring and will have more employees by EOY versus the day they announced the planned layoff.
> The company confirmed they're still hiring
That's not accurate, for salaried workers. Similarly, there is a hiring freeze for salaried workers. They're still hiring hourly workers.
We fixed global warming?
Stop looking at the showmanship and look at the crude numbers.
Thanks in part to Elon Musk.
You honestly can't try and equate this with Elon almost single handedly bring the EV car market to the planet.
It either shows you are being disingenuous at best or ignorant in the subject matter at worse.
He's not emblematic of US problems but theres a trajectory that lines up with some of the political discord timeline wise and his change in perspectives going from center left to center right.
A great example of how far gone the misinformation campaign already is.
If he now regrets that, it’s his own fault.
> The number is hardly new: Twitter has been giving the same estimate for years, even though critics and experts have said they believe the company is lowballing the actual number of such accounts.
If Musk wanted the deal contingent on this very specific data point, he should've said so before he committed to the $1B cancellation fee and made it part of that agreement.
> "Musk tweeted on Tuesday that Twitter Chief Executive Parag Agrawal has refused to show proof for his company's estimate and that the deal cannot move forward until he does. Twitter's proxy statement shows that in the run-up to the deal Musk made no effort to get information about the issue. "Mr. Musk did not ask to enter into a confidentiality agreement or seek from Twitter any non-public info regarding Twitter," Twitter said in its proxy statement."
https://www.reuters.com/markets/deals/twitter-committed-elon...
There's a reason so many refer to him on a first-name basis that they don't with other tech CEOs, and it's not because of media coverage. It's because of his own cult of personality that makes his fans think he's one of them and overlook the countless shortfalls in his visions for the future.
Twitter is where he plays around, but his thoughtful personality comes through face to face in talks and interviews. That's what shows how Elon got to where he is. No other CEO talks with the clarity like he does (ironically in a stuttering fashion).
It's not because of a "cult". It's because of his insight into things I had never put that much thought into. He's broken a lot of my own assumptions about how things are supposed to work. He's literally changed how I think as an engineer.
Not saying it’s what you’re doing, but your comment reminded me of people like that.
And yes in his interviews of late he's been a quite clear communicator. Here's a couple within the last month or so that are quite good:
https://www.youtube.com/watch?v=YRvf00NooN8
Every year, Elon makes over 100 flights using private aircraft, which offsets the emissions savings of over 100k EVs. Most of these flights are for pleasure, not business.
"Fixing" global warming is just a marketing ploy for Musk, since he seems to be doing an incredible job of personally trying to make it worse. He doesn't get to freeride on the labor of others on this.
You deny that your admiration for Elon Musk is because of a "cult," but this sounds very cult-like. Have you considered that Elon Musk is not the only person who can make you a better engineer?
Seek help. I mean it. This is not healthy. You do not know him, you are infatuated with aspects of his public persona.
He's visible because of his neurosis. He doesn't do it to make money. He's never admitted to it, but it's been hinted at in the past that he also has some kind of bipolar condition as well.
Sure, the media reports on him a lot, but it’s because he gives them endless stuff to report on. He’s made himself the face of every company he owns, and gives ostentatious presentations of products that are often totally bananas (like the CyberTruck). He posts 2011-era memes on Twitter then randomly decides to talk about buying companies or taking companies private while tweeting questions about business strategy at their CEOs. He dated a pop star and they gave their child a name that sounds like a galaxy cluster.
For better or for worse, Elon’s intense visibility is his own doing, and the press is just along for the ride.
I thought he had a VERY short-lived period where he was popular in the media and everyone was raving about him (Developers, Developers, Developers - like 1 or 2 years after XP), and then after that he was a punching bag for like a decade.
Is this wrong?
While late-Gates Microsoft was the king of whole technology industry, by late Ballmer it was one of many players. While they haven't decayed into "enterprise" obscurity like IBM, they weren't driving the industry then.
They missed several "trends" like mobile phones, and only thanks to Nadella they've caught up in cloud with Azure.
Balmer was responsible for the One Microsoft reorganization which Nadella finished executing.
https://www.theverge.com/2013/7/11/4514160/steve-ballmers-re...
https://www.theverge.com/2013/7/11/4486730/microsoft-reorgan...
I dont think Ballmer get's enough credit for reflecting on his tenure, looking at what didnt work, and blowing it up for the future on his way out the door.
That's just negotiations 101.
He's playing a game and he's winning. While not all his tactics sit well with me, he's created immense value for the world. We want this man to keep investing and running capital. The alternatives are just so much worse.
I agree that some people value modesty, I hope those people won't stop the next ego manic from trying to change the world.
I'd equally be happy if we could clone Buffett, Gates, and Musk. We get what we get. Unless you want to build a rocket, we should respect these life enhancing men, despite their character flaws.
> I hope those people won't stop the next ego manic from trying to change the world.
You are describing a super villain here! I certainly hope we would try to stop them. “Advancement at any price” is how we end up with dictators and fascists.
Maybe I'm naive, it doesn't seem like there's a desire for world domination. No political aspiration, unlike Sheryl Sandberg. Not implying she is evil or anything just highlighting another highly successful person.
This sounds like how people discuss celebrity beefs.
At least in American English, the connotation of the word "arrogant" is so universally negative that it would only ever be used to express distaste for someone. Now whether he is arrogant or just (over)confident is another question but I think you acknowledge there is at least a good case for the former.
> We want this man to keep investing and running capital.
Why? If you ask the folks at the SEC, they probably wouldn't agree with you. From a public perspective, he hasn't exactly been great on regulatory compliance and market protection. From a shareholder/company perspective, he is a major liability. No company ever wants a CEO or any employee that picks fights with regulators, has a massively oversized media spotlight, and entangles the business in unrelated politics and personal fixations. That's textbook bad news for a business.
I've used Tesla's products, so as a consumer I'm very grateful for it. I am not a direct investor in Tesla (ie., only via index funds).
The take I can't believe is the SEC should decide how capital gets allocated. Elon created a tremendous amount of value. Both for consumers and for investors. Does he sometimes do things that appear/are dumb. 100%. However, net-net he's been such crazy value add to humanity i can't see why we would want to take this man out.
Is the world really a better place where this man just sits on the beach and does nothing? I think not. You may counter and say, why doesn't he follow the rules like everyone else, well sometimes to get something special we need to make special exceptions.
I think i'm just trying to reconcile that your view is genuine given the age of your account. I'm sadden by this being a real take. We want creators. We want folks to build. It's hard to build to follow all the rules. There are soooo many.
There are thousands of people smarter than Musk in tech but who didn’t have his money and connections. Give his billions to those people and you’ll get a thousand Teslas.
Intelligence is necessary but not sufficient. In fact, being a little too smart is quite detrimental to success.
I almost want to say intelligence is orthogonal to running a company but that wouldn't be true. You have to have some intellect, anything above that is not that important.
That's literally its job, and they charged him with securities fraud didn't they?
Their job is to regulate not allocate. They aren't here to pick winners or losers they only control who is allowed and not allowed to take money and from whom.
SEC protects investors cause investors from its perspective need protecting. It is like a father looking out for his kids. Some of us don't think we are kids that need protecting.
That's the context of what was being replying to - the "who" part.
I think that caricature is pretty off base. He bought something that was damaged and its value went off a cliff. What kind of person would pay full freight for Twitter as the tech valuations plummet - only a fool would stay locked into that deal.
This post is probably not on top of HN because “the media” uses him for ad revenue, just saying.
>[second]
That’s not even close to the full picture. Its not like he went into a shop with cash to buy a car. Not saying that the gp is 100% correct either, but gross simplifications don’t help the discourse. Edit - To clarify: if he believed in the purchase as an investment, temporary tech valuations would not matter, what would matter is the quality of the product relative to the changes he wanted to make in the company. Twitter is very much intact, it didn’t materially change since the situation began.
And the layoff isn't 10% of all workers. It was 10% of salaried workers, a much smaller amount.
This goes exactly to the point of the person you responded to. The media blows up smaller news items into bigger ones for clickbait.
Could you clarify what the set complement of a salaried worker is?
> Glad you could enshrine it in this comment that adds absolutely no value to the conversation.
These comments are equally as tiresome. You reply to a comment that apparently adds no value (not a sentiment I necessarily disagree with) with a comment that adds even less?
> You reply to a comment that apparently adds no value (not a sentiment I necessarily disagree with) with a comment that adds even less?
So this is going to be an argument of which comment(s) add less value? We already started very close to 0 with yours so can continue to ride the asymptote as far as our stamina allows.
You have to balance his incredibly strong capital manner with the fact that he also is changing our human trajectory. He's tiresome, gets into petty arguments with people but he's also changing our trajectory more than almost all other humans on the planet right now - for better or worse.
Whether his heavy lifts stands the test of time and significantly alter our trajectory is truly the question here. This Twitter buy doesn't really matter in the arc of this century unless it is merely a reflection point which Musk fades to irrelevance.
People will jump through hoops to defend him because he's doing work that no one else is capable of doing.
Has he? How do large rockets help with climate change? How does going to Mars, a dead planet that is almost a foreshadowing of where Earth is going with climate change and ecosystem destruction, help fight climate change? Electric cars will improve things a bit, but they are not a one-shot solution to climate change. They are cars after all, and for the first couple years of their life, they contribute more emissions than existing cars, so there's a crossover point. And those emission crossover point calculations do not take into consideration battery recycling or disposal. There are many, many other things that we could be doing. But Musk likes to keep the limelight on him and have his toys.
Many solutions to climate change are actually rather boring and easy in terms of their actionable solutions, but we don't do them. One can't hype up hundreds of millions of dollars of investment for planting native plants or composting or improving ocean ecosystems or reducing plastic use and habitat loss. If Musk truly cared about the climate, he would promote these other things. But he doesn't, because they can't be hyped, they wouldn't get him the attention he craves, and they wouldn't serve his ego.
I have seen it first hand. Young college graduates, apparently concerned about climate change, choosing Tesla over working for a fusion company. These are people whose tech and science influences are Musk and Iron Man.
> ... that he also is changing our human trajectory. ... but he's also changing our trajectory more than almost all other humans on the planet right now - for better or worse.
Comments like these are so hyperbolic that they're tough to even respond to. If I can be frank, they are sort of childish. Even out of billionaires, Musk doesn't contribute as much to these things as people like James Simons, who donates hundreds of millions of dollars to education, climate change research, and other scientific research. But Simons is an actually intelligent person doing actually important things with his money and influence. But funding education and scientific research is boring, apparently according to those obsessed with electric cars and rockets.
Oh yes, by shilling proof-of-work cryptocurrencies he definitely made a contribution. I'm not even sure if his Tesla venture would offset this damage long term.
The value of Twitter may have decreased since he made his offer, and he may want to back out, but he (impulsively) made an agreement to purchase it, so backing out comes with the responsibility of $1 billion.
Honestly I think it's comical that people are complaining that he's not paying up for twitter when valuations went off a cliff and twitter hasn't divulged bot data (when CLEARLY that's what he was doing all along (see my comments eons ago saying that he was pointing to this as an exit strategy). Twitter could have put that information forward and kept the $1B but they knew either (1) don't know or (2) they didn't want to for fear of damaging their company.
It's like all of a sudden Twitter is the good guy and Elon is the bad guy when at the end of the day this is two business entities interacting and positioning themselves.
We aren't complaining, we're mostly confused how the world's smartest man would make a bid on a product not based on actual valuation, but instead on the inflated current public market price.
He's free to back out of the deal, but some people aren't falling for the victimization. His bid was a mistake, and he should own it.
>twitter hasn't divulged bot data
Once again, this should have been part of a due diligence process that the Musk team deemed unnecessary.
And I'm not necessarily saying HN complaining - I'm referring to the general public narrative
Separately from intent (where I agree with you), legally, Twitter was required to provide “properties, books and records [and] information concerning the business, properties and personnel” per section 6.4[0], which is cited in today’s letter[1]. (The fact that it is not a due diligence, IIUC, means that this information should not change the decision to make the purchase; but if Twitter was found to violate the merger agreement, Musk could walk out on it anyway.)
It will all hinge in litigation on whether Twitter can argue that Musk’ demands were not “reasonable business purpose related to the consummation of the transactions” or would “cause significant competitive harm to the Company”.
In my mind, it is easy to argue that Musk did violate section 6.4 by making his request public, impacting the stock, which is not a “reasonable best effort to minimize any disruption to the respective business”.
[0]: https://www.sec.gov/Archives/edgar/data/1418091/000119312522...
[1]: https://www.sec.gov/Archives/edgar/data/0001418091/000110465...
He waived due diligence now is complaining about something that should have been obvious in advance, and in fact was one of the things he said was an issue with the platform that he'd fix.
>What kind of person would pay full freight for Twitter as the tech valuations plummet
The kind of person that signs a deal. Were he and his team not smart enough to offer fair value for the company? What kind of person absolves a billionaire from rules we all have to follow?
Twitter have two options if Elon refuses to close. They can sue him. Or they can settle. The former will be a multi-year boondoggle for everyone involved. Nobody wants that. But neither does either side want to settle for less than they can get.
Both are thus positioning to make it seem like they'll make the boondoggle the boondoggliest if they're forced to face it. Twitter isn't great at theatrics. Elon is. Thus, he's taking the lead. That said, it remains in both parties' rational interests to appear willing to pursue their aims to an irrational extent in the courts, so the other side settles for less than that. Keep that in mind over the coming weeks.
Point is, yes, when you're a billionaire, signing a contract means something different from you or myself because the cost of enforcing a $44bn deal is minuscule compared to the cost of the deal. (And in this, he's far from unique.)
Sure, I agree.
But the OP's interpretation of events is dead-wrong. This isn't the media picking on poor Elon. The guy dove head-first into something without thinking through consequences, now he and his supporters are claiming to be some kind of victims in this. Twitter did nothing wrong here.
I have nothing but respect for Elon's work at Tesla and SpaceX. But Elon Musk is a known quantity in terms of counterparty behavior. Nobody should be surprised this is happening, least of all Twitter's Board.
"Twitter did nothing wrong here" -- what kind of framing is that?
Again there is no victimization of Elon - he's just trying to get out of a deal - you are using some overly hyperbolic language in your comment which is common these days and equally as annoying as Elon's twitter thread.
Oh stop it! I lived in Los Angeles, that place is too big and populated by too many sharks. You only become famous if you really, really want to and deploy resources in a way that is optimized to reach that goal.
Musk wanted to be famous ever since the Paypal days.
There's a reason why you don't hear media obsessively reporting on 3 time Oscar winners Daniel Day Lewis and Jack Nicholson anymore. They have concluded their respective press tours (Lewis at least temporarily and Nicholson for a good 10 years, ever since he made "The Departed")
You need to seek press to get press, you don't stumble into it.
I would wager that the risk to his earned media strategy is he is going a bit off the rails in the last 6 months and staff might not be as interested working for him in the future. I don't think it has scared off investors yet as it appears he has the midas touch in the business world.
Disingenuous.
He knew about the bots. Everyone knows about the bots.
Disingenuous again. Most people knows a significant amount of engagement is bots, as you yourself agreed.
>Most people knows a significant amount of engagement is bots
No, I don't think most people know that. They know there are bots, and they suspect there's a lot. That's why I said there's a difference between the two.
How was he to know they would intentionally misrepresent the number of fake users on the platform? Couldn't he argue twitter tried to defraud?
He chose not to do that. He chose to make the acquisition "sight unseen" in a way that also left the him on the hook for $1bn if he pulled out of the deal.
Now he's trying to dodge the $1bn clause, but the contract he signed doesn't give him many ways out.
Of course, the fact that Musk is materially affecting Twitter, Trump was president, etc. totally call for their manic actions as newsworthy. Ugh. Too much power concentrated in the hands of too few.
Whacky.
I'm not a Twitter investor so I have never looked deeply into their financials. Is this consistent with previous representations?
But it should be clear that if Musk insisted on this being part of the deal he would press them on it. Many (including myself) have long suspected a ton of Twitter activity is bot-related.
Twitter may end up owing Musk $1 billion in a breakup fee if they renege on their deal (including making material misrepresentations). This combined with the reputational damage may be a fatal blow to Twitter. And by "fatal" I mean vulnerable to a hostile takeover or forced to take an even worse acquisition deal.
I respect Musk's accomplishments with SpaceX. Everything else seems to be sussy AF. SolarCity famously was a bailout of one of his companies (SolarCity) that owed a lot of money to another of his companies (SpaceX) by yet another of his companies (Tesla). Tesla too seems to be in trouble.
Like many though I have Musk fatigue. He seems to have personally gone off the deep end. I kinda wish they'd lock him up in one of the old nuclear cities and make him build rockets away from social media.
Yes, it very much is. And, actually, given their definitions, it's something I find highly plausible (essentially, they're saying that less than 5% of accounts that look like active daily users are bots).