Comment by zinekeller | Hacker News Reader

Comment by zinekeller | Hacker News Reader

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> Twitter committed fraud by lying to the SEC about the mDAU numbers with the intent of inducing Musk to buy Twitter at an inflated price.

What is that commonly-used aphorism? "One man's trash is another man's treasure"? Like, even if this is true, Musk didn't do (and subsequently waived) due diligence.

> No, really, this is the allegation

No further comment on it.

> Count 2 is that Twitter committed [Texas fraud statute] by lying when it offered its shares. It's shotgun-pled, so I don't know which specific statements are supposed to be wrong, but I'm imagining it's basically the previous count recast under a different statute.

If it's due to Texas laws, is the appropriate jurisdiction is the Texas courts or... oh, he's trying to claim that the case should be heard in a federal court (for diversity reasons). Good luck though Musk.

> Count 3 says that Twitter broke the contract by failing to provide information.

What information? The contract is already in the public, but okay you want to waste court time.

> Count 4 says that Twitter broke the contract by instituting a hiring freeze.

Twitter could just point to its peers like Google, Meta and Microsoft.

> Count 5 is pretty please declare that Twitter lying about mDAUs is a materially adverse event that is cause to break the contract.

Yeah, at this point I'm convinced that Musk wants to just waste everyone's time, especially after the chancery court denied his petition to schedule the hearing next year.

> What information? The contract is already in the public, but okay you want to waste court time.

The contract stated that Twitter had to provide Musk with internal data as required to close the deal. His teams tokens were apparently rate-limited at some point and it took a while for Twitter to give him access to all data, a.k.a. 'the firehose'.

Just for completeness sake, Twitter seemed to still try (the token thing was probably a technical error) and whether giving him access to the firehose was actually necessary could even be contested, as he arguably wanted to use the data to not close the deal.

Quite derailing a bit, but Twitter executives are also saying that it tries to protect Twitter since that Musk indicated that he will launch a rival platform. Honestly this particular part sounds like Stac v. Microsoft (https://en.wikipedia.org/wiki/Stac_v._Microsoft)

Twitter was contractually obliged to give him data to help him close the deal, not to help him find a way to squirrel out of the deal.

I suggest reading the twitter complaint. It is not long, and it is very well written. They discuss many (if no all) things musk has been saying trying to avoid the acquisition.

If I recall correctly, Twitter says they had no obligation to provide the firehose to Musk, but they did anyway. Musk had issues with rate limit, but twitter fixed it in reasonable time.

"His teams tokens were apparently rate-limited at some point and it took a while for Twitter to give him access to all data, a.k.a. 'the firehose'."

Here's the thing though:

None of that data was required to close the deal. Musk had no diligence rights, he explicitly gave them up, and the contract clearly says so. He doesn't get to do regular diligence through that clause, it's meant to cover the literal things necessary to close the deal (like financing info or whatever).

So Twitter didn't have to provide anything here, and certainly not access to the firehose.

His response is going to be smacked down pretty hard by a chancellor - it's 100% nonsense.

IANAL, but I think it makesMore sense if you separate it into:

1. due diligence as a buyer (contract) to review additional information, ask questions etc

2. using public information to purchase as an investor (he was) for a public company regulated by SEC

I think the claim is not that he has the right to #1 (he didn’t) but that #2 was false and has been false.

No idea if contract laws let #2 get him off the hook though

All that matters, against musk, is that however twitter claimed to count it's users was infact, how they counted.

Musk wanted to invent some means to count users in an effort to demonstrate fraud. But that's not fraud. Just because musk provides an alternate means to count users, doesn't demonstrate fraud.

Full stop. Unless he proves that they didn't count the way they claim, he has not claim. Waiving he due diligence clause is what makes his claims a non issue.

I was not defending Musk, just trying to explain what he might be “thinking”.

I see you’re point though. I guess he’d have to prove they used a formula that they knew was wrong for it to be fraud?

> I guess he’d have to prove they used a formula that they knew was wrong for it to be fraud?

They could know the formula was wrong - inherently every measurement is wrong to some extent which is why you see a +/- error, that is not fraud.

For it to be fraud, they would need to measure it in the way they claim to, get a result they dont like, and report it as <5% anyway (with intent to defraud people). Which could happen in theory, but seems highly unlikely.

Also I’m pretty sure Musk himself wrote on public Twitter that he would trim the fat once he owns the company ..

> Musk didn't do (and subsequently waived) due diligence.

Wasn't him collecting all of this MAU stuff to analyze it part of the due diligence needed in order to close the deal?

No. He signed the merger agreement without doing DD into mDAU, and didn’t write any contingencies around mDAU onto the contract.

You do your diligence BEFORE signing the merger agreement.

Exactly. This whole thing smacks of regret on an impulse buy. And as Musk should well know: regret is no cause for contract annulment. Twitter is going to be his Waterloo if he can't follow through on the deal, they're going to force him to perform which means he may have to sell a whole bunch more stock to people who know he has to buy. That isn't going to help at all.

O, that seems pretty odd. I can't think of any reason for them to do that beyond trying to get out of the deal or incredible negligence on the musk side in not doing that before hand. Were they able to get that data before hand if they wanted it?

It doesn’t really matter at this point, because he signed a binding agreement. He’s the one that made that move. Specifically why is just speculation now.

But, hey, we’re all here speculating anyway! My take is:

1) He’s a history of making impulsive decisions without thinking (or caring) about the consequences.

2) It forced Twitter’s hand because they couldn’t act like it was it a non-genuine offer.

3) He’s so rarely held accountable for the consequences of his decisions he knew it didn’t matter because he’s above the law.

You have to make a series of countless good or great decisions to be that successful. His ratio of good decisions to bad ones is probably one of the best in the world. He is not above the law, he has to stand before court as every normal citizen has.

Or, counter-point: https://twitter.com/nntaleb/status/1534172773580513280?s=20&...

If you think his ratio of good to bad business decisions is even average then you haven't been paying attention. Tesla has nearly gone bankrupt repeatedly, and it's stock price has largely risen the most after Musk was removed from controlling the company as a result of a series of tweets that were considered illegal attempts at manipulating the stock market. In point of fact, Musk still controls SpaceX and internal memos leaked earlier this year indicate that SpaceX could very well go Bankrupt within the next 18 months. The Boring Company is generally solvent and under Musk's full control, but it is far smaller, and could be in danger of law suits for effectively failing to meet contractual obligations regarding the tunnel the agreed to provide Las Vegas. The Boring Company's future doesn't look great to me, their results don't meet public expectations which could easily lead to funding drying up.

Also, anybody who thinks accusing a rescue diver of pedophilia purely because he told them not to interfere with rescue efforts is pretty far from being a genius. Musk has been lucky his whole life, people just rarely see his failures.

Basically, his press is full of shit. The claim that he learned to program and wrote a video game at age 10 is quite ridiculous. Seriously, there are online websites where you can play his "game". It's Space Invaders, except theirs only one alien, you can't have multiple projectiles on the screen at the same time, the alien doesn't fire at you unless they get extremely close, if the alien fires at you it locks your controls making it virtually impossible to dodge and prevents you from firing back, and when you successfully hit the alien it immediately respawns at a random location which may be in range of you, resulting in you immediately dying. My own nephew programmed significantly more impressive games at age 10, will people start following him and assume he's never made any mistakes if someone who owns an emerald mine gives him hundreds of millions of dollars to invest into new technologies and the businesses don't ultimately fail?

I’m not an Elon Musk fan but it was 1981 when he was 10. There were far fewer resources for learning to program and make games in 1981 than there are today. Not to take away from what your nephew did, but there are currently hundreds of “how to make a game” tutorials available online in a variety of instantly consumable formats. There are even entire development environments focused on simplifying game development with low code workflows. In 1981 there wasn't even the concept of a widely accessible public Internet.

Is your nephew close to Musk's age? Programming a simple game in 1980 is much more impressive to me than doing the same in the 2010s.

You are basically making a claim that he is a bad businessman without mentioning that he is one of the richest people in the world. Why should anyone take your arguments seriously?

He signed a binding acquisition agreement in a $44 billion dollar deal without doing any due diligence. Bigger deals have been struck on similar timeframes, but rarely has the purchaser evidenced such obvious buyer’s remorse so quickly afterward, or embarked on the venture with as little thought as he put toward it.

That’s a pretty weighty fact on the scale of “Musk - canny businessperson, or remarkable streak of being in the right place at the right time.”

So you suggest he is a bad businessman and his success is only attributable to luck. To understand how ridiculous this claim is you first need to realize that there are infinite ways to fail and very very little ways to succeed. Good and bad decisions are not symmetric, it is not 50:50, it is more like infinite:1. But even if it was 50:50, for the thought experiment sake, if you make random decisions you quickly make a bad one, and to be successful you need to make way, way more good decisions than bad ones. Sure luck is obviously always a factor, but thinking that he created a car that he later sent to space on his own rocket is not a sign of extraordinary competence, well, to me you can as well claim that the Earth is flat.

Yes, Musk could have received that data and had time to analyze it before buying, these kind of merger contract processes have time built into them to allow prospective buyers to look into finances and other information that is not normally publicly available. Musk was so certain he wanted this that he signed additional documents waiving his right to a due diligence period, allowing him to immediately sign the merger agreement.

This next bit is mainly speculation, but the reason Musk is actually trying to back out is partly to do with the fact that signing the merger contract caused his other companies stock prices to drop and public speculation that his existing business would suffer if he needed to focus on running Twitter. The second and more widely believed version of events is that partly due in fact to his other stock prices dropping, Musk cannot afford Twitter without having to sell more of Tesla and SpaceX than he is willing to. Musk is already down to owning only 17% of Tesla and less than 50% of SpaceX, although that's complicated as some percentage of Tesla is owned by SpaceX and vice versa along with the Boring company in such a way that Musk effectively has majority control over SpaceX whenever he wants. If he has to sell additional stock to cover the purchase of Twitter he would very likely lose the ability to control everything except possibly the Boring Company.

What's more, the contract he signed effectively puts him in a position of buying Twitter at a substantial loss as the stock market has significantly fallen since Musk signed the deal. He would effectively be losing significant control of his two primary sources of wealth in exchange for something he has likely since discovered he cannot run the way he wants.

In short, this was a bad move financially when Musk first announced his intentions, it was extremely foolish of him to waive due diligence, and it became financially even worse shortly after he signed the deal, partly due to the facts that people lost trust in him for waiving due diligence while making a financially inadvisable move, partly due to the fact that he's actually pretty bad at math and doesn't understand the stock market, and partly because the stock market took a nose dive right after he foolishly waived due diligence and signed such a financially ruinous deal.

If you're thinking Musk is smarter than I'm making him out to be, please consider that Musk tried to insert himself into a cave rescue he had nothing to do with, was told not to interfere with the professionals that know what they're doing, and retaliated to being told to butt out by publicly accusing the rescue team lead of being a pedophile despite knowing nothing about the man.

Trying to offer to help without really understanding the situation isn't necessarily a bad thing, but randomly accusing someone of being a pedophile because they were critical of you is so far beyond acceptable behavior it's amazing Musk wasn't banned from Twitter as a result (it was where he made the accusation publicly). That level of harassment violates Twitter's ToS, plain and simple.

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