The F.B.I. search of Mar-a-Lago is a coda to the years of tumult between an erratic president and the nation’s intelligence and law enforcement agencies.
Elon Musk’s lawyers want to question the Twitter employees responsible for calculating spam-account estimates, and they claim that Twitter is hiding these potential witnesses, Bloomberg reported yesterday.
Musk on Wednesday filed a proposed order requesting that Delaware Court of Chancery Judge Kathaleen McCormick compel Twitter “to produce discovery from specific custodians.” Musk provided further details on the request in a letter to McCormick that was filed under seal as part of the case in which Twitter seeks to enforce the $44 billion merger contract that Musk is trying to exit.
While the letter isn’t public yet, Bloomberg cited “people familiar with the allegations” to describe the letter’s contents. “Musk contends the social media company isn’t producing the names of employees specifically responsible for evaluating how much of Twitter’s customer base is made up of spam and robot accounts… Musk’s lawyers have asked the judge in the case to force Twitter to identify the workers so the defense can get their records and question them,” Bloomberg wrote.
Within weeks of the Twitter board’s approval of Elon Musk’s unsolicited bid to take the company private, the South African-born billionaire came down with a severe case of buyer’s remorse. Twitter was not happy, and after Musk decided not to go through with the purchase, the social media company quickly sued him. In advance of the trial, set for October despite Musk’s attempts to push it back to 2023, Elon Musk is apparently preparing for the worst-case scenario of being forced to consummate the deal.
With Tesla stock on a rebound, Musk has just sold $6.9 billion worth of shares in his electric car company, a move disclosed in regulatory filings on Tuesday. Musk got an average of $869 for the shares, which is significantly more than the $628 that TSLA shares were trading at in late May. TSLA had hit its 2022 peak of $1,145 on April 4, the day after Musk revealed his purchase of 9.2 percent of Twitter’s outstanding shares.
In late April, after announcing his plans to buy Twitter, Musk unloaded $8.5 billion in Tesla stock, saying at the time that there were “no further TSLA sales planned after today.”
Social media companies have taken steps to restrict Russian state media accounts. But posts from those accounts still spread in Spanish, Arabic and other languages and in places outside the West.
Elon Musk, unsatisfied with the ongoing court case over his attempt to break a $44 billion merger contract, has challenged Twitter CEO Parag Agrawal to a public debate.
“I hereby challenge @paraga to a public debate about the Twitter bot percentage,” Musk wrote in a tweet on Saturday. “Let him prove to the public that Twitter has <5% fake or spam daily users!”
Of course, a Musk/Agrawal debate is unlikely to happen, and Musk’s proposed debate would not be likely to prove any facts about Twitter spam that couldn’t be proven at trial. Musk, Agrawal, or both could also choose to testify at the upcoming trial in the Delaware Court of Chancery. CNBC reported, unsurprisingly, that a “source close to the company says a debate is not going to happen outside of a pending trial.”
Twitter yesterday slammed Elon Musk’s response to the company’s lawsuit in a 127-page filing in the Delaware Court of Chancery that says Musk’s claims are “contradicted by the evidence and common sense.” Twitter’s court filing also said Musk’s spam analysis relied on a tool that once called his own Twitter account a likely bot.
“According to Musk, he—the billionaire founder of multiple companies, advised by Wall Street bankers and lawyers—was hoodwinked by Twitter into signing a $44 billion merger agreement,” Twitter wrote. “This story is as implausible and contrary to fact as it sounds. And it is just that—a story, imagined in an effort to escape a merger agreement that Musk no longer found attractive once the stock market—and along with it, his massive personal wealth—declined in value.”
Twitter’s filing was in response to Musk’s defense and counterclaims, which were submitted last week but not made public immediately because Twitter was given time to request redactions. Twitter apparently chose not to make any redactions.
Are spam accounts really the reason behind Tesla CEO Elon Musk’s decision to back out of his cursed Twitter deal?
This week, Twitter sent a bunch of subpoenas to find out, pulling Musk’s close circle of friends and business associates into the chaotic trial. One subpoena includes more than two dozen document and communications requests for Tesla. The documents that Twitter seeks from Musk’s friends, advisors, banks, legal team, and investors include emails, text messages, and Twitter DMs.
It’s possible that just one email out of all the subpoenaed material could give Twitter enough information to convince the Delaware Chancery Court to force Musk to cough up $44 billion and actually buy the social network. By crawling documents from Musk’s inner circle, Twitter hopes to reveal what was happening behind Musk’s tweets through the negotiation. In their lawsuit, Twitter claims that Musk violated their merger agreement, and the subpoenas could help prove that he possibly never planned to follow through on the purchase.
Twitter is moving ahead with a shareholder vote on the merger with Elon Musk a few weeks before its lawsuit against Musk goes to trial. Twitter yesterday sent a letter to shareholders inviting them to a September 13 special meeting where they will be asked to approve the merger agreement that Musk is now trying to get out of.
“We are committed to closing the merger on the price and terms agreed upon with Mr. Musk,” Twitter CEO Parag Agrawal and Board Chairman Bret Taylor wrote. “Your vote at the special meeting is critical to our ability to complete the merger. Twitter’s Board of Directors unanimously recommends that you vote ‘FOR’ each of the proposals at the special meeting.”
Noting that a five-day court trial is set to begin in October, the letter said, “Adoption of the merger agreement by our stockholders is the only remaining approval or regulatory condition to completing the merger under the merger agreement.” While Musk sent a “notice purporting to terminate the merger agreement,” the Twitter letter said the company “believes that Mr. Musk’s purported termination is invalid and wrongful, and the merger agreement remains in effect.”
The social media company swung to a loss in the second quarter and cited “uncertainty” over its pending takeover by the billionaire Tesla chief executive as a factor.
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Elon Musk has lost his attempt to delay the Twitter trial until next year. Delaware Court of Chancery Judge Kathaleen McCormick scheduled a five-day trial for October, rejecting Musk’s request for a trial in February 2023.
McCormick’s ruling came far closer to Twitter’s preferred timeline than to Musk’s. Twitter, which is suing Musk to force him to complete their agreed-upon merger, was seeking a four-day trial in September 2022.
“The reality is delay threatens irreparable harm to the sellers,” McCormick said today, as reported by Reuters. “Those concerns are on full display in the present case,” she also said, according to The Wall Street Journal. “Typically, the longer the merger transaction remains in limbo, the larger the cloud of uncertainty cast over the company and the greater the risk of irreparable harm to the sellers.”
Elon Musk urged the Delaware Court of Chancery to reject Twitter’s motion for an expedited trial, saying he needs extensive time to analyze Twitter’s spam-account data. While Twitter’s motion sought a four-day trial to be completed in September 2022, Musk’s court filing on Friday said the trial should begin on or after February 13, 2023.
“Twitter has engaged in tactical delay for two months by resisting Defendants’ information requests… Twitter’s sudden request for warp speed after two months of foot-dragging and obfuscation is its latest tactic to shroud the truth about spam accounts long enough to railroad Defendants into closing,” Musk’s motion said. Musk’s legal team argued that the “core dispute over false and spam accounts is fundamental to Twitter’s value,” and that resolving “these issues will require complex, technical discovery—including the forensic review and analysis of large swaths of data.”
Twitter sued Musk on July 12, demanding that he complete the $44 billion purchase he agreed to in April. Twitter’s motion for a September 2022 trial cited the contract’s “presumptive drop-dead date of October 24, 2022 for completion of the merger.”
Mr. Musk formally responded to Twitter’s attempt to force him to buy the company, arguing that there was no reason to hurry the case.
Elon Musk has reason to worry about the Delaware Court of Chancery judge handling Twitter’s lawsuit against him. Kathaleen McCormick, the court’s chancellor, or chief judge, “has a no-nonsense reputation as well as the distinction of being one of the few jurists who has ever ordered a reluctant buyer to close a US corporate merger,” Reuters wrote today.
Specifically, McCormick last year “order[ed] an affiliate of private equity firm Kohlberg & Co LLC to close its $550 million purchase of DecoPac Holding Inc, which makes cake decorating products,” Reuters wrote.
McCormick’s April 2021 ruling in that case, available on the court’s website, centered on a specific performance clause in the purchase contract—similar to the clause that Twitter is citing in its attempt to force Musk to complete his $44 billion purchase. “Chalking up a victory for deal certainty, this post-trial decision resolves all issues in favor of the seller and orders the buyers to close on the purchase agreement,” McCormick wrote in the ruling.
A deal of this magnitude can generate value for Twitter create stability for future mergers.
Here are some of the company’s main legal arguments.
Twitter filed its expected lawsuit against Elon Musk today, demanding that he complete the $44 billion purchase of the social network.
“Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests,” the lawsuit said. “Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he—unlike every other party subject to Delaware contract law—is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.”
The suit accused Musk of “a long list of material contractual breaches by Musk that have cast a pall over Twitter and its business” and asks the court to “compel consummation of the merger upon satisfaction of the few outstanding conditions.”
The question of whether Elon Musk must buy Twitter, as he agreed to do in April, is headed to a court in Delaware.
Twitter told Elon Musk in a letter that his “purported termination” of their merger deal “is invalid and wrongful,” and that his commitment to fund the purchase remains in effect.
Mr. Musk’s and the other Musk Parties’ purported termination is invalid and wrongful, and it constitutes a repudiation of their obligations under the Agreement. Contrary to the assertions in your letter, Twitter has breached none of its obligations under the Agreement, and Twitter has not suffered and is not likely to suffer a Company Material Adverse Effect. The purported termination is invalid for the independent reason that Mr. Musk and the other Musk Parties have knowingly, intentionally, willfully, and materially breached the Agreement, including but not limited to Sections 6.3, 6.8, and 6.10 thereof.
The cited sections include various commitments to close and finance the deal. Twitter’s letter further said the Twitter/Musk “Agreement is not terminated, the Bank Debt Commitment Letter and the Equity Commitment Letter remain in effect, and Twitter demands that Mr. Musk and the other Musk Parties comply with their obligations under the Agreement.” In the Equity Commitment Letter dated April 20, Musk committed to provide an estimated $21 billion in equity financing toward the $44 billion purchase.
Mr. Musk swooped in and exposed Twitter’s lack of business and financial prospects. After criticizing the company’s weaknesses, he now wants to back out of buying it.
If Twitter sues Mr. Musk to force a sale of the company, the case is likely to end up at a 230-year-old court in Delaware.
Twitter has hired an elite law firm to handle its forthcoming lawsuit against Elon Musk, which could be filed any day now.
After Musk pulled out of his deal to buy Twitter for $44 billion on Friday, Twitter Board Chairman Bret Taylor said the company will sue Musk to enforce the merger contract and force him to complete “the transaction on the price and terms agreed upon.” Twitter then hired the “merger law heavyweight” Wachtell, Lipton, Rosen & Katz to work on a lawsuit it expects to file early this week in the Delaware Court of Chancery, Bloomberg reported.
“Wachtell Lipton has perhaps the leading litigation practice in Delaware, where the majority of US public companies are incorporated,” the Financial Times wrote. “It defends companies in lawsuits over breach of fiduciary duty and broken merger agreements in the state.”
Twitter is in a good position to sue under a legal doctrine called specific performance, which allows courts to force a transaction to be completed, even if one of the parties wants out.
In a regulatory filing on Friday, Mr. Musk said Twitter was in “material breach” of the acquisition agreement.
Elon Musk is expected to take “drastic action” to get out of his $44 billion deal to buy Twitter, The Washington Post wrote yesterday in an article citing “three people familiar with the matter.”
The anonymous sources seem to be from Musk’s camp. “Musk’s team has concluded it cannot verify Twitter’s figures on spam accounts,” and the Musk side’s “doubts about the spam figures signal they believe they do not have enough information to evaluate Twitter’s prospects as a business,” the Post wrote. Musk’s people have also reportedly “stopped engaging in certain discussions around funding for the $44 billion deal, including with a party named as a likely backer.”
According to the Post, one of its sources said Musk’s team is now “expected to take potentially drastic action. The person said it was likely a change in direction from Musk’s team would come soon, though they did not say exactly what they thought that change would be.”
Mr. Musk has appeared reluctant to proceed with the $44 billion agreement, citing uncertainty about the number of fake accounts on the platform.
For more than four decades, the Georgia Guidestones near Elberton Ga., have been an enigma. On Wednesday, the authorities said, “unknown individuals” destroyed a large part of the structure.
Censoring peaceful protesters isn’t the only reason governments have deliberately shut down the Internet in 2022, but researchers say it is the primary objective and is costing the most to the global economy.
According to a report from Top10VPN, the cost of government-ordered Internet shutdowns in 2022 has cost the global economy more than $10 billion. That figure nearly doubles 2021 costs, and it’s only halfway through the year.
At a cost of $8.77 billion, the biggest drain on the global economy is Russia. That country’s ongoing social media blackouts began shortly after the Ukraine invasion and are designed to limit peaceful protest and press freedoms by preventing access to Facebook, Instagram, and Twitter.
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Although Elon Musk recently banned remote work at both Tesla and SpaceX, he told Twitter employees today that he won’t necessarily impose the same policy at the social network. “If someone can only work remotely, and they’re exceptional, it wouldn’t make sense to fire them,” Musk said in a virtual town hall with Twitter staff, according to The Wall Street Journal.
Musk also pointed out that the work at Twitter is different from the work at Tesla. “Tesla makes cars, and you can’t make cars remotely,” he said, according to CNBC.
While his comments may be promising for those who want to keep working remotely, Musk reportedly did not provide specifics on how he’d handle remote work at Twitter if he completes the $44 billion acquisition. His reference to letting “exceptional” employees work remotely suggests that a Musk-led Twitter might reduce remote work options even if they aren’t banned completely.
Mr. Musk answered questions from Twitter’s 8,000 workers for the first time in a virtual meeting on Thursday.
Mr. Musk answered questions from Twitter’s 8,000 workers in a virtual meeting on Thursday.
Twitter now plans to comply with Elon Musk’s demand for user data that he says is needed to determine whether the company’s spam estimates are accurate, The Washington Post reported Wednesday.
“After a weeks-long impasse, Twitter’s board plans to comply with Elon Musk’s demands for internal data by offering access to its full ‘firehose,’ the massive stream of data comprising more than 500 million tweets posted each day, according to a person familiar with the company’s thinking, who spoke on the condition of anonymity to describe the state of negotiations,” the Post wrote.
Twitter declined comment on the Post report when contacted by Ars today but pointed to its statement from Monday that “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 move may make it tougher for Mr. Musk, who has said he is not getting enough information from the company, to end the $44 billion acquisition.
For Ken Paxton, the state attorney general, there are positives. Aligning with Elon Musk? Check. Politically helpful? Check.
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Texas Attorney General Ken Paxton on Monday stepped into the Elon Musk/Twitter battle by launching an investigation into whether Twitter is hiding the extent of its spam-account problem. Paxton announced the investigation in a press release that echoes Musk’s claims and sent Twitter a letter demanding the same types of data on fake accounts that Musk hasn’t been able to get.
“Twitter has received intense scrutiny in recent weeks over claiming in its financial regulatory filings that fewer than 5 percent of all users are bots, when they may in fact comprise as much as 20 percent or more,” Paxton’s announcement said. Paxton’s press release says that an inaccurate estimate of bot accounts may “inflate the value of the company and the costs of doing business with it, thus directly harming Texas consumers and businesses.”
Though Paxton’s press release didn’t mention Musk, the “intense scrutiny” has been driven by Musk claiming that Twitter’s spam-account estimate is wrong. Additionally, Paxton’s concern that incorrect spam data would “inflate the value” of Twitter comes amid Musk’s attempts to get out of or renegotiate his $44 billion deal to buy Twitter—Musk agreed to pay $54.20 per share, and Twitter’s stock price was $39.59 at market close on Monday.
Elon Musk today threatened to pull out of his $44 billion deal to buy Twitter in a letter that claimed the company violated the merger agreement by refusing to provide the data behind its spam estimates. Musk needs the data to obtain financing and prepare for the ownership transition, according to the letter sent to Twitter Chief Legal Officer Vijaya Gadde.
“Based on Twitter’s behavior to date, and the company’s latest correspondence in particular, Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement,” Musk’s legal team wrote in the letter to Twitter on Monday. “This is a clear material breach of Twitter’s obligations under the merger agreement, and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.”
As we’ve previously written, Musk’s offer to buy Twitter waived “business due diligence,” and the Twitter board relied on that commitment when it approved the transaction and recommended that shareholders vote for it. A Twitter proxy statement told shareholders that one reason to approve the agreement is “the likelihood that other potential acquirers would require substantial due diligence, creating a delay and risk to reaching the signing of such a potential transaction.”
In a filing, Mr. Musk’s lawyers said that Twitter was “actively resisting” his requests for more information.
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Elon Musk ist der reichste Mann der Welt. Er muss also wissen, wie und wo man investiert. Aber Moment mal, Twitter ist kein Hypethema wie Krypto, NFT oder Fintech. Twitter ist ein Medienunternehmen. Und Medien sind ja eigentlich nicht im Fokus der internationalen Venture Capital Szene. Also was ist hier passiert?
Ein Serienunternehmer wie Musk setzt auf mehrere Pferde gleichzeitig. Derzeit sind dies vor allem der Elektrofahrzeughersteller Tesla und das Raumfahrtunternehmen Space X sowie etliche andere Projekte. Aber Twitter ist keine Gründung, die langsam wächst, sondern eine der größten Übernahmen der Geschichte. Twitter hat viele Fans, gleichzeitig ist das Unternehmen chronisch renditeschwach, tausendmal für obsolet erklärt worden und der CEO steht chronisch auf Abberufung.
Für mich ist der eigentliche Punkt nun gar nicht, ob das unternehmerische Kalkül mit seinem Twitter-Kauf für Musk aufgeht oder nicht. Viel interessanter ist die Motivation hinter dem Kauf. Denn würde es Musk allein um Geld gehen, fielen mir auf Anhieb ein Dutzend andere, renditestärkere Investitionsmöglichkeiten für sein Geld ein. Nein, hinter seinem Twitter-Kauf steht die Leidenschaft, ein Problem zu lösen. Musk glaubt, dass es zunehmend zu wenige Plattformen gibt, auf der es uneingeschränkte Meinungsfreiheit gibt. Gerade Twitter war zuletzt immer wieder in den Nachrichten mit der Löschung von Inhalten oder dem Sperren von Nutzeraccounts, wie bspw. dem von Donald Trump.
Wer weiß, vielleicht ist das alles nur ein PR-Gag und vielleicht liegt Musk auch kaufmännisch daneben mit dem Kauf von Twitter. Und er mag auch Unrecht haben in Sachen Meinungsfreiheit – denn die Konzentration der Meinungsmacht einer Plattform wie Twitter in der Hand eines Mannes ist auf jeden Fall diskussionsbedürftig. Und Elon Musk hat schon mehrfach gezeigt, dass auch er nicht immer ganz sauber spielt. Was mir aber Respekt abnötigt, ist wie er ein Problem für sich glaubt erkannt zu haben und es versucht zu lösen. Er wartet nicht darauf, dass irgendwer anderes auftaucht, um sich dem Thema anzunehmen. Er macht es einfach, und zwar selbst, jetzt und hier. Keine Ausreden, keine Warteschleifen. Einfach los geht’s!
Nun bin ich keine Elon Musk, auch nicht mal eine kleine. Aber als ich vor zwei Jahren mit Strive ein Wirtschaftsmagazin für Frauen gegründet habe, wurde ich auch zu Beginn im Wesentlichen ausgelacht. Print ist tot! Es gibt doch tausend andere Magazine! Wer soll das lesen?! All diese gut gemeinten Ratschläge im Kleinen hört Musk nun sicher im Großen. Aber was soll’s: Wenn man ein Problem erkennt und es kein anderer für einen löst, warum es dann nicht selbst machen?
Ich habe mich nicht abschrecken lassen, sondern habe auf mein Bauchgefühl gehört. Zudem habe ich Expert:innen angesprochen, und hier fand ich die Bestätigung, die ich dann doch suchte und brauchte. Ich habe gelernt, dass man einfach sagen muss, was man braucht. Und das ist natürlich meistens Geld. Aber es gibt sie, die Wagemutigen, die bereit sind, einen zu unterstützen. Tarek Müller von About You hat damals bei mir investiert, ohne je ein Pitchdeck gesehen zu haben. Er hat eine Wette auf meinen Kopf abgeschlossen. Und bisher war er verdammt gut im Wetten.
Ich stelle immer wieder fest, dass sich gerade Frauen viel zu leicht abschrecken lassen. Widerspruch muss man aushalten und Kritik annehmen. Aber andere Meinungen bedeuten nicht automatisch, dass der eigene Traum ausgeträumt ist. Im Gegenteil: Ich segle am liebsten mit seichtem Gegenwind. Und ich habe gelernt, je lauter man raus geht, desto größer ist die Resonanz.
Ich glaube, all die Erfahrungen, die ich im Kleinen gemacht habe, sieht man jetzt im Großen auch bei Elon Musk. Aber er lässt sich nicht abschrecken, sondern macht seine Pläne und gewinnt Unterstützer für sein Projekt. Ist damit der Twitter-Kauf schon ein Erfolg? Noch lange nicht! Die Arbeit fängt jetzt erst an. Aber wenn man das macht, woran man glaubt, kann man den Unterschieb machen und eben manchmal auch Berge versetzen. Jede und jeder, jeden Tag. Darum frage ich auch Dich: Was hast Du heute noch so vor?!
Über die Autorin
Katharina Wolff, Gründerin und Verlegerin Strive Magazine, Gründerin und CEO D-Level Personalberatung.
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Foto (oben): Shutterstock
Elon Musk was sued by a Twitter investor who alleges that he broke the law in a scheme to drive down Twitter’s stock price.
The lawsuit was filed Wednesday against Musk and Twitter in US District Court for the Northern District of California. It recounts much of Musk’s behavior since he began investing in Twitter and since he agreed to buy the company for $44 billion.
The lawsuit noted that “Tesla’s stock is worth much less now than when Musk agreed to buy Twitter” as “Tesla’s shares have declined by over 37 percent since the announcement of the Buyout.” Musk, the CEO of Tesla, “pledged his Tesla stock as collateral for a $12.5 billion loan to finance the buyout of Twitter” and is thus “at risk of a margin call or a requirement to put up more cash,” it says.
Twitter has agreed to pay a $150 million penalty for targeting ads at users with phone numbers and email addresses collected from those users when they enabled two-factor authentication. Twitter agreed to the fine and “robust compliance measures to protect users’ data privacy” to settle a lawsuit filed on Wednesday by the US government.
“As the complaint notes, Twitter obtained data from users on the pretext of harnessing it for security purposes but then ended up also using the data to target users with ads,” Federal Trade Commission Chair Lina Khan said. “This practice affected more than 140 million Twitter users, while boosting Twitter’s primary source of revenue.”
The settlement was reached with both the FTC and Department of Justice. “The $150 million penalty reflects the seriousness of the allegations against Twitter, and the substantial new compliance measures to be imposed as a result of today’s proposed settlement will help prevent further misleading tactics that threaten users’ privacy,” DOJ Associate Attorney General Vanita Gupta said. The payment will go to the US Treasury, according to the settlement.
Technology titans are missing that old adulation.