Delaware’s Chancery seems like a fitting place to hear the pleas of a billionaire nobody believes.
Elon Musk’s attempt to get out of his $44 billion Twitter takeover deal seems ridiculous.
He’s overpaid. He knows it. We know it. Twitter knows. And there seems little chance a Delaware court will let him get out.
Do you remember why he said he wanted to buy it in the first place? It should rid the platform of spam bots. Now he claims that there are actually more spam bots than he thought. So many, in fact, that it should kill the sale.
I can’t stress this enough: nobody believes him.
It’s not just that he hasn’t provided a shred of evidence to support his hasty claims that spam bots exceed Twitter’s 5 percent estimate.
It’s so anyone with a functioning frontal lobe can see they agreed to buy it just before tech stocks crashed.
Now he has $10 billion out of his own pocket. Even the richest man in the world is worth wriggling out of.
But here’s why he won’t win.
His case is based on two main legal arguments. First, that a higher number of spam bots than disclosed could significantly affect the value of the company he agreed to buy.
He has a near-impossible task of proving this. He can’t prove there are more spam bots than Twitter’s 5 percent estimate.
Even if he could, it would have to be a much higher number to “materially” affect the company’s value.
In other words, it would have to show that advertisers are fleeing Twitter in droves over the newly discovered spam bots. So he won’t win there.
The second reason is more likely, at least in theory.
If he can show that Twitter has failed to respond to reasonable requests for information or has kept him updated on important company matters, he may have the right to withdraw. Musk appears to be relying on some unanswered or partially answered data quality questions. He also says the firing of two Twitter execs qualifies as something he should have kept abreast of.
But again, Musk’s problem is proportionality. Twitter generally went above and beyond to give Musk access to his data.
This culminated in an extraordinary look at his “firefighter” raw data as it hits Twitter’s servers. Arguing for Musk that “reasonable” requests for data quality have not been met will be a difficult task.
Likewise, it’s hard to say what Musk could have done about firing two executives. He could not have opposed or influenced the proceedings. Therefore, it is very difficult to see a court ruling that any of these claims are sufficient grounds to terminate such a large contract.
After all, Musk could finally be a victim of his own notoriety. Even if his case held some water, the Delaware court will be well aware that the world is watching this case and his handling of it.
In many ways, the reputation of the Delaware Chancery is also being tested here.
Delaware is best known to those unfamiliar with the tiny state as a go-to place for incorporating and regulating any business — be it Stripes Atlas or a startup.
Will it be known as a place that gives in to the antics of a billionaire tyrant? If anything, couldn’t there be an unconscious bias in the opposite direction? That the court is above such noisy gimmicks and is a place of quiet continuity?
All signs currently point to a direct Twitter profit or a renegotiation of the purchase price. I’d bet the latter is the more likely option.
Musk has the tools to delay this for months or even years. That could ruin the company. There are already reports of cracking morale and departures in the company.
Everyone I know at the Dublin office, which employs 500 people, is dismayed at what is happening. It doesn’t help that Musk has messed up the rationale for much of the work the Dublin office is doing.
Shareholders, too, could decide that Musk’s rabid behavior online shows he’ll run the case like a soap opera — until it either gets his way or the company is truly hurt.
That could spur them on to accepting a revised — lower — offer for the company.
For users of the service, the prognosis is much less clear.
What started out as a party – “We’re finally getting an edit button!” – is already looking like a real trot.
On the other hand, Twitter’s resilience might just be what has kept its earning potential among other platforms so far. It remains a very simple platform at its core, dominated by a single scroll of short posts.
It’s hard to mess that up completely.
And that could be why it is now treading water while its entrepreneurial future hangs in the balance
https://www.independent.ie/opinion/comment/musk-may-well-be-lying-but-a-court-victory-will-be-far-from-the-end-of-twitters-trials-41844782.html Musk may be lying, but a court victory won’t mean the end of the Twitter trials