Twitter And Musk Appear Headed For An Ugly Legal Battle Over Buyer's Remorse
According to people familiar with the Twitter buyout, the deal may be in jeopardy due to Elon Musk's team concluding that Twitter's numbers on spam accounts are not verifiable. Those speaking on the condition of anonymity, stated that Musk's team has stopped engaging in certain discussions surrounding the funding for the $44 billion deal.
Elon Musk set out to buy social media platform Twitter back in April of this year. Twitter eventually accepted the billionaire's bid of $44 billion, and the road to closing the deal since has been a rocky one. At one point, Musk threatened to drop the salaries of those on Twitter's Board to $0, and has been sued by a group of Twitter stakeholders accusing him of shady stock price manipulation. But the biggest sticking point, it seems, has been Twitter's estimates of how many spam accounts exist on the platform.
The tech billionaire had demanded that Twitter provide data that supported its figures on spam accounts, or else he would walk on the deal. The social media platform resisted at first, but has since said it would comply. Twitter's board gave Musk access to its "firehouse," a massive stream of data that is made up of more than 500 million tweets posted each day.
Musk's legal team insisted that the data was paramount for understanding the true amount of spam and bot activity on the platform. But even after being given access to the mountain of data, Musk's team still has doubts about the spam figures. Those who have spoken anonymously contend that Musk and his team do not believe they have enough information to fairly evaluate Twitter's prospect as a business.
So, what does all this mean? According to the three insiders and a report by the Washington Post, it could signal a dramatic turn in how Musk and his team are approaching the situation. The change in direction is believed to happen soon, while what direction that might be was not given.
Many feel that the spam numbers are just a small part of why Musk has decided to try and get out of the deal. Twitter's stock prices have taken a severe down turn since his takeover bid was accepted back in April. Musk has since tried to get Twitter to agree on a lower price, pointing to the fact of the stock drop.
Even if Musk decides to simply walk away from the deal, it won't be a cheap move. The deal contained language that would guarantee Musk follow through with the deal unless something drastic happened to Twitter's business. Legal experts doubt that the spam accounts and lower stock prices will give the entrepreneur an out. And even if Musk were to convince a judge that it was, he would still have to pay a $1 billion breakup fee.
Twitter has stated that it remains committed to completing the deal. In a statement back in June, the company stated, "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." It added that it believes the deal is in the best interest of its shareholders, and intends to close the deal at the agreed upon price and conditions.
**UPDATE 7/9/2022 10:41 a.m. EST: Elon Musk has filed to terminate his agreement to buy Twitter. Twitter, however, continues to say it will make Musk complete the deal as initially agreed upon. All of this sets the stage for what could be a nasty and lengthy court battle between the two, and adds more uncertainty to the social media platform that has seen its share of turmoil as of late.
Top Image Credit: David Oberhaus via Flickr