Ever since Elon Musk attempted to wriggle out of the $44 billion acquisition that he so wanted to do (or so it seemed), Twitter has gone on the offensive. How this unfolds in courts and the boardrooms remains anyone’s guess, but two observations have bubbled to the surface. First, Elon Musk doesn’t believe he has what it takes to run a social media platform as big as Twitter and second, he doesn’t believe his own convictions.
It is very unlikely though that Elon Musk will get away from this deal easily. Earlier today, Twitter attorney William Savitt of the law firm Wachtell, Lipton, Rosen & Katz wrote in a letter saying “Twitter has breached none of its obligations under the agreement.”
It is important to look at two of the reasons (excuses, perhaps) that Musk’s legal team has included in the filings indicating the intent of pulling out of the deal. First, the issue of spam accounts and bots. This was building up as an excuse (at least a long-drawn conversation point, if you may), over time, including some tweets that would be classified generally as in bad taste (including the poop emoji as a reply to Twitter CEO Parag Agrawal). Second, Twitter fired some executives and few employees left before Musk could take charge.
But at the same time, it could be a strategy to ensure Twitter reveals the specifics of the bots and fake accounts once the courts ask for it. Twitter share price, as to be expected in such circumstances, has also dropped again. Musk can point to that for a reworking of the deal, for a lower price tag. Yet, being embroiled in this doesn’t make for a pretty sight for a man who claims to a visionary, the one to solve climate change as well as the collapsing birth rate, among other things.
On the issue of bots, the filing reads, “Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”
The second is the issue of Twitter firing some executives, while a few others have resigned in the weeks since the merger was first announced. “Twitter’s conduct in firing two key, high-ranking employees, its Revenue Product Lead and the General Manager of Consumer, as well as announcing on July 7 that it was laying off a third of its talent acquisition team, implicates the ordinary course provision,” reads the filing claiming Twitter didn’t get the consent of the incoming owner, for changes in the conduct of its business.
Both excuses sound very flimsy, at the very first glance, even to legal novices. And that’s before the courts in the US have had a chance to scan the claims, and Twitter’s submissions. Twitter board chairman made it clear that the company has approached the Delaware Court of Chancery. “The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery,” he said in a tweet.
In case Musk didn’t realise it earlier, fighting spam and bots is what takes up a lot of time at any social media company. It isn’t a problem unique to Twitter. How are bots that big a challenge when Elon Musk claims to be the man who will save the world, shows a willingness to solve climate change and throws around grand ideas at keynotes? Twitter, in its latest financial report says they have 229 million monetizable daily active users. Business doesn’t stop just because there are 5% (or 20%, just to humor Musk for a moment) bots that infiltrate the overall user base.
Can Elon Musk really cancel a $44 billion business deal over some management changes at Twitter, before he’s arrived in office? Unlikely, because Twitter will very calmly submit that they have been upgrading the product and new features have been rolled out over the last few weeks, which shows business is running as normal. The new functionality includes co-tweeting and the ability for users to un-tag themselves from conversations.
It all boils down to how this started. Twitter didn’t go out seeking to be acquired. No one forced a social media company’s acquisition on Elon Musk, distracting him from his persistent tweeting. He forced this entire series of unfortunate events, which have been littered by frankly troll-ish behavior in public.
He’d made the right noises too, at least on the surface. He wanted to make Twitter the “de facto town square”, talked about free speech on the platform, that the deal wasn’t about money but the future of civilization (there’s a TEDx talk that’ll live on forever) and Twitter’s extraordinary potential that he intends to unlock. Alas, it seemed these words, and statements, only skimmed the surface.
Elon Musk has spent years building an image that he’s saving the planet, with Tesla. That may be true to an extent, but the impact is limited by price and a buyer’s ability to purchase. Tesla’s electric cars are among the more expensive options in each category. But that’s a step towards the intended goal. Musk also fast-tracked deliveries of the Starlink satellite broadband equipment to Ukraine as the Russian invasion began earlier this year, much to the chagrin of the Russian administration.
But none of this takes away from the fact that after forcing through a move to acquire Twitter, Elon Musk cannot simply one day decide he’s too bored to go through with it. Or that it’ll be too much work.