I literally can't imagine ever wanting to do business with Elon Musk. Matt Levine has written a lot about this deal and it sounds extremely clearcut that Elon is contractually committed. There is no "buyers remorse" or "lol, jk" clause in the deal.
That said, I have a feeling he will weasel out with nothing more than a slap on the wirst, if even that.
Twitter's board isn't exactly known for its competence and backbone, so I suspect it will back down if Elon yells and lies enough about whatever pretext he decides to use to back out of the deal.
Irrespective of anything regarding Musk, Shouldn't transparency and Truth be sought from Twitter. Full Stop.
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I recall when I interviewed there in ~2008?? Don't recall, and they asked me in the interview what I thought Twitter was: I stated "Twitter is a global sentiment engine thats able to take the pulse of users around the globe on any topic"
> Irrespective of anything regarding Musk, Shouldn't transparency and Truth be sought from Twitter. Full Stop.
No. Twitter is not the press, nor is Twitter a public utility. Twitter is under no obligation to provide "Truth" or "transparency" to the public. It's a microblogging service, not the BBC.
> It's a microblogging service, not the BBC. Full Stop.
*publicly listed. so they need to be transparent as far as market information goes, while not disclosing corporate secrets or breaching personal data regulations.
and the CEO said from the start that they cant disclose more details regarding their 5% assessment.
No, you're missing the fact that Twitter is a publicly traded company. If they knowingly provide false or misleading information in their filings, the SEC and likely the shareholders can go after them. It would be tricky to prove intent here, but there may be other risks. I'm not a lawyer.
the merger agreement is clear. the only thing that can free elon from completing the deal is lack of regulator approval and no regulators are even looking at the deal
No, this would normally be covered by a due diligence provision but Musk expressly chose not to include one in the agreement as an incentive to Twitter to approve the deal.
Twitter might let Musk off the hook for $1 billion, but he's paying something to get out of this.
The SEC reports says they estimate the bot daily active users (or something like that) to be 5%, but in fact could be much larger and it is merely an estimate. These leaves room for bot count to be much higher and they still would not have lied.
Go to the statement (10-Q I think) and you'll see caveats and conditional statements that are rather clear the estimate was not in anyway definitive or even methodologically sound. They said that. My man Elon is so focused on numbers that he doesn't read the fine print. Certainty intervals matter, even if they're described with words rather than numbers.
Yeah, that is the part I'm referring to. Agreed, that if he read the fine print that he would be litigating this much differently, or at least in his public statements. From the change in strategy, it appears his lawyers are now just trying to claim that Twitter isn't providing some information... although, I'm not sure that they are required to verify any claims regarding bots based on their public filings.
His lawyers are claiming a technicality in the contract, specifically there _is_ a clause that requires Twitter to service any "reasonable" request for information to Elon. Theres 2 important things to keep in mind when judging the violation however:
1) Requests for information are assumed to be to facilitate _closing the deal_. Its not just for any willy-nilly request he wants.
2) It specifically is not to service "due diligence". This is the "open for interpretation" part. The contract _separately_ calls out that Musk has had the opportunity to seek information for due diligence, and Twitter has already fulfilled those requests to his satisfaction. So with that in mind, I would interpret the obligation to service information to be limited to things e.g. related to acquiring financing, or to fill out paperwork etc.
The SEC filing very specifically explains that Musk has _already_ had the opportunity to seek any clarifying information needed, and is _already_ in agreement that no more information is needed to be satisfied with the deal. See my other comment about Section 5.11.
There is a misapprehension about the breakup fee: It isn't at Musk's discretion that he can pay the fee and walk away. The breakup fee would be paid if the deal can't proceed for reasons outside Musk's control. That does not include wanting to argue due diligence matters, having waived dd.
But Twitter's board has to fight, no? Elon is essentially accusing them providing fraudulent statements. If they admit as-is, it can open a massive door for other lawsuits.
No, they don't have to do anything except say, "We had a contract and you agreed to waive due diligence. Pay up."
EDIT: pay up in this context probably means $1 billion, though given that he is the world's richest man, it could conceivably include specific performance of the contract (meaning going through with the deal).
The problem is that Elon, for so long, has avoided the consequences of his actions that the thought of being held accountable to perform or pay the termination fee feels like oppression to him.
Had he acted with integrity and honesty, he wouldn’t be in this situation of his own making, but those traits aren’t what made him wealthy.
I would hesitate caution before assuming that “waiving due diligence” is a magic get out of jail free card. It’s rarely that simple in a contractual dispute.
More than $1bn. It’s damages (i.e. how much he would have overpaid) - so more like $15bn. The $1bn is for if outside forces (e.g. antitrust laws) prevented the deal from closing.
Nah, Elon is more bloviating than making a serious accusation. He waived his due diligence and is not using the same terms as Twitter, possibly because he's dumb but I think more likely because he's trying to deliberately mislead people. Twitter's 5% claim (from public financial filings!) is about monetizable users, not "accounts that look like bots to Elon" or whatever other standard he wants to use. He's acting in bad faith and Twitter knows it.
The board may not have a backbone, but their legal team has blood in the water for a multi-billion dollar settlement. I don't see how this doesn't end with years of expensive litigation (barring a new agreement).
Yeah, the updated link content says they plan to sue to enforce the original buyout terms:
>>"Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement," the company said in a statement.
>>"We believe this agreement is in the best interest of all shareholders," it added. "We intend to close the transaction and enforce the merger agreement at the agreed price and terms."
Given that the SEC likely has a bone to pick with Elon for his other stunts, I wonder if they'd step in under their authority to make sure he doesn't get away with just a slap on the wrist. Not so much forcing him to go through with the sale, but use their soft power to ensure he pays the breakup fee.
At this point the deal is as much politics (not left/right, but posturing between powerful institutions and individuals) as business, so anything could happen.
> Never mind Twitter. Buying a car from that guy is really absurd and dangerous.
Very true. I was rooting hard for Tesla to succeed a number of years ago, but these days there's no chance I would even consider buying one of their cars. A few people close to me own Teslas and I worry quite a bit about their safety. I really hope that Musk's absurd behavior lately opens some more eyes to just how reckless and irresponsible the company is.
The Twitter board isn’t gonna make Elon do anything.
They will settle the shareholder lawsuits (and probably make Twitter Inc. and therefore the shareholders themselves, pay for it).
Because if they do anything Elon’s gonna threaten to make their lives miserable in many different ways. And they are all gonna fold.
They didn’t become board members to protect shareholder rights. They became board members because it’s a cushy job that pays well for little work. And gives you some street cred. Getting into a fight with Elon threatens all of that.
So yeah, Elon’s bullying and tantrum throwing will win again because the only entity that can fight back, the US govt, has decided for a few decades that it really shouldn’t be doing anything.
I fundamentally agree with you but I think a few things.
1. There's a small chance they fight because 10's of billions of dollars are at stake.
2. If they do fight I'm pretty sure they lose because I don't think a judge would want to force someone to do something they don't want to do like this, especially when that person is a billionaire.
3. It makes the future popcorn-eating amateur sports analysis in the future interesting(or less interesting?) on these kind of deals, because I think early on there was this sense that Elon Musk was taking this big risk by making a big offer and waving due diligence, and the reality is that risk doesn't work for billionaires the way it works for the rest of is. All this back and forth about the nuances of contract law end up irrelevant.
Re: point 2 – a judge wouldn't necessarily force him to carry out the deal, but the judge would likely force him to pay the $1bn breakup fee that is agreed to if he does not carry out the deal.
> "Because if they do anything Elon’s gonna threaten to make their lives miserable in many different ways."
> "this is an ugly tantrum"
I think you and OP are in agreement there.
But I'm highly interested what you think Elon would personally do to make the board's lives miserable. If anything, standing up to his tantrums gives them more "street cred", and if Elon does take over Twitter they will all immediately lose their "cushy job that pays well for little work" anyways.
If I'm a board member, extracting the $1 billion breakup fee from Musk without giving up any control of the company would be my number one strategy in saving my job, in defending my worth as a board member against Elon's charges of ineffectiveness, and in carrying out my fiduciary duty to shareholders.
Is he disputing the $1 billion dollar break-up fee? In the big scheme of things I just don't know that that element of it is that big a deal in comparison to the $15 or so billion dollars Twitter is not getting from the delta between current stock prices and Musk's original offer.
Yes, he's positioning himself to be able to claim he is as able to walk away without paying the breakup fee, by claiming Twitter breached contract first:
"Musk’s lawyers say in the letter that Twitter has offered only to provide details about the company’s testing methods. But they contend that’s “tantamount to refusing Mr. Musk’s data requests,” and constitutes a “material breach” of the merger agreement that gives Musk the right to scrap the deal if he chooses."
I saw that quote, and I guess don't highly doubt that he wouldn't try to walk away from the fee, but since he's currently contractually obligate to purchase twitter well over it's valuation, I figured the emphasis of that statement was more to say that he could back out at all, since that's the much bigger financial risk.
Elon has the ability to direct an angry mob at anyone he wants just by saying some mean things about them, true or not. I certainly would not want millions of rabid Elon fans gunning for me.
He could also maliciously try to deny Twitter board members and executives positions at other companies, like he did with the SEC employee turned law associate.
Given Elon's power and pettiness I'm sure there are many other ways he can and will try to harm people he dislikes.
Seems like Twitter's major shareholders include Vanguard and Morgan Stanley? If Twitter's board forgoes billions of $$$ just because "Elon's gonna threaten them," I can't imagine these nice Wall Street Bankers not personally igniting fire under the feet of every single board member. Especially when the law is on their side.
That was merely a tweet. This time they've got him by the balls with a signed contract. It will be interesting to see if he can get out of this one so easily, because this whole drama will certainly end up in court.
Not really, I mean worst case he has to pay Twitter 1B?. Which to us seems ridiculous, but for him it's like $1,000 might be to many of us, we would notice it, but it would likely not financially ruin us.
People keep stating that he can buy a $1B get out of jail card but AFAIK that's not true. He can only pay the breakup fee if he has financing concerns and/or regulatory reasons for not being able to close the deal. [0]
> The real outrage, I conclude, is not the details of how Elon Musk might change Twitter, but the fact that so many people in positions of power — politicians, business leaders, journalists — still pay so much attention to these 240-character missives.
> “Twitter’s increasingly heated wrangling is not just far from a considered democratic debate,” I write, “but has truly become a spectacle driven by a narrow and unrepresentative group of elites.”
Why do we care so much about what happens to Twitter?
It's easy to blame Twitter for election misinformation, but getting rid of Twitter will never be the solution. The problem will keep showing up until we fix the root cause. (I'm certain that people were upset about the invention of the printing press for the same reason.)
At some point, to have a functioning democracy, the populace has to be educated. Then when there's misinformation, they'll just ignore it.
In the past, we've gotten around this by it being expensive to broadcast ideas to large numbers of people. You had to be a newspaper or TV network, and newspapers and TV networks employed people worried about their reputation, so nobody ever published op-eds about how Bill Gates is injecting us with 5G microchips or whatever. This weeded out quite a lot of conspiracy theories and whatnot. But the reality is that the Internet changed the calculus there; anyone can publish anything to a large number of people. With that floodgate open, there is no going back and we have to teach people to critically analyze what they hear on the Internet. It's the last line of defense.
This means that all the bluster over Facebook and Twitter and free speech needs to translate to increased funding for schools, and that if we start right now it will probably take a couple generations to get to a better place. There is no quick fix to make democracy work, only hard work and time.
Journalists do, because it makes their job easier. You can literally be called a journalists because you write long form articles about tweets. Journalists tend to obsess over their own profession and its tools
This is sort of the elephant in the room, and it's why I find the arguing over how many bots exist on the platform to be pretty boring. It misses the point. Twitter is a platform and coordination mechanism for elite opinion. That's what makes it valuable, and this is completely separate from whether or not "twitter makes money".
Twitter is fun to read but it's a warped version of reality. So many people post absurd takes on there and find their little corners where other people actually agree with their craziness. A lot of people brashly tweeting stuff that they would likely never say out loud with polite company.
I don't, but I can see why people in/seeking power do: it's just another nebulous thing to point to as a distraction or scapegoat.
Like there's tons legitimate talking points that people can make for or against Kamala Harris' body of work as a politician, but once people start talking about the KHive on Twitter in those discussions, it totally distracts from those points.
So by pretending Tweets about someone matter more than what someone actually does, they can try to control or shift the narrative away from someone who actually has power (Harris) to something else that doesn't (people using a particular hashtag).
Are people purposely ignoring the fact that Twitter are clearly lying about the % of non-human users? They say its less then 5% but in reality its between 5% and 25% based on multiple independent research studies.
If it really was < 5% why don't Twitter just release the data Musk is asking for?
I'm curious about the nuances of this, I haven't seen this argument made elsewhere yet, but it does seem to make sense that you would make that kind of exception. Even when you buy a house as-is, exceptions are generally going to be made for existential threats (leans on the house, title issues, etc.) outside of the _condition_ of the house. But it still feels like posturing, especially since he knew this was an issue before he made the offer, why not explicitly call this out in the contract? It definitely feels like the weight of the economy collapsing is the substantive issue.
No, the SEC agreement directly addresses this. Section 5.11 ("Parent" and "Acquisition Sub" is Musk, "Company" is Twitter):
> Each of Parent and Acquisition Sub has conducted, to its satisfaction, its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company and its Subsidiaries. In making its determination to proceed with the transactions contemplated by this Agreement, including the Merger, each of Parent and Acquisition Sub has relied solely on the results of its own independent review and analysis and the covenants, representations and warranties of the Company contained in this Agreement
So, in essence:
1) Musk has been afforded the opportunity to address any concerns he has with Twitter
2) Any concerns of Musks have been satisfactorily resolved by Twitter
3) In determining said satisfaction, Musk is relying on his own judgement and analysis, and is not relying on any analysis by Twitter.
There is absolutely 0 ground to his complaints today and claiming he "isnt being given the information hes been asking for" or that "I was going off your numbers but I want to run my own".
the poster is defending Twitter be able to lie on their public filings. If their bot % is materially higher then 5% they have committed securities fraud.
Twitter are stuck. If they admit a bot count of say 25% and say "sorry Mr. Musk but you committed to buy no matter what... buyer beware" then yes, Musk should be force to continue the sale but they can't because it raises much more serious questions.
Not only that, his biggest argument for buying Twitter was literally that there were too many bots and that he would solve it. Now that he's waived due-diligence and the market is tanking, he's "concerned" about the number of bots? It's such transparent BS that it's embarrassing.
I don't have a horse in this race, but I don't follow your reasoning. If you thought there was a large bot problem, part of the appeal would be that there's an opportunity to fix that problem. That would increase the value of the company after you've fixed the problem. Assuming that's the case, then finding out there's not a big bot problem would mean there's not as much of an opportunity.
yeah, maybe he could have spent a little time looking into this stuff before committing. Oh well, I'm sure his lawyers are happy to take the billable hours!
It comes down to not being able to state that he was unaware of a bot problem (as an argument for walking out of the deal) if he has very publicly said that he's doing this because of and to fix the bot problem.
It is a little more nuanced. Twitter is claiming than fewer than 5% of the monthly active users they report are spam bot, not that fewer than 5% or those on the platform. If they “don’t count” them but also don’t ban them, that would leave room for bit theories to be “true”
There's also a deeper set of definitions at play. Twitter the corporation cares about monetizable active users, as stated. Or, in English, "what fraction of ads served are really going to robots?"
Twitter users don't give a fig about Twitter's ad impressions. They care about what fraction of comments or interactions are in fact with bots or astroturfers. From the perspective of Twitter as a communications medium rather than an advertising channel, this is the relevant statistic.
it’s a nonsense argument, most people (including musk) couldn’t even articulate robust criteria for measuring a “non-human” user — musk himself has undermined his position on this topic multiple times.
Twitter has never claimed that the number is accurate nor important in absolute terms (“we aren’t sure” features prominently in their filings!) rather it’s a number that is important for understanding growth and evolution of the platform. The number matters quarter-to-quarter, not in isolation.
Active human users matters in the context of advertising, it’s a pointless distraction that musk is employing to back out of the deal.
Let’s imagine there is a real measure of “non-human users” and lets say it turns out that Twitter underestimated by 50%… so? Musk long said he wasn’t buying Twitter as a financial move, and that he has a plan to be wildly profitable off of a small proportion of twitter’s users so unless 95% of twitter’s users aren’t real, it doesn’t impact his (absurd and ridiculous) plan.
That’s not how advertising works, advertisers don’t care about “quality of the audience” in the abstract because digital advertising is results driven. There’s a great deal of fraud in advertising across the industry, and it’s certainly not good, but it’s a cost of doing business for advertisers and is factored in: when an advertiser pays Twitter $100 to generate $150 in revenue, it doesn’t matter if $50 of that $100 was spent because it “non-human users”. Twitter could reveal tomorrow “oops our numbers are wrong, our non-human user count is actually twice as high” and it would have zero impact on advertisers. Not a single professional in the space would care, because advertisers are not measuring their value from Twitter based on twitters KPIs. Advertising is a means to an end, advertisers measure the end.
That's completely false. I've worked in both the media buying and inventory side of advertising and the large accounts definitely care about the quality of audience. Nike, Apple, Nestle etc have huge internal agencies that are tasked with finding brand safe platforms to advertise against.
The type of attribution based advertising you are talking about certainly also exists whereby the advertiser pays $x per (milli)impression, then a further $x for click-thru and then a final $x for a conversion. However the vast majority of twitter's revenue is in the first bucket (CPM) which is entirely valued based on the size and quality of the audience.
You’re drawing an arbitrary line. The majority of digital advertisers are using digital advertising because the value is quantifiable through attributable revenue.
There are certainly a minority of major brands that operate as advertisers with awareness campaigns — sponsored hashtags are a good example — but if you read the Twitter filings, it’s very clear that their focus is performance based advertising — and that’s where they see their future, too.
Maybe a decade ago you could have said that advertisers were just trusting platforms to deliver value, and that ad-fraud could make or break a platform if they got caught, but that’s not true anymore, it’s a much more sophisticated market. Advertisers aren’t (as) dumb (as they once were).
Brand safety is a whole other kettle of fish — that’s a concern across all types of advertising, and not relevant to the audience, rather the content of the platform.
>You’re drawing an arbitrary line. The majority of digital advertisers are using digital advertising because the value is quantifiable through attributable revenue.
If you are talking about the majority of ad impressions being programmatic/attribution based then yes you are correct, however if you talking about dollars spent that direct sponsorship with large internal agencies is still very much king.
To give some context, large corps would routinely drop $5 million on a direct deal with Twitter for a combination of promoted tweets, hashtags, trending etc. This was also almost pure margin as there was no middle DSP/SSP taking a cut. To get the same profit from the method you are purporting to be most common would take years.
>Maybe a decade ago you could have said that advertisers were just trusting platforms to deliver value, and that ad-fraud could make or break a platform if they got caught, but that’s not true anymore, it’s a much more sophisticated market. Advertisers aren’t (as) dumb (as they once were).
Maybe a decade ago? So the people who are now in senior positions at the agency and call all the shots are the ones making the major deals. Well then it would stand to reason that the biggest profit comes from deals that are structured like they were 10 years ago.
Nowhere Twitter claims that. For years they don’t report active users, but their own metric of monetizable active users. Elon just pretends he doesn’t know that.
It would be interesting to know exactly what the definition is for a bot / fake account.
For instance, I have 5 accounts which automatically tweet out the latest posts from 5 of my websites. They are automated and probably technically bots, but that seems different than an account that is meant to give fake likes/retweets.
The part that seems dangerous to Twitter is not the go/no-go part of Elon Musk's offer , but the possible shareholder and advertising related lawsuits that may arise.
Representing bot activity as less than 5% but using a sample size of 100, when you are claiming millions of active accounts, can't easily be seen as honest. Since statistics which Twitter is expected to know as a matter of their duty to shareholders , makes it plain that the sample size is too small.
Too many bots = shareholders were misled as to true number of active accounts.
Too many bots = advertisers were misled as to potential reach.
Everything about the bots is a side show to the merger. Twitter’s assertions about bots are in SEC filings and they are a publicly traded company. If there is a cause of action, it already exists and has nothing to do with Musk’s bid.
As for that bid, the time for due diligence is before, not after, one signs the merger agreement.
FWIW I have shares in Twitter and would prefer them to remain a publicly traded company.
He didnt "waive" it as far as I know. The agreement explicitly says that at the time of the SEC filing, the due diligence has been completed to the satisfaction of Musk. Now, this might mean he just didn't ask for any information, so that could technically mean he waived it. See my other comment about section 5.11.
The SEC filing (https://www.sec.gov/Archives/edgar/data/1418091/000119312522...) very explicitly says that Musk has _already had the opportunity to ask for clarifying information_ and that Musk _is already happy with the results of those discussions_. It explicitly explains that the only thing that Musk considers material is included in this document already, and that anything outside of this document should not be considered when evaluating the agreement.
Section 5.11 (note that "Parent" / "Acquisition Sub" refers to Musk and "Company" refers to Twitter):
> Each of Parent and Acquisition Sub has conducted, to its satisfaction, its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company and its Subsidiaries. In making its determination to proceed with the transactions contemplated by this Agreement, including the Merger, each of Parent and Acquisition Sub has relied solely on the results of its own independent review and analysis and the covenants, representations and warranties of the Company contained in this Agreement. Parent and Acquisition Sub hereby acknowledge that, notwithstanding anything contained in this Agreement to the contrary, (i) neither the Company nor any of its Subsidiaries, nor any other Person, makes or has made or is making any express or implied representation or warranty with respect to the Company or any of its Subsidiaries or their respective business or operations, in each case, other than those expressly given solely by the Company in Article IV; and (ii) neither Parent nor Acquisition Sub is relying on any express or implied representation or warranty, or the accuracy or the completeness of the representations and warranties set forth in Article IV, with respect to the Company or any of its Subsidiaries or their respective business or operations, in each case, other than those expressly given solely by the Company in Article IV.
Because if you want to back out of a contract on the basis that someone lied, you need actual evidence that they lied, not just a lack of evidence that they were honest.
What is known—as an organization Twitter hasn’t always been forthright with the public regarding their practices (shadow banning, uneven application of rules regarding account suspensions). In some cases these may have been bad actors within the organization acting outside of the management’s knowledge, or even tuned algorithms towards certain topic preferences that have a more aggressive effect—but when discovered, the company does tends to deny and then quietly work to rectify the problem internally.
So did they lie about the bots? Who knows? Do they always tell the truth? Well, I think you could reasonably argue not quite.
There’s no reason to lie - the way it’s stated makes it clear that it is not, in fact, an estimate of the total number of bots on the platform. They never stated the number of bots on the platform and never claimed to. The stat they gave (percent of monetizable users - those who see ads) may be not what Musk was asking for, but there’s no reason to believe they lied about a percentage they defined in a very specific way - especially when, even with that definition, it had a disclaimer that it was only an estimate and could be higher.
So the argument wouldn’t be that they lied. It would be that the information they provided wasn’t useful to gauge the true scope of the “bot problem” on Twitter - at best it’d be misleading by omission, which is almost certainly not illegal given what publicly-traded companies do all the time. (Making truthful statements and being fully transparent with all facts of a business are clearly not the same thing.)
Part of the reason Twitter is so hesitant to put some number on bots is because we’d first have to agree on how to define it exactly and how to measure it objectively. If someone uses the API or third-party app or integration to interact with Twitter, how do you prove they’re not a bot? Twitter’s definition avoids that by focusing on people who can see ads on the website and if you’re actually visiting the website proper (or using an official app) you’re much less likely to be a bot to begin with.
But honestly, all this stuff is just a distraction anyway. The SEC statements were there for years and if he doubted it this could have come up during due diligence. He only is making a stink about it now because a) he wants to get out of the deal at the quoted price and b) he wants to embarrass Twitter in the process. In fact, it seems to me this whole thing from the get-go was an exercise in the hopes of uncovering evidence of something salacious regarding “censorship” and various posturing around it. There never appeared to be any realistic and serious plans to address the issues at hand, just to gesticulate wildly about it in front of the press. I think those truly concerned about the problems being discussed should have hoped for better from this whole thing.
That's a right granted by your contract that expires after a certain amount of time with no objections. The merger agreement would have incorporated such a right but Musk waived it (iirc, based on Matt Levine's summaries).
> I bought a house. The due diligence period to inspect the house, get a survey, etc. was after we entered into the contract and before closing.
I know with the crazy housing markets, this might not be something anymore, but in times past you would enter into a CONDITIONAL contract and set the price, with the stipulation that the inspection has to be satisfactory to remove the conditions. Otherwise, after you signed your contract, the house is yours, and the survey just tells you what you are obligated to fix.
Also, Business deals usually allow parties to enter into things like NDAs for due diligence, as well as signing things like Memos of Agreement to get a roughed out deal, pending a thorough due diligence.
I believe he's past (or waived) the due diligence. I'm sure there is a back-out clause, but that has $$$ attached and he's trying to wiggle out without paying, is what it seems like.
> The due diligence period to inspect the house, get a survey, etc. was after we entered into the contract and before closing.
Right, because thats what you included in your offer contract. Now, imagine that you didn't have anything in your offer about contingent on inspection. Do you think you would have standing to back out of the deal?
I bought a house. The due diligence period to inspect the house, get a survey, etc. was after we entered into the contract and before closing.
And many people, just like Musk, waive their right to terminate the contract due to inspections, loan approval, etc. For the same reason that he did - it gives the seller less reason to reject your offer.
There are two whole sections from Section 4.1 through Section 5.11, comprising 16 pages of representations and warranties, which incorporate a wide swath of statements (including public disclosures to shareholders), not to mention two pages of conditions, etc. including specifically:
> Section 5.5 Information Supplied. None of the information supplied or required to be supplied by or on behalf of Parent or any of its Representatives expressly for inclusion or incorporation by reference in the Proxy Statement shall, at the time it is first mailed to the Company’s stockholders and at the time of the Company Stockholders’ Meeting to be held in connection with the Merger, contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
It says right there ~"if Twitter has been lying to its shareholders I can void the contract."
True, Musk's lawyers haven't accused Twitter of lying. They've said Twitter is withholding information that Musk is entitled to (I had to go read the letter). And yeah, the contract gives him very broad rights:
> Section 6.4 Access to Information; Confidentiality. Upon reasonable notice, the Company shall (and shall cause each of its Subsidiaries to) ... furnish promptly ... all information concerning the business ... as may reasonably be requested ... for any reasonable business purpose related to the consummation of the transaction...
I think it makes perfect sense that any financier will ask "How many users does Twitter have?" And that entitles him to this information.
It’s a clever approach by Musk. How do I prove I am not withholding information? Not sure I can to the satisfaction of the person accusing me of it.
Twitter doesn’t know what it doesn’t know. It’s dropping a bot estimate that may or may not have shaky foundations. It knows it’s bot “estimate” could be low, perhaps significantly so. It knows that every point over their best estimate fuels Musk’s fears and ultimately becomes a PR and potential legal disaster.
They will have internal employee pressures to make Musk go away.
They will have political pressures to make Musk go away.
The shareholders want the offer, but Twitter hasn’t really gave a shit about them before.
> It says right there ~"if Twitter has been lying to its shareholders I can void the contract."
The thing you quote very specifically only applies to the Proxy Statement provided to shareholders as part of the process of this specific deal. It has nothing to do with previous communications and "if youve ever lied about anything then the contract is void".
EDIT: even better, Parent/Acquisition Sub refers to Musk's side. So this clause is basically saying Musk won't mislead shareholders to convince them to agree to a deal.
EDIT 2 because its super frustrating that theres an entire contract with the specific language in it that people argue past:
> it's not fair to suggest this was 73-page contract was an as-is agreement with no warranties express or implied
Article IV is what binds Twitter (Article V is what binds Musk). It very explicitly says this is as-is with no warranties express or implied. Section 4.25:
> Section 4.25 No Other Representations or Warranties. Except for the representations and warranties expressly set forth in this Article IV, neither the Company nor any other Person makes or has made any representation or warranty of any kind whatsoever, express or implied, at Law or in equity, with respect to the Company or any of its Subsidiaries or their respective business, operations, assets, liabilities, conditions (financial or otherwise), notwithstanding the delivery or disclosure to Parent and the Acquisition Sub or any of their Affiliates or Representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing. Without limiting the generality of the foregoing, neither the Company nor any other Person makes or has made any express or implied representation or warranty to Parent, Acquisition Sub or any of their respective Representatives with respect to (a) any financial projection, forecast, estimate or budget relating to the Company, any of its Subsidiaries or their respective businesses or, (b) except for the representations and warranties made by the Company in this Article IV, any oral or written information presented to Parent, Acquisition Sub or any of their respective Representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or the course of the Merger, or the accuracy or completeness thereof.
If home inspections on TikTok have shown me anything, it's to never do this. Too much potential reward (savings on the fixes, rights of refusal) for such a small outlay (a couple of hundred dollars).
It’s not to save the inspection fee, it’s to win a bidding war on the house. Given two bids at the same price, sellers will accept the bid with fewer contingencies.
This is also why people offered all cash for a house even when mortgages were cheap (avoids the financing contingency).
Not worth it. Spending $200k (I know, I'm a good decade out of date on my house prices) on a house and then having to spend another $200k to make it habitable is a losing game.
Perhaps it's different if you're acting like an angel investor in housing, but for an average family, it's financial Russian Roulette.
We're getting off topic, but I have two points about waiving inspection:
1) In my state there's a mandatory seller disclosure. If the seller knew about a problem with the house and didn't disclose it on the seller disclosure you can sue them if you can prove they new about the defect and intentionally didn't disclose it, so there's at least that.
2) Home inspectors don't take legal responsibility if the inspection misses something important, they only offer to, at most, give you your money back on the inspection. So you have to be optimistic that the inspector has a clue what they are doing and can catch future problems when you rely on an inspection.
Buying a home while waiving inspection might be Russian Roulette, but I bet the odds are less than 16.7% that waiving inspection will financially kill you.
The reason to wave inspection is not to save money, but because the seller will refuse to sell to you if you don't. My father in law was offering to pay $5-10k over the next highest bid on a house he wanted to buy, but didn't get it because it he refused to wave his right to inspection.
Personally, the seller refusing to sell if you get an inspection is such a huge red flag I would never enter the contract. The house could be in a state where it should be condemned, and you wouldn't be able to tell.
There's no red flag. The seller doesn't demand anything. In a hot market they simply sell to the person who waived inspection.
For example, a house goes up for sale, three people bid within three days of the listing. Two of them for $300,000 with inspection waived, one for $300,000 with inspection not waived. The bid with inspection not waived is never even considered. It would be irrational for the seller to take the risk associated with the weaker bid.
>It refers to 5% of monthly active users who are shown ads.
This may come across as pedantic, but I'm genuinely asking: can a bot be "shown" ads? If a bot never loads the js or html that serves the ad, was it "shown" ?
"Shown" is a placeholder for "recorded as shown". This is technically some async call to a metrics endpoint. There may be correlation in a processing pipeline with other metrics/pageviews but that's not something that can be assumed.
Ultimately, however they measure ads shown, they have some process to determine what they believe to be bot ad views. We can only discuss at that level without more information.
Depends if the bot is using full browser emulation or not. If they're using Puppeteer or something to drive a headless browser, it seems likely the ad would be recorded as "shown". If they're just making requests to specific endpoints sufficient to avoid Twitter's bot countermeasures, then it's likely not registering as an ad impression.
It's a silly argument though. If twitter knew all bots, they could easily remove them all.
Because that isn't as easy, what they have is just an estimate. And what makes Elon estimate any better than twitter's?
Elon figured out that he can make money by manipulating the market via twitter posts. An ability to control the platform would allow to have even more impact and it would be harder to prove that he had anything to do with it.
The purchase backfired his stock tanked (not just because of the purchase but other actions he did recently, he put me off and I was a huge fanboy before) so he is looking for excuse to get out.
Also from personal experience I think whatever they are doing also has a lot of false positive. I managed to not have a twitter account for so many years, but created one as I wanted to post a response. I think it might worked once, now whenever I post something it just refuses (forgot exact message but essentially something that my post looks suspicious). I don't think I will be going back.
That makes me believe they might be also losing many real users.
Is that very different from companies like Google or other online like syndication consortium, selling ads and avoiding the discussion on how many users block ads?
Among the demographic 16 and 24 years old, 46% of users worldwide admit to using ad blockers. I would be curious to see if this statistic and these reports make it back to people paying for online ads.
Is there a difference between Legit Bots, i.e. that post some kind of useful information similar to an rss feed, and illegit bots, i.e. that exist solely to upvote other peoples content or inflate follower counts?
> Representing bot activity as less than 5% but using a sample size of 100, when you are claiming millions of active accounts, can't easily be seen as honest
The margin of error of a sample of a given size does not depend on the size of the universe from which the same is drawn; a sample size of 100 gives a too big of an MoE to support a claim of “less than 5%” at typically acceptable levels of confidence, but the size of the universe of accounts is irrelevant to it.
When the offer was announced most HN commenters speculated that the twitter board will never accept the $54.2 price because it was too low. They said that the fundamental value of the company was much higher since it was trading in the 70s only a few months prior. If the deal falls apart now the share price might fall into the 20s.
> some kind of clause about the market valuation moving by X% might have been a good idea
Collars are not uncommon in M&A agreements. Diligence clauses, far more common. Neither made it into the final agreements negotiated in this case. Hence the drama.
Isn't it $1 billion in both directions? If he can establish that they didn't do their part, he gets $1 billion IIRC.
Either way it's a sum of money in which a lawsuit is effectively inevitable, by very simple game theoretic analysis. The amount of confidence in losing one would need in order to not even try with that amount at stake would be sky high and I doubt either side could end up that confident that a judge wouldn't at least partially rule in their favor.
Section 8.3[1] of the contract covers that. There are very limited circumstances where Twitter would pay, and none of them are likely to happen.
Twitter would pay in these circumstances:
> (i) (A) a Third Party shall have made a Competing Proposal ...
> (ii) this Agreement is terminated by the Company pursuant to Section 8.1(c)(ii); or
> (iii) this Agreement is terminated by Parent pursuant to Section 8.1(d)(ii)
(i) and (ii) involve competing offers to acquire Twitter, which I don't think are likely given market conditions.
(iii) is defined in Section 8.1(d)(ii)
> (ii) prior to the receipt of the Company Stockholder Approval, if the Company Board shall have made an Adverse Board Recommendation Change.
"Adverse Board Recommendation Change" is defined in length in Section 6.5(d), but basically means that the board recommended shareholders to reject the deal.
With as obnoxious as Elon Musk has been on his Twitter account, it is far more likely that Elon Musk is providing the Twitter-lawyers with plenty of examples for their inevitable court case.
Ex: Elon Musk needs to explain his "I don't care about the financials of this deal" statement to a jury, or "Single most annoying problem on Twitter" tweets.
That's my reading of the situation. But, probably both Elon and Twitter want to cancel. Elon would in principle like to buy, but the timing was unfortunate, and the offered price is now too expensive.
I don't know enough about the deal to use the term "sabotaging", but a bit of hardball is to be expected during a hostile takeover and it feels to me like Musk wasn't prepared for that.
What did they do to sabatoge the deal, after the ink dried? To me, it looks like elon is attempting a shakedown to either ruin twitter altogether, or devalue it enough so he can afford to purchase it without tanking Tesla.
I predict twitter's board blinks and sells at <40 bucks a share, then Musk settles a bunch of shareholder lawsuits for pennies on the discount he negotiated.
"One possibility is that Musk will keep sending nasty letters and tweets about bots, and the people — including the ones working for him — whose job it is to get the deal done will keep working to get the deal done, and one day Musk will be mid-sentence typing a nasty tweet about Twitter and find out that he owns it."
I can't believe now people are wondering if social media traffic is mostly bot driven. Social media and really any online ad company are the only companies that make money off the stats only they have access too and provide. Their ad prices are based on these numbers. Its kinda crazy this has been a thing for so long. Even bill board ad effectiveness can be checked by third partys. You can look at traffic stats on the road, seasonal spikes if near a beach town, weather effects, etc. There are NO certified valid third party check on any of these social media services. Billions of dollars getting funneled into these online ads and no one knows how much of the data is even real.....crazy.
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[ 3.5 ms ] story [ 245 ms ] threadThat said, I have a feeling he will weasel out with nothing more than a slap on the wirst, if even that.
Twitter's board isn't exactly known for its competence and backbone, so I suspect it will back down if Elon yells and lies enough about whatever pretext he decides to use to back out of the deal.
---
I recall when I interviewed there in ~2008?? Don't recall, and they asked me in the interview what I thought Twitter was: I stated "Twitter is a global sentiment engine thats able to take the pulse of users around the globe on any topic"
I didn't get the job.
No. Twitter is not the press, nor is Twitter a public utility. Twitter is under no obligation to provide "Truth" or "transparency" to the public. It's a microblogging service, not the BBC.
Full Stop.
*publicly listed. so they need to be transparent as far as market information goes, while not disclosing corporate secrets or breaching personal data regulations.
and the CEO said from the start that they cant disclose more details regarding their 5% assessment.
the merger agreement is clear. the only thing that can free elon from completing the deal is lack of regulator approval and no regulators are even looking at the deal
Twitter might let Musk off the hook for $1 billion, but he's paying something to get out of this.
1) Requests for information are assumed to be to facilitate _closing the deal_. Its not just for any willy-nilly request he wants.
2) It specifically is not to service "due diligence". This is the "open for interpretation" part. The contract _separately_ calls out that Musk has had the opportunity to seek information for due diligence, and Twitter has already fulfilled those requests to his satisfaction. So with that in mind, I would interpret the obligation to service information to be limited to things e.g. related to acquiring financing, or to fill out paperwork etc.
The real reason is that he can't afford to buy Twitter at the negotiated price, which is entirely on Musk.
EDIT: pay up in this context probably means $1 billion, though given that he is the world's richest man, it could conceivably include specific performance of the contract (meaning going through with the deal).
Had he acted with integrity and honesty, he wouldn’t be in this situation of his own making, but those traits aren’t what made him wealthy.
Long way for that, you'd have to (at least):
* Prove the report contains false info
* Prove it happened on purpose AND with an intent to commit fraud
* Prove it affects the transaction in a substantial way
* Prove this is enough to stop the transaction from happening, and get away with zero consequences
... and it won't be hard for Twitter's lawyers to turn any of these on their favor.
>>"Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement," the company said in a statement.
>>"We believe this agreement is in the best interest of all shareholders," it added. "We intend to close the transaction and enforce the merger agreement at the agreed price and terms."
If they let him walk away, they would get sued by their own shareholders for losing them a ton of money.
At this point the deal is as much politics (not left/right, but posturing between powerful institutions and individuals) as business, so anything could happen.
> I literally can't imagine ever wanting to do business with Elon Musk.
Never mind Twitter. Buying a car from that guy is really absurd and dangerous.
Very true. I was rooting hard for Tesla to succeed a number of years ago, but these days there's no chance I would even consider buying one of their cars. A few people close to me own Teslas and I worry quite a bit about their safety. I really hope that Musk's absurd behavior lately opens some more eyes to just how reckless and irresponsible the company is.
They will settle the shareholder lawsuits (and probably make Twitter Inc. and therefore the shareholders themselves, pay for it).
Because if they do anything Elon’s gonna threaten to make their lives miserable in many different ways. And they are all gonna fold.
They didn’t become board members to protect shareholder rights. They became board members because it’s a cushy job that pays well for little work. And gives you some street cred. Getting into a fight with Elon threatens all of that.
So yeah, Elon’s bullying and tantrum throwing will win again because the only entity that can fight back, the US govt, has decided for a few decades that it really shouldn’t be doing anything.
1. There's a small chance they fight because 10's of billions of dollars are at stake.
2. If they do fight I'm pretty sure they lose because I don't think a judge would want to force someone to do something they don't want to do like this, especially when that person is a billionaire.
3. It makes the future popcorn-eating amateur sports analysis in the future interesting(or less interesting?) on these kind of deals, because I think early on there was this sense that Elon Musk was taking this big risk by making a big offer and waving due diligence, and the reality is that risk doesn't work for billionaires the way it works for the rest of is. All this back and forth about the nuances of contract law end up irrelevant.
> "this is an ugly tantrum"
I think you and OP are in agreement there.
But I'm highly interested what you think Elon would personally do to make the board's lives miserable. If anything, standing up to his tantrums gives them more "street cred", and if Elon does take over Twitter they will all immediately lose their "cushy job that pays well for little work" anyways.
If I'm a board member, extracting the $1 billion breakup fee from Musk without giving up any control of the company would be my number one strategy in saving my job, in defending my worth as a board member against Elon's charges of ineffectiveness, and in carrying out my fiduciary duty to shareholders.
"Musk’s lawyers say in the letter that Twitter has offered only to provide details about the company’s testing methods. But they contend that’s “tantamount to refusing Mr. Musk’s data requests,” and constitutes a “material breach” of the merger agreement that gives Musk the right to scrap the deal if he chooses."
https://apnews.com/article/elon-musk-twitter-inc-spacex-tech...
He could also maliciously try to deny Twitter board members and executives positions at other companies, like he did with the SEC employee turned law associate.
Given Elon's power and pettiness I'm sure there are many other ways he can and will try to harm people he dislikes.
You are saying that "many of us" have a net worth in the 4m-40m range.
[0] https://www.cnbc.com/2022/05/13/elon-musk-cant-just-walk-awa...
Hopefully the two groups bickering will come to some sort of agreement and save the many millions of lawyer fees, but who knows.
https://www.calnewport.com/blog/2022/05/03/the-real-problem-...
> The real outrage, I conclude, is not the details of how Elon Musk might change Twitter, but the fact that so many people in positions of power — politicians, business leaders, journalists — still pay so much attention to these 240-character missives.
> “Twitter’s increasingly heated wrangling is not just far from a considered democratic debate,” I write, “but has truly become a spectacle driven by a narrow and unrepresentative group of elites.”
Why do we care so much about what happens to Twitter?
Should it? No. Is it pathetic that it is? Yes.
But is vs. ought. It IS a powerful platform but ought not be.
At some point, to have a functioning democracy, the populace has to be educated. Then when there's misinformation, they'll just ignore it.
In the past, we've gotten around this by it being expensive to broadcast ideas to large numbers of people. You had to be a newspaper or TV network, and newspapers and TV networks employed people worried about their reputation, so nobody ever published op-eds about how Bill Gates is injecting us with 5G microchips or whatever. This weeded out quite a lot of conspiracy theories and whatnot. But the reality is that the Internet changed the calculus there; anyone can publish anything to a large number of people. With that floodgate open, there is no going back and we have to teach people to critically analyze what they hear on the Internet. It's the last line of defense.
This means that all the bluster over Facebook and Twitter and free speech needs to translate to increased funding for schools, and that if we start right now it will probably take a couple generations to get to a better place. There is no quick fix to make democracy work, only hard work and time.
How do you ignore misinformation that you don’t know is misinformation?
That's true of pretty much all social media, including HN (though HN is better than most).
Like there's tons legitimate talking points that people can make for or against Kamala Harris' body of work as a politician, but once people start talking about the KHive on Twitter in those discussions, it totally distracts from those points.
So by pretending Tweets about someone matter more than what someone actually does, they can try to control or shift the narrative away from someone who actually has power (Harris) to something else that doesn't (people using a particular hashtag).
If it really was < 5% why don't Twitter just release the data Musk is asking for?
> Each of Parent and Acquisition Sub has conducted, to its satisfaction, its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company and its Subsidiaries. In making its determination to proceed with the transactions contemplated by this Agreement, including the Merger, each of Parent and Acquisition Sub has relied solely on the results of its own independent review and analysis and the covenants, representations and warranties of the Company contained in this Agreement
So, in essence:
1) Musk has been afforded the opportunity to address any concerns he has with Twitter
2) Any concerns of Musks have been satisfactorily resolved by Twitter
3) In determining said satisfaction, Musk is relying on his own judgement and analysis, and is not relying on any analysis by Twitter.
There is absolutely 0 ground to his complaints today and claiming he "isnt being given the information hes been asking for" or that "I was going off your numbers but I want to run my own".
Twitter are stuck. If they admit a bot count of say 25% and say "sorry Mr. Musk but you committed to buy no matter what... buyer beware" then yes, Musk should be force to continue the sale but they can't because it raises much more serious questions.
But that's not what he's saying, he's saying "the bot problem is way worse than you're saying, therefore the $54.20 price is too high."
Twitter users don't give a fig about Twitter's ad impressions. They care about what fraction of comments or interactions are in fact with bots or astroturfers. From the perspective of Twitter as a communications medium rather than an advertising channel, this is the relevant statistic.
Twitter has never claimed that the number is accurate nor important in absolute terms (“we aren’t sure” features prominently in their filings!) rather it’s a number that is important for understanding growth and evolution of the platform. The number matters quarter-to-quarter, not in isolation.
Active human users matters in the context of advertising, it’s a pointless distraction that musk is employing to back out of the deal.
Let’s imagine there is a real measure of “non-human users” and lets say it turns out that Twitter underestimated by 50%… so? Musk long said he wasn’t buying Twitter as a financial move, and that he has a plan to be wildly profitable off of a small proportion of twitter’s users so unless 95% of twitter’s users aren’t real, it doesn’t impact his (absurd and ridiculous) plan.
If Twitter did come out and say they underestimated non human activity by 50% or the like then yes Musk should be forced to continue the sale.
Twitter haven't though. They are still pretending that less than 5% of daily active users are non-monetizable.
The type of attribution based advertising you are talking about certainly also exists whereby the advertiser pays $x per (milli)impression, then a further $x for click-thru and then a final $x for a conversion. However the vast majority of twitter's revenue is in the first bucket (CPM) which is entirely valued based on the size and quality of the audience.
There are certainly a minority of major brands that operate as advertisers with awareness campaigns — sponsored hashtags are a good example — but if you read the Twitter filings, it’s very clear that their focus is performance based advertising — and that’s where they see their future, too.
Maybe a decade ago you could have said that advertisers were just trusting platforms to deliver value, and that ad-fraud could make or break a platform if they got caught, but that’s not true anymore, it’s a much more sophisticated market. Advertisers aren’t (as) dumb (as they once were).
Brand safety is a whole other kettle of fish — that’s a concern across all types of advertising, and not relevant to the audience, rather the content of the platform.
If you are talking about the majority of ad impressions being programmatic/attribution based then yes you are correct, however if you talking about dollars spent that direct sponsorship with large internal agencies is still very much king.
To give some context, large corps would routinely drop $5 million on a direct deal with Twitter for a combination of promoted tweets, hashtags, trending etc. This was also almost pure margin as there was no middle DSP/SSP taking a cut. To get the same profit from the method you are purporting to be most common would take years.
>Maybe a decade ago you could have said that advertisers were just trusting platforms to deliver value, and that ad-fraud could make or break a platform if they got caught, but that’s not true anymore, it’s a much more sophisticated market. Advertisers aren’t (as) dumb (as they once were).
Maybe a decade ago? So the people who are now in senior positions at the agency and call all the shots are the ones making the major deals. Well then it would stand to reason that the biggest profit comes from deals that are structured like they were 10 years ago.
For instance, I have 5 accounts which automatically tweet out the latest posts from 5 of my websites. They are automated and probably technically bots, but that seems different than an account that is meant to give fake likes/retweets.
The comment was 5% of active users never receive ads. Some real people turn javascript off as well and some user ad blockers.
Majority of Twitter users don’t tweet, they’re still active
Representing bot activity as less than 5% but using a sample size of 100, when you are claiming millions of active accounts, can't easily be seen as honest. Since statistics which Twitter is expected to know as a matter of their duty to shareholders , makes it plain that the sample size is too small.
Too many bots = shareholders were misled as to true number of active accounts.
Too many bots = advertisers were misled as to potential reach.
As for that bid, the time for due diligence is before, not after, one signs the merger agreement.
FWIW I have shares in Twitter and would prefer them to remain a publicly traded company.
It's very much related to the bid. If you materially mis-represent your company then it's a valid reason to scrap the deal.
> As for that bid, the time for due diligence is before, not after, one signs the merger agreement.
That's not how it works.
Try calling Twitter: "I'm doing due diligence on you guys, could you open your books to me"?
They'll laugh at you and hung up.
The agreements is a pre-requisite of doing what "due diligence" means in this context.
"Due diligence" specifically involves looking at things that you're typically not allowed to looked at.
Things like auditing financials of the company, doing an audit of the source code, proprietary technology etc.
It requires the company being acquired to share a lot of proprietary information.
The agreement, which includes $1 billion breakup clause, is necessary to filter out people who are not serious.
> They'll laugh at you and hung up.
Sure, but we're not the richest person on the planet, Elon Musk
https://arstechnica.com/tech-policy/2022/05/twitter-board-te...
https://www.bloomberg.com/opinion/articles/2022-05-17/elon-m...
Section 5.11 (note that "Parent" / "Acquisition Sub" refers to Musk and "Company" refers to Twitter):
> Each of Parent and Acquisition Sub has conducted, to its satisfaction, its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company and its Subsidiaries. In making its determination to proceed with the transactions contemplated by this Agreement, including the Merger, each of Parent and Acquisition Sub has relied solely on the results of its own independent review and analysis and the covenants, representations and warranties of the Company contained in this Agreement. Parent and Acquisition Sub hereby acknowledge that, notwithstanding anything contained in this Agreement to the contrary, (i) neither the Company nor any of its Subsidiaries, nor any other Person, makes or has made or is making any express or implied representation or warranty with respect to the Company or any of its Subsidiaries or their respective business or operations, in each case, other than those expressly given solely by the Company in Article IV; and (ii) neither Parent nor Acquisition Sub is relying on any express or implied representation or warranty, or the accuracy or the completeness of the representations and warranties set forth in Article IV, with respect to the Company or any of its Subsidiaries or their respective business or operations, in each case, other than those expressly given solely by the Company in Article IV.
now assume twitter lied in those filings
Why should we trust that they are being honest?
So did they lie about the bots? Who knows? Do they always tell the truth? Well, I think you could reasonably argue not quite.
So the argument wouldn’t be that they lied. It would be that the information they provided wasn’t useful to gauge the true scope of the “bot problem” on Twitter - at best it’d be misleading by omission, which is almost certainly not illegal given what publicly-traded companies do all the time. (Making truthful statements and being fully transparent with all facts of a business are clearly not the same thing.)
Part of the reason Twitter is so hesitant to put some number on bots is because we’d first have to agree on how to define it exactly and how to measure it objectively. If someone uses the API or third-party app or integration to interact with Twitter, how do you prove they’re not a bot? Twitter’s definition avoids that by focusing on people who can see ads on the website and if you’re actually visiting the website proper (or using an official app) you’re much less likely to be a bot to begin with.
But honestly, all this stuff is just a distraction anyway. The SEC statements were there for years and if he doubted it this could have come up during due diligence. He only is making a stink about it now because a) he wants to get out of the deal at the quoted price and b) he wants to embarrass Twitter in the process. In fact, it seems to me this whole thing from the get-go was an exercise in the hopes of uncovering evidence of something salacious regarding “censorship” and various posturing around it. There never appeared to be any realistic and serious plans to address the issues at hand, just to gesticulate wildly about it in front of the press. I think those truly concerned about the problems being discussed should have hoped for better from this whole thing.
The bid gave Musk access to inside information.
> the time for due diligence is before, not after, one signs the merger agreement.
I bought a house. The due diligence period to inspect the house, get a survey, etc. was after we entered into the contract and before closing.
I know with the crazy housing markets, this might not be something anymore, but in times past you would enter into a CONDITIONAL contract and set the price, with the stipulation that the inspection has to be satisfactory to remove the conditions. Otherwise, after you signed your contract, the house is yours, and the survey just tells you what you are obligated to fix.
Also, Business deals usually allow parties to enter into things like NDAs for due diligence, as well as signing things like Memos of Agreement to get a roughed out deal, pending a thorough due diligence. I believe he's past (or waived) the due diligence. I'm sure there is a back-out clause, but that has $$$ attached and he's trying to wiggle out without paying, is what it seems like.
Right, because thats what you included in your offer contract. Now, imagine that you didn't have anything in your offer about contingent on inspection. Do you think you would have standing to back out of the deal?
And many people, just like Musk, waive their right to terminate the contract due to inspections, loan approval, etc. For the same reason that he did - it gives the seller less reason to reject your offer.
There are two whole sections from Section 4.1 through Section 5.11, comprising 16 pages of representations and warranties, which incorporate a wide swath of statements (including public disclosures to shareholders), not to mention two pages of conditions, etc. including specifically:
> Section 5.5 Information Supplied. None of the information supplied or required to be supplied by or on behalf of Parent or any of its Representatives expressly for inclusion or incorporation by reference in the Proxy Statement shall, at the time it is first mailed to the Company’s stockholders and at the time of the Company Stockholders’ Meeting to be held in connection with the Merger, contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
It says right there ~"if Twitter has been lying to its shareholders I can void the contract."
If Twitter has been lying to its shareholders, then senior leadership is already in trouble and may be going to jail, but there's no evidence of that.
> Section 6.4 Access to Information; Confidentiality. Upon reasonable notice, the Company shall (and shall cause each of its Subsidiaries to) ... furnish promptly ... all information concerning the business ... as may reasonably be requested ... for any reasonable business purpose related to the consummation of the transaction...
I think it makes perfect sense that any financier will ask "How many users does Twitter have?" And that entitles him to this information.
Twitter doesn’t know what it doesn’t know. It’s dropping a bot estimate that may or may not have shaky foundations. It knows it’s bot “estimate” could be low, perhaps significantly so. It knows that every point over their best estimate fuels Musk’s fears and ultimately becomes a PR and potential legal disaster.
They will have internal employee pressures to make Musk go away.
They will have political pressures to make Musk go away.
The shareholders want the offer, but Twitter hasn’t really gave a shit about them before.
The thing you quote very specifically only applies to the Proxy Statement provided to shareholders as part of the process of this specific deal. It has nothing to do with previous communications and "if youve ever lied about anything then the contract is void".
> it's not fair to suggest this was 73-page contract was an as-is agreement with no warranties express or implied
Article IV is what binds Twitter (Article V is what binds Musk). It very explicitly says this is as-is with no warranties express or implied. Section 4.25:
> Section 4.25 No Other Representations or Warranties. Except for the representations and warranties expressly set forth in this Article IV, neither the Company nor any other Person makes or has made any representation or warranty of any kind whatsoever, express or implied, at Law or in equity, with respect to the Company or any of its Subsidiaries or their respective business, operations, assets, liabilities, conditions (financial or otherwise), notwithstanding the delivery or disclosure to Parent and the Acquisition Sub or any of their Affiliates or Representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing. Without limiting the generality of the foregoing, neither the Company nor any other Person makes or has made any express or implied representation or warranty to Parent, Acquisition Sub or any of their respective Representatives with respect to (a) any financial projection, forecast, estimate or budget relating to the Company, any of its Subsidiaries or their respective businesses or, (b) except for the representations and warranties made by the Company in this Article IV, any oral or written information presented to Parent, Acquisition Sub or any of their respective Representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or the course of the Merger, or the accuracy or completeness thereof.
This is also why people offered all cash for a house even when mortgages were cheap (avoids the financing contingency).
Perhaps it's different if you're acting like an angel investor in housing, but for an average family, it's financial Russian Roulette.
1) In my state there's a mandatory seller disclosure. If the seller knew about a problem with the house and didn't disclose it on the seller disclosure you can sue them if you can prove they new about the defect and intentionally didn't disclose it, so there's at least that.
2) Home inspectors don't take legal responsibility if the inspection misses something important, they only offer to, at most, give you your money back on the inspection. So you have to be optimistic that the inspector has a clue what they are doing and can catch future problems when you rely on an inspection.
Buying a home while waiving inspection might be Russian Roulette, but I bet the odds are less than 16.7% that waiving inspection will financially kill you.
For example, a house goes up for sale, three people bid within three days of the listing. Two of them for $300,000 with inspection waived, one for $300,000 with inspection not waived. The bid with inspection not waived is never even considered. It would be irrational for the seller to take the risk associated with the weaker bid.
Twitter CEO said they use “thousands” selected randomly and reviewed by multiple humans.
It refers to 5% of monthly active users who are shown adds.
This may come across as pedantic, but I'm genuinely asking: can a bot be "shown" ads? If a bot never loads the js or html that serves the ad, was it "shown" ?
Ultimately, however they measure ads shown, they have some process to determine what they believe to be bot ad views. We can only discuss at that level without more information.
Because that isn't as easy, what they have is just an estimate. And what makes Elon estimate any better than twitter's?
Elon figured out that he can make money by manipulating the market via twitter posts. An ability to control the platform would allow to have even more impact and it would be harder to prove that he had anything to do with it.
The purchase backfired his stock tanked (not just because of the purchase but other actions he did recently, he put me off and I was a huge fanboy before) so he is looking for excuse to get out.
Also from personal experience I think whatever they are doing also has a lot of false positive. I managed to not have a twitter account for so many years, but created one as I wanted to post a response. I think it might worked once, now whenever I post something it just refuses (forgot exact message but essentially something that my post looks suspicious). I don't think I will be going back.
That makes me believe they might be also losing many real users.
"An estimated two-thirds of tweeted links to popular websites are posted by automated accounts – not human beings'
Complete Report PDF (2018): https://www.pewresearch.org/internet/wp-content/uploads/site...
"Botometer": https://botometer.osome.iu.edu/
"Botometer (formerly BotOrNot) checks the activity of a Twitter account and gives it a score. Higher scores mean more bot-like activity."
"19.42% of active Twitter accounts are fake or spam:" https://whatsnewinpublishing.com/19-42-of-active-twitter-acc...
Among the demographic 16 and 24 years old, 46% of users worldwide admit to using ad blockers. I would be curious to see if this statistic and these reports make it back to people paying for online ads.
The margin of error of a sample of a given size does not depend on the size of the universe from which the same is drawn; a sample size of 100 gives a too big of an MoE to support a claim of “less than 5%” at typically acceptable levels of confidence, but the size of the universe of accounts is irrelevant to it.
... for plausibly relevant company sizes. It doesn't matter if your universe is large vs very large vs enormous.
It does matter if the size of your universe is close to the size of your sample.
Not sure how you would contract for that, but the actual value of the asset has significantly declined.
Collars are not uncommon in M&A agreements. Diligence clauses, far more common. Neither made it into the final agreements negotiated in this case. Hence the drama.
The “market” price of the asset could move for all manner of unanticipated reasons.
Either way it's a sum of money in which a lawsuit is effectively inevitable, by very simple game theoretic analysis. The amount of confidence in losing one would need in order to not even try with that amount at stake would be sky high and I doubt either side could end up that confident that a judge wouldn't at least partially rule in their favor.
Twitter would pay in these circumstances:
> (i) (A) a Third Party shall have made a Competing Proposal ...
> (ii) this Agreement is terminated by the Company pursuant to Section 8.1(c)(ii); or
> (iii) this Agreement is terminated by Parent pursuant to Section 8.1(d)(ii)
(i) and (ii) involve competing offers to acquire Twitter, which I don't think are likely given market conditions.
(iii) is defined in Section 8.1(d)(ii)
> (ii) prior to the receipt of the Company Stockholder Approval, if the Company Board shall have made an Adverse Board Recommendation Change.
"Adverse Board Recommendation Change" is defined in length in Section 6.5(d), but basically means that the board recommended shareholders to reject the deal.
[1] https://www.sec.gov/Archives/edgar/data/1418091/000119312522...
With as obnoxious as Elon Musk has been on his Twitter account, it is far more likely that Elon Musk is providing the Twitter-lawyers with plenty of examples for their inevitable court case.
Ex: Elon Musk needs to explain his "I don't care about the financials of this deal" statement to a jury, or "Single most annoying problem on Twitter" tweets.
https://twitter.com/elonmusk/status/1511230314902953984
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When you have an obnoxious dude making public statements, lawyers want them to make _more_ statements, not fewer statements.
Legally speaking, this letter from his lawyers state the opposite. Elon Musk is trying to call off the deal and __NOT__ buy Twitter.
I think it's more likely Musk is making up reasons to back out of the deal .
Just needs to write a $1B check.
Enough with the Billionaires ignoring contacts when they aren't convenient to them.
"One possibility is that Musk will keep sending nasty letters and tweets about bots, and the people — including the ones working for him — whose job it is to get the deal done will keep working to get the deal done, and one day Musk will be mid-sentence typing a nasty tweet about Twitter and find out that he owns it."