from the mouth-writing-checks-the-tail-can't-cash dept.
Three submitted stories on different aspects of the breakdown of the Musk/Twitter tale.
Elon Musk's deal to buy Twitter is in peril:
Elon Musk's deal to buy Twitter is in serious jeopardy, three people familiar with the matter say, as Musk's camp concluded that Twitter's figures on spam accounts are not verifiable.
[...] The spam accounts are not the only reason Musk might try to wriggle out of the deal. Twitter's share price has fallen dramatically since his takeover bid in April, leading to the impression that he is overpaying. And Musk also runs two other major companies, Tesla and SpaceX, along with some start-ups.
[...] Musk likely grasps the difficulty of backing out at this stage, prompting him to find legal reasons to justify an exit, according to Carl Tobias, law professor at the University of Richmond.
After raising the bot issue, for example, Musk said Twitter's figures could constitute a "material adverse misstatement," a likely reference to a contractual clause that gives him the ability to back out of the deal in the event of a significant event that fundamentally changes the business.
"I think it's an excuse," Tobias said. "It doesn't seem to me that a court would find that persuasive." Tobias cited Musk's own waiving of due diligence in his hasty acceptance of the deal. "It does seem to me that it undercuts a lot of arguments he could try to make otherwise," he said.
Elon Musk has notified Twitter the $44 billion buyout is off, citing "false and misleading representations"
Musk's withdrawal from Twitter deal sets stage for long court battle:
Analysis: billionaire could be fined $1bn for walking away – and he risks new lawsuits and even his job, experts say
The Twitter chair, Bret Taylor, said on Friday that the social media firm would sue in a Delaware court to enforce the deal. The deal included a "specific performance" clause, a provision that may force Musk to buy the company as long as he has financing in place. Musk in May said he had secured financing to complete the deal.
Musk may also face a fine of $1bn to walk away, a penalty he is seeking to evade by accusing Twitter of a "breach of multiple provisions" of the agreement, according to a letter filed with the Securities and Exchange Commission announcing the dissolution of the offer.
[...] "What Musk and his team are doing is trying to come up with an excuse so that he doesn't have to pay the penalty fees to walk away," said Anat Beck, a professor and business law expert at Case Western Reserve University.
In addition to the fine for the failed deal, Musk could face serious consequences from the SEC for his antics, which have had major impacts on the several public companies he manages as well as Twitter itself.
[...] "The fine will be painful for Musk, but what would be more painful is if the SEC used its power to say 'you are not fit to run the companies you are running and someone else should be appointed as CEO'," Beck said.
[...] "Investors in any company that has been impacted by this can bring forth a lawsuit," she said. "The question is: do we have fraud? Do we have a billionaire that is doing this purposely to impact the markets? That is legally what needs to be answered."
Original Submission #1 Original Submission #2 Original Submission #3
Related Stories
The pressure on Twitter to talk publicly about how it monitors and removes spam accounts continues to mount.
Reports from CNN and The Washington Post reveal an 84-page whistleblower complaint alleging that Twitter isn't motivated to track the true number of spam accounts and hid security vulnerabilities from federal regulators.
The complaint comes from Twitter's former security chief, Peiter Zatko. Zatko is a well-known ethical hacker with the alias "Mudge." He told the Post that he "felt ethically bound" to report his serious concerns to government agencies. He alleges that he was fired for pushing disinclined Twitter executives to address major security problems—which his complaint suggests "pose a threat" to Twitter "users' personal information, to company shareholders, to national security, and to democracy."
Zatko alleges that Twitter execs were more invested in covering up those vulnerabilities, including cherry-picking and misrepresenting data on spam accounts and security threats to regulators and Twitter's board members.
Previously:
Judge Orders Twitter to Give Elon Musk Former Executive's Documents
Elon Musk Pulls Deal to Buy Twitter
Twitter Reportedly Will Give Musk the Full "Firehose" of User Data
Elon Musk Accuses Twitter of Thwarting His Due Diligence, Threatens to Walk Out of Deal
Twitter Users React to Elon Musk Putting Buyout Deal 'on Hold'
Musk Buying Twitter Is Not About Freedom of Speech
After Musk's Twitter Takeover, an Open-Source Alternative is 'Exploding'
Elon Musk has just bought Twitter
Elon Musk Isn't Joining Twitter's Board of Directors After All
Elon Musk Will Join Twitter's Board of Directors
(Score: 5, Touché) by sgleysti on Sunday July 10 2022, @04:46AM
I hope the outcome is the worst possible for both parties.
(Score: 4, Interesting) by Rosco P. Coltrane on Sunday July 10 2022, @04:51AM (9 children)
Musk managed to perform the most credible, most publicized, damning assessment of the company's own statements regarding its bot problem at no cost to him. That's a masterstroke of a payback! The man sure knows how to exact revenge.
(Score: 5, Informative) by Anonymous Coward on Sunday July 10 2022, @05:08AM (2 children)
But it might cost him $1B, open himself to a lot of lawsuits, and perhaps remove him as CEO of a company or two for purposeful market manipulations.
(Score: 0) by Anonymous Coward on Sunday July 10 2022, @06:47PM (1 child)
I believe Twitter is looking for more like $20 billion, or whatever value they've lost in market share since this fiasco began.
(Score: 2) by Reziac on Monday July 11 2022, @04:03AM
Twitter might find itself looking foolish if the discovery phase brings out actual numbers on bots and spam accounts, rather than whatever they've cagily claimed so far.
And there is no Alkibiades to come back and save us from ourselves.
(Score: 3, Informative) by epitaxial on Sunday July 10 2022, @06:10AM (4 children)
Revenge for what?
(Score: 1, Troll) by Runaway1956 on Sunday July 10 2022, @12:17PM (3 children)
Revenge for being censored, I would imagine. All the social media platforms are heavily invested in censorship.
(Score: 4, Touché) by Anonymous Coward on Sunday July 10 2022, @01:46PM (1 child)
Yeah, I should be so lucky to be censored like him, with his millions of followers and ability to manipulate crypto worth with a single tweet.
(Score: 2) by Freeman on Monday July 11 2022, @03:43PM
Crypto currency is Highly volatile! It's like storing gasoline in a baggie and betting that the bottom won't fall out today.
Joshua 1:9 "Be strong and of a good courage; be not afraid, neither be thou dismayed: for the Lord thy God is with thee"
(Score: 0) by Anonymous Coward on Monday July 11 2022, @01:19PM
Not all. You forgot TRUMP Social: "encourages an open, free, and honest global conversation without discriminating on the basis of political ideology"
(Score: 0) by Anonymous Coward on Sunday July 10 2022, @08:28AM
I would wait until after the epic court battle to decide who was victorious.
Considering that $1-44 billion is at stake, the amount each side will be willing to spend on lawyers' fees will be obscene.
(Score: 4, Touché) by Opportunist on Sunday July 10 2022, @07:38AM
Half the internet pulls muscle from laughing.
(Score: 5, Interesting) by Snotnose on Sunday July 10 2022, @07:44AM (12 children)
This could be Twitter's death blow. A lot of people left Twitter when they thought Musk would be The Boss. Musk has also revealed the bot problem is worse than anyone thought. Advertisers are taking note, leading to loss of revenue. If Twitter sues Musk then all the skeletons in the closet get exposed during discovery. The Twitter stock price has crumbled.
Twitter may not survive.
When the dust settled America realized it was saved by a porn star.
(Score: 3, Insightful) by The Vocal Minority on Sunday July 10 2022, @11:09AM
One can only hope...
(Score: 0) by Anonymous Coward on Sunday July 10 2022, @01:51PM (8 children)
Perhaps I missed it, but how did he prove the bot problem is worse? He's claimed it's much higher, and they gave him a big data dump, but I thought a big problem is that there is no way of definitively counting bots acting in bad faith. Did Musk's team come up with their own number and are able to stand behind it?
(Score: 2, Interesting) by Runaway1956 on Sunday July 10 2022, @02:17PM (6 children)
My impression, for what it's worth, is that Twitter turned on the 'firehose' for Musk. Imagine, getting everything from twitter dumped onto your own network. How to make sense of it? How to analyze anything? How to tally bots vs real people? It takes infrastructure to handle all of that, and a staff dedicated to the task. Twitter gave Musk no usable or useful data. Sure, the evidence is in there, but no one person could ever hope to use it. No small team could ever use it. Maybe if Musk had his own 'intelligence' network housed in a modestly sized business building somewhere, he could have coped with that 'firehose'. How much hardware does Twitter dedicate to analyzing their traffic? Musky boy would have to match that to get any use of all that data.
(Score: 2, Insightful) by khallow on Sunday July 10 2022, @02:56PM (5 children)
Or maybe they did. I imagine a staff capable of that is expensive, but not that expensive. A few tens of millions might yield a team better than the one Twitter has.
(Score: 1) by Runaway1956 on Sunday July 10 2022, @03:21PM (4 children)
Overnight? I don't think so. If it took a team only a month to get up to speed, that would be remarkable. Building that team from scratch would most likely take six months or more.
(Score: 2) by drussell on Sunday July 10 2022, @03:38PM (2 children)
"Musk's team" wouldn't need to be doing it in real-time, in perpetuity. All they had to do was take some timeframe of data from "the firehose" and do at least a somewhat detailed overall analysis of it, not build a system to do it continuously.
(Score: 2, Interesting) by Runaway1956 on Sunday July 10 2022, @04:34PM (1 child)
Hmmm - OK. I believe you may be right, a snapshot should have sufficed. And that would cut the whole team thing drastically. Yeah, they probably could have analyzed a snapshot in a couple weeks. Or, maybe not . . . how do you analyze patterns and usage from a snapshot? How do you grasp the dynamics of an account?
Maybe I over estimated the task, but, you may be under estimating it. Really obvious bots might be discovered in a snapshot, but other bots are probably a lot more subtle and you're not going to discover them until you've watched them for awhile. And, there are probably some highly skilled operators you would have to watch for weeks or months to ascertain that they are socks or bots.
SN staff has experience sniffing out socks and bots, I wonder what they think of this?
OK - one more thought. The goal was not to expose all of the bots and socks in Twitter. The goal was to prove that they comprise more than ~5% of twitter membership. If, in reality, the number is closer to 20%, then yes, a snapshot may well have provided evidence, if not proof, that 10% or more are bots.
Enough of thinking out loud here - I certainly don't have the mad skillz, or the talent, for sifting data at that scale.
(Score: 2, Interesting) by Anonymous Coward on Sunday July 10 2022, @06:10PM
I'm not sure sifting the data is the hard part as much as defining the problem you're looking for. One of the articles mentions that they look at things like coordinated activities from accounts, or account interaction histories and behaviors, but there is no flag to say this is a bot or not. There's no easy way to tell which is a bot account and which isn't by anyone, so you have to infer it from the data. I presume twitter can show their working out on how they got their number (if not, that will no doubt go into the legal wranglings).
There has been pretty wide speculation that the bot number issue was a canard from the very start from Musk as a way to back out of the deal, and unless they can come up with their own justifiable analysis showing the number of bots is significantly different than what twitter says, they are going to have a tough time talking their way out of paying the fine (not to mention that he largely signed away any rights to do any thorough investigation into twitter's inner workings). They first tried to argue that they should be able to walk away because they weren't being given the data, so then they were given the data. They can't say "I have too much data" as an excuse now.
I don't know what his motivation were in purchasing the original 11% or so of stock, but after that I think he basically was talking out his ass like in a bar room boast about buying twitter, enjoying the massive media attention it brought, then went forward not to lose face. Then when he saw basically not only twitter stock dropping, but his own company stock too (and the fact that he didn't have the money to and had to secure funding from his and other's assets), as well as realizing that you can't do "absolute free speech" and how hard it is currently to keep in compliance with existing laws, that this whole thing would be a major headache and not worth the attention he would get, so he had buyer's remorse. Now he's trying to walk away without having to pay a penalty. If they show he was intentionally trying to depress twitter stock to make it cheaper for him to buy, he'll be exposed to lawsuits from people who lost money on twitter, and if it comes out that he was never serious about purchasing twitter, or is pulling out of the deal in bad faith, he'll be exposed to lawsuits from the other investors who were part of the $44B that was secured. Whatever the case, he sure seems to cause a lot of problems for himself by talking out his ass (as he's shown in various other issues over the last decade), but he will at least be keeping lawyers gainfully employed for the near future.
(Score: 1) by khallow on Sunday July 10 2022, @08:50PM
(Score: 0) by Anonymous Coward on Monday July 11 2022, @01:23PM
Hopefully he will get his day in court to prove his claims.
(Score: 0) by Anonymous Coward on Sunday July 10 2022, @03:13PM
Twitter stock price [yahoo.com] today is virtually identical to what it was at the beginning of the year before Musk announced he was going to buy it at $54/share, and it has been pretty much flat over the last 5 years excepting 2021 where the markets were just crazy.
Pretty much all the current stock price says is that investors don't expect they will actually get paid $54/share from Musk, and they haven't expected that since the middle of May or so when we saw the price drop from ~$50 to ~$40 or so.
(Score: 3, Funny) by crafoo on Sunday July 10 2022, @03:28PM
As if the people spending our tax dollars and printing money would ever let such a valuable NSA op be mothballed. LMAO
(Score: 4, Insightful) by Runaway1956 on Sunday July 10 2022, @12:15PM (6 children)
Musk allowed himself to be distracted from his businesses. My only hope is that SpaceX isn't affected by all this nonsense. Tesla and whatever else may be cool and all, but I don't care much about any of that. I want SpaceX to continue doing amazing shit that no one else dared to do. If SpaceX is crippled, derailed, sidetracked, or whatever, then none of this silly bullshit was worth it.
Be a shame if the richest man in the world lost half his fortune, just because he ran off at the mouth about buying up a shit platform, then didn't follow through. But the greater shame would be watching SpaceX fall apart in the aftermath.
(Score: 1, Informative) by Anonymous Coward on Sunday July 10 2022, @01:47PM (3 children)
How do we quantify that? He has estimated the time he spends at each company before. I think it was 70% Tesla during a crunch period. He has a team of lawyers to handle the nuts and bolts of the Twitter acquisition, and he does his obligatory shitposting to raise the stakes.
His companies can run without him to a great extent. SpaceX is not at risk. Tesla may be at risk because it's publicly traded, it got kicked off the ESG index, or because of the actions of the Biden administration.
https://www.businessinsider.com/musk-biden-tesla-electric-vehicles-political-switch-gop-twitter-2022-5 [businessinsider.com]
https://www.cnbc.com/2021/10/29/energy-secretary-defends-tesla-ev-tax-credit-exclusion.html [cnbc.com]
(Score: 2) by oumuamua on Sunday July 10 2022, @07:25PM (2 children)
SpaceX itself may not be at risk but the mission to colonize Mars is. It is Musk driving that specific push and it will fall apart if he leaves the helm or SpaceX goes public: https://www.genolve.com/design/socialmedia/memes/Musk-mars-humanity-a-multi-planet-species [genolve.com]
(Score: 0) by Anonymous Coward on Monday July 11 2022, @01:27PM (1 child)
No doubt this will be PROF of cancel culture just in time for the 2024, 2028, 2032 prez election. The only question is if Muzk or Suck or Bozo get the (R) nomination. What a clown show!
(Score: 2) by Freeman on Monday July 11 2022, @03:55PM
Musk is not eligible to be elected president. As far as I know, the other two could. Pray we don't live in such a bizarro world.
Joshua 1:9 "Be strong and of a good courage; be not afraid, neither be thou dismayed: for the Lord thy God is with thee"
(Score: 3, Informative) by richtopia on Sunday July 10 2022, @03:35PM (1 child)
He has discussed starting his own Twitter competitor as an alternative to the takeover. It is reminiscent of Truth Social, but it could be successful with someone technically literate driving the platform. Listening to him talk on the topic, it is obvious he is passionate about free speech. He also has a vision of a larger scope for this app; something competing with WeChat.
A chat with Elon, specifically jumping to his discussion on WeChat: https://youtu.be/CnxzrX9tNoc?t=1686 [youtu.be]
(Score: 2) by sgleysti on Sunday July 10 2022, @05:54PM
The trouble with starting another platform is that a platform's value comes from its user base. It's really hard to get as large of a user base as twitter or facebook has on some new platform, since people who use these things want to be on platforms where other people are.
(Score: 5, Interesting) by Thexalon on Sunday July 10 2022, @04:47PM (2 children)
The moment that Musk started claiming that Twitter had misrepresented the merchandise, I knew he wanted out.
Maybe he should have done his due diligence on spending $44 billion, rather than just going with his gut like he said he did. All the stuff he tried to do after the announcement to verify is precisely what he should have done before signing anything other than an NDA. Because as it stands, he's looking at a $1 billion lesson in the phrase "caveat emptor".
Unless, of course, he never actually planned on going through with the purchase, and was going instead with the plan of:
1. Buy a bunch of Twitter stock.
2. Say he was going to buy it out for a very large sum, making the price of that stock skyrocket.
3. Sell his own stock at the new price at around the same time he announces the deal fell through.
That would likely be illegal stock manipulation but the SEC is so toothless these days he might get away with that.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 3, Interesting) by drussell on Monday July 11 2022, @03:00AM (1 child)
I never expected him to actually go through with the purchase, right from the initial early rumours...
What all of his various motivations were for going through the charade obviously remains unclear.
(Score: 0) by Anonymous Coward on Monday July 11 2022, @01:31PM
Unclear? He's a media personality. A cartoon character. He probably doesn't write any of what "he writes" but has a team of PR guys making him look edgy and smart while he spaffs blow and hookers up his nose.
(Score: 1, Funny) by Anonymous Coward on Sunday July 10 2022, @06:45PM