I think Musk's counterclaims are more interesting than Twitter's response. Here's the summary of the five counterclaims:
* Twitter committed fraud by lying to the SEC about the mDAU numbers with the intent of inducing Musk to buy Twitter at an inflated price. No, really, this is the allegation (see paragraphs 202-206).
* Count 2 is that Twitter committed [Texas fraud statute] by lying when it offered its shares. It's shotgun-pled, so I don't know which specific statements are supposed to be wrong, but I'm imagining it's basically the previous count recast under a different statute.
* Count 3 says that Twitter broke the contract by failing to provide information.
* Count 4 says that Twitter broke the contract by instituting a hiring freeze. [not gonna fly, especially when Musk admitted that Twitter gave him warning of what it was doing and Musk didn't respond. Did I mention that Musk's answer admits far more than I would have expected?]
* Count 5 is pretty please declare that Twitter lying about mDAUs is a materially adverse event that is cause to break the contract.
I still can't get over the banana-pants insanity of the first count... arguing that Twitter lied about its numbers for years specifically so that someone would buy it at an inflated price?
> "To the contrary, Musk forwent all due diligence—giving Twitter twenty-four hours to accept his take-it-or-leave-it offer before he would present it directly to Twitter's stockholders," Twitter wrote.
Bot/spam account analysis is just trying to do PR spin. Musk has no legal standing to use any of that to back out of the merger.
> The five-day trial is now scheduled to begin on October 17
So we will see about 2 more months of PR campaigns from Musk and Twitter about the case.
> Musk has no legal standing to use any of that to back out of the merger.
The claim is that Twitters SEC filings had bots at ~5%, and Musk made the investment based on that. From the leaked recordings of staff, everyone knew that the percentage was much higher.
That's not what the SEC filings say. The SEC filings say that up to 5% of the number of monetizable daily active users (i.e., the number of users after eliminating bots) may be bots--or, in other words, the techniques that Twitter uses to detect bots have up to a 5% false negative rate.
No one is saying that 5% of Twitter's users is bots, except for when Musk is trying to put those words into Twitter's beak.
In addition, one could make the claim that monetizeable bots cannot have a material adverse effect since they are still generating revenue and profits.
I mean, the point of Twitter's statement is to try to bound the risk. They could fix their methodology, or their advertisers could sue them for charging them for bot views, and the magnitude of the risk is ~5% of their mDAU, according to Twitter.
A company with 95% of its revenue coming from bot-clicks and a company with 5% of its revenue coming from bot-clicks might make the exact same amount of money, but one is substantially more screwed in the future.
They don't just say up to five percent are bots - They say that their methodology might be flawed and the actual number could be higher or lower.
> No one is saying that 5% of Twitter's users is bots, except for when Musk is trying to put those words into Twitter's beak.
"In its disclosures, Twitter claims to have nearly 238 million monetizable daily active users (“mDAU”) who participate on the platform, and tells its investors that this userbase metric is a bellwether for its ability to generate revenue and the “best way to measure [Twitter’s] success . . . .”
I think they are talking about this number being significant less than 238 million.
"They show that in early July fully one-third of visible accounts may have been false or spam accounts—resulting in a conservative floor of at least twice as many false or spam accounts as the 5% that Twitter discloses for the entire mDAU population."
They are talking about the same after bot removal 5%.
That logic is nonsense, 3rd party observers have no way to know what twitter counts as a daily active user. They *could not possibly* make any such estimate.
Nope, Twitter has been very clear in their filings:
> Additionally, our calculation of mDAU is not based on any standardized industry methodology and is not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. Similarly, our measures of mDAU growth and engagement may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology.
Musk can't barge in and say "but MY calculations have a HIGHER number!" because Twitter already acknowledged this could be the case. Musk decided to buy anyways.
[1] https://www.sec.gov/Archives/edgar/data/1418091/000141809120...
> Musk can't barge in and say "but MY calculations have a HIGHER number!" because Twitter already acknowledged this could be the case
Not to mention that some of Musk's publicly stated reasons for the purchase are to reduce the bot problem to improve Twitter's value.
I made a bad analogy before about this, if Twitter were a house Musk was buying, he waived the right to back out of the deal based on home inspections (bots/spam accounts). He still can analyze bots/spam as much as he wants (as he should) but from the article it has no basis in the legal contract signed.
> The merger agreement contained no references to false or spam accounts, and Musk didn't ask Twitter for any information to verify the number of spam accounts before signing the merger deal.
Twitter doesn't say that 5% of all accounts are bots. While I don't have inside knowledge of how Twitter does things, the industry standard is to:
1. Build a classification model to determine whether an account is a bot or not.
2. Measure the precision/recall curve of that model, and pick a threshold where the precision would be >95% (i.e. >95% of what the model labels as "humans" are really humans).
(Higher recall leads to lower precision and vice versa. Higher recall means a higher mDAU, so it's a balancing act between a high number versus a high confidence in that number.)
3. Let the model loose on all accounts.
4. The number the model tags as humans is the "mDAU", though <5% of these might be false positives.
While this model takes a lot of training data to build, verifying its continued precision/recall characteristics can be completed with very little ongoing sampling - easily handled by the "100 a day" figure Musk has claimed.
Twitter describes how they get the 5% number (from Matt Levine [0]).
They randomly sample 100 accounts per day and have human raters decide if they're bots or not. This is the right way to validate that your fancy ML algorithms are working well.
That is a misreading of twitters filing.
Completely wrong.
I find it rather ridiculous and in bad faith that Musk is harping on the bot issue for 2 reasons.
First, it wouldn't matter anyway. He signed away any and all rights to due diligence in the agreement.
And secondly, it's completely impossible for any outside analysis to determine the number of active users on Twitter because most active Twitter users don't tweet or interact in anyway. They just read tweets and those users see ads, which makes them monetizable users.
And thirdly, his boast was that he would solve the bot problem and that would make twitter better. More bots means there's more room for him to improve the company - should be a good thing.
Yes! And in addition to that, some people have argued that the more bots the better, because, since Twitter's financials are not in dispute, the value of each actual mDAU is proportional to number of bots.
Twitter revenue for 2021 was $5b, for, say, 200m mDAU (actual number is a little over that); each mDAU is therefore worth $20. But if half of these are bots, then each non-bot is worth twice more!
If all mDAU are actually bots save one, that one user is worth five billion dollars per year.
Musk should be very happy that there are bots. Not only is his defense irrelevant, for the reasons listed above, but it's also incoherent.
Disclaimer: Just speculating with your scenario. I know nothing on this subject and my understanding of this deal is that of mild curiosity at best.
Fair point. Though i would think bots still affect price, right? Ie lets say it's 100% fake right now, what would the value be? Lets say $0 for easy math. Buying it at $54.20 means he has to at least clean up the bots enough to make it worth, at least, $54 to regain his investment.
So while i think your point is interesting, if bot count affects price then i feel one could argue there's a bot threshold whereby he would be over valuing it.
In your scenario the sweet spot would be if it was just enough bots to make $54 a fair price, but also lots of bots in total so that he could "fix the problem" and increase value.
Actual bot count is irrelevant. The only thing that matters for revenue purposes would be the results that advertisers are getting by advertising on the platform and what advertisers think of the bot count.
If the ads are converting all the way through the chain, they don't really have any reason to care whether it's "bots" making those purchases and service sign-ups or not.
> First, it wouldn't matter anyway. He signed away any and all rights to due diligence in the agreement.
He waived DD but the claim is that Twitter specifically inflated numbers to make itself appealing for an acquisition/merger, which would still be grounds for breaking the contract without Musk needing to give any money to Twitter or complete the purchase.
IANAL, but I've read Twitter's SEC filings, and I don't see any potential inflation. The section on bots is extremely clear and specifically states that reality may be higher or lower than their rough estimate, after explaining exactly how they make the rough estimate.
So... "We think it's 5% using these methods, but if those methods are wrong, then the actual number could be higher or lower." How does that lead to grounds for breaking the contract?
The claim is that it's actually much higher, say 25%, but they're intentionally misrepresenting it as 5%; Elon only purchased it at the $54.20 share price because of the market valuing Twitter at a certain price ($45) based on those bot numbers. Musk is claiming that, if the bot numbers were correctly reported at the higher percentage, then the market would've valued twitter at a lower price and he would've offered to purchase it for less money.
But yes, this is very unlikely to be proven since it'd also be fraud against every investor that has put money into TWTR within the past few years, opening the company up to a shareholder lawsuit even after it goes private.
Even if he's forced to buy Twitter, let's not forget that... he will own Twitter. I'm not sure that's a net positive for the world. Though I'm not certain it's a net negative either.
And though it may well be expensive, it's not as if the $44 billion disappears: in fact it buys Twitter. And though he might regret it all in the end, he'll still have enormous wealth. (And Twitter.)
So... it does feel a bit like a pyrrhic victory to me.
> The claim is that it's actually much higher, say 25%
Like the parent comment said, bot count was tied with methodology.
So Musk can argue:
1) twitter is lying about the results of their methodology - highly unlikely
2) their methodlogy is flawed - which he should've brought up during discovery and asked to revaluate according to his requirements.
Either way, seems like he's screwed.
Just because you have a disclaimer doesn't mean you are free to state a wildly wrong number.
I'm not saying that the numbe is wildly wrong. I'm saying the disclaimer doesn't relieve you from the responsibilities.
It's pretty bold of him to claim they were trying to make themselves more appealing for an aquisition or merger when nearly every action Twitter took was to try to stop Elon from buying them, only relenting when he made an offer so preposterous that they had no choice but to negotiate or risk a lawsuit from their shareholders.
They can lie to make the company more valuable to a buyer and also not want that buyer to be Musk.
"He signed away any and all rights to due diligence in the agreement." Why do more fraudsters not use contracts If people can sign away due diligence, sign up for a Diamond, get a Lemon, and have no recourse, surely scammers would be doing this instead of structuring their scam in a way that has the potential of sending them to jail
I mean, that’s how a lot of immature markets without regulations work, until laws are added to say “you can’t do that for this kind of transaction”.
That’s why many states have lemon laws for used car sales, to prevent exactly that kind of behavior in that market.
Sales of corporations often don’t have consumer protection style regulations, because consumers don’t often buy corporations.
The assumption is if you’re spending enough money to buy a corporation, you’re a big boy and can pay a lawyer to review your contracts.
So, if you’re spending $54B to buy a company, you should have your lawyers closely review the terms of the contract. Every lawyer I’ve heard that reviewed the contract Musk signed is gobsmacked by its terms and would have strongly discouraged Musk from signing the contract as written, because it’s so one sided in Twitter’s favor.
We also can't forget that there was time for due diligence before the contract was signed.
Sure, indemnity doesn't always work, especially in the case of scammers going after your average consumer.
But clauses like this are highly binding when dealing with high stakes deals between sophisticated parties with highly sophisticated teams of attorneys on both sides of the deal.
And you certainly couldn't break a deal like this on a hunch that the number of daily active users might be wrong. That would be like holding up a national presidential election because the losing team believes there was fraud but has no evidence yet.
The default is that you have the right to perform due diligence prior to making a binding offer. If you make a binding offer and waive the right to due diligence doing it later and using whatever you find to back out of the deal or change the price likely will not work. Musk can't claim he's a business newbie and besides that was spelled out black-on-white.
He was allowed to do due diligence, he chose not too. People said it was dumb at the time.
This absolutely happens in commercial contracts. Consumers have more statutory rights, though even for stuff that consumers might buy there are examples, notably property.
“Caveat emptor” has been knocking around as a phrase for two millennia now for a reason.
Scammers are doing this. It's called cryptocurrency.
You don’t deserve the downvotes here. Agreeing to buy Twitter as-is does not absolve them if they’re found to have misrepresented what they’re selling which is what the legal angle they’re gunning for is. I don’t buy it but it at least logically follows.
That’s not what Musk is claiming though, when you cut through the noise. He has zero actual evidence showing that Twitter made false misrepresentations. His entire argument really centred around the argument of “Twitter has lots of bots” which is orthogonal and immaterial to the question of mDAUs.
Twitter could be 75% bots and its SEC filing claim could still be entirely above board if it was able to filter them out.
Musk’s opportunity to verify that statement was during due diligence. He chose not to, and can’t legally try to perform due diligence after the fact because he has cold feet.
"The merger agreement contained no references to false or spam accounts, and Musk didn't ask Twitter for any information to verify the number of spam accounts before signing the merger deal, Twitter said. "To the contrary, Musk forwent all due diligence—giving Twitter twenty-four hours to accept his take-it-or-leave-it offer before he would present it directly to Twitter's stockholders," Twitter wrote."
If that's true, it kind of makes the question moot.
Not entirely moot. If Musk could demonstrate that the 5% number was actually a fraud (that is, not just wrong, but people were lying about it) and show that the true number is so different that it would cause a material adverse effect, then he’d have an argument to escape the contract even with the DD waiver.
I don’t think he has a shot in hell at demonstrating fraud, given the various disclaimers around the quoted figure.
And, if he’s saying the real number is 10%, he just doesn’t have close to a shot at reaching the material adverse effect bar (which lawyers have told me is a very high bar in Delaware courts).
So, on the narrow path that he can navigate after signing away his soul and due diligence waivers, he’s still totally hosed.
He really shouldn’t have signed that contract.
Even if he prove fraud (which he won't), there is countless evidence of him believing the number to be higher, and that specifically being one of the main reasons he wants to buy it so he can clean it up, so material adverse effect to the deal wouldn't hold
No, it's great that he signed the contract. It could ruin him, which would be fantastic.
That’s kind of like saying he has a shot at getting out of the agreement if the sun collapses.
I’m just saying the issue isn’t legally moot, because there’s a legal path even after due diligence is waived.
But, I think the facts of this case almost certainly foreclose that path.
Meanwhile other people argue that, even if twitter reports a wildly wrong number, twitter still isn't at fault.
It seems like people like to exaggerate both ways.
If twitter bot number is, say, 30%, you mean twitter will not be charged by SEC?
Yeah, I disagree.
No, because waiving due diligence does not mean the seller is immune to claims if they knowingly provided false data.
That will be almost impossible to prove. Especially as he provided an all-cash, take-it-or-leave-it offer based on publicly available financial data. He has access to lawyers and financial advisors to warn him against potential misstatemrnts on Twitter's part.
If they signed off on it, he has no case. If they warned him against it, and he went ahead anyway, he also has no case.
The judge will rightfully wonder how this isn't anything other than a attention-hungry blowhard trying to get out of scoring the most comical own goal in business history.
What happens in cases like this is that Musk will request the court for discovery of internal Twitter documents/emails/reports/etc to backup his claim that Twitter was aware that more bots existed in their BAU number than they reported.
Twitter will object, but ultimately some degree of discovery will be allowed (with a more narrow scope), but it will pressure Twitter to settle for a lower purchase price because god only knows what kinds of incriminating shit lawyers will find in employee emails. Internal emails is always a big big random variable which can then spawn all sorts of unrelated lawsuits from discrimination, to regulatory fines, to executives' private life drama, etc...
Even if Twitter is innocent - it is very easy for lawyers to intentionally misconstrue a vague email or threaten so with things found in discovery.
Have you met https://twitter.com/TechEmails ?
Musk doesn't need to leak emails.
The discovery by the lawyer team alone is probably scary enough.
There is a high chance that twitter will settle for XB.
At this point, it is just free money for twitter.
Imagine Musk acquires twitter and exposes all internal emails (well, he owns the company) and sue execs one by one for every little thing that is wrong.
Execs are earning 10M/year. For these people, money is not an issue. Getting into a scandal is a huge issue.
Yes I also think a settlement is where this is headed. But the bill be pretty high.
Is it really possible to pursue a claim, if nothing you find in discovery can possibly be relevant to the case?
The experts seem to think that it's virtually impossible a hypothetical misrepresentation rises to the level of a "material adverse event".
It can't even be his motivation, since he is inherently admitting he doesn't have the evidence yet.
> That will be almost impossible to prove
I mean, the trivial case is Musk's discovery reveals some smoking gun email about knowing that their methodology showed 50% mDAU were bots but the CEO overruling everyone and putting 5% on the SEC filing instead. Not close to impossible to prove if it's that stupid (not saying it is)
Imagine this whole ordeal playing out on a house that was not listed for sale.
The buyer starts harassing the homeowner to sell to them, they say no, so he buys up the mortgage lender and tries to force a sale. His antics are hurting the home's value so you relent to selling and give him an as-is sale contract, which he signs and gives you 24 hrs to respond or he will try to force a sale.
All the while, this is of course taking your attention away from your day job and costing you countless thousands in legal bills.
Then, soon after signing the contract, the housing market crashes and the buyer claims he peaked in the window and it doesn't look as nice as he imagined (even though he had previously been publicly announcing that your house was crappy on the inside and that he was going to buy it and fix it up) and so he wants to break the deal.
You sue to make the deal go through, he countersues that you misrepresented.
Who could possibly be on the side of the buyer?
It’s almost as if Musk used a smoke screen to sell $8.5B in Tesla stock before the crash while redirecting attention to Twitter so as to not raise suspicion about selling his own stock…and then instead of going through with the deal he allegedly sold his Tesla stock to complete, he wants to back-out without paying the $1B penalty.
But that can’t be it and what really happened, Musk is buying Twitter for us and restoring our Free Speech…right?
From my understanding, there's literally no way to get out of the $1B penalty even if he proves everything that he claims about Twitter bots. What he's trying to get out of right now, is buying Twitter at the price he originally said.
Is he even capable of selling just because he wants to buy something?
Insiders have to have a stock acquisition/disposition window and follow that schedule to only sell during that pre-determined schedule
I don't really understand this theory/criticism, can you elaborate? note, its not about whether he did, its about whether its important since all insiders have windows and schedules they can and can't sell in
in this criticism, did he sell outside of that window? and is that compliant?
if it was within the window, then... who cares?
The theory is that buying twitter provided him a good "excuse" to dump a ton of TSLA. If he had just randomly sold billions of TSLA it would have spooked the markets because it would seem like Elon didn't believe in the future of the company, or at the very least didn't believe that it's current valuation is justified.
an you mean that its not really about the liquidity of the markets, its more about the perception of why the sell (of an amount that large) occurred at all, and extrapolating what that means
okay
He sold $8.5B in stock over 3 days and within 2 days of the sales filed Form 4’s (changes in beneficial ownership) as required by the SEC.
If you have SEC filings showing these sales were scheduled in advance show please link them.
It would be a legal issue if they weren’t scheduled
So proving that they werent is More important than proving that they were
It sounds like a diabolical idea, but why would someone risk that much money on something that is pretty much guaranteed to get tied up in long-term and very public litigation?
There's no way to simply back out of a very public offer for a major social app without litigation that costs time out of your life (which is in that case more of a painful thing than losing the money). Paying capital gains (after huge deductions of course) might prove to be less by the time it's all done.
Because Musk thinks he’s a god, he can distort the reality around him and do whatever he wants with no consequences.
And TBH, he has all the reasons to think so. He’s been openly lying about so many aspects of his businesses for a long time, manipulating markets, ignoring all the rules and regulations and only thing it resulted in, was making him wealthiest man in the world.
This thread is not court and the question posed was "why would Musk do it". And the answer seems spot on - he lied and bullied for years and it tended to end for his benefit. There was no reason for him to not think it is going to end the same way.
And it is not even primary issue with Musk, it is primary issue with general economy/justice syatem that favors lying and bullying, pri ided you have enough money.
> There's no way to simply back out of a very public offer for a major social app without litigation that costs time out of your life
$1B is a lot of money…he has obviously determined it’s well worth it to spend a few million in legal fees to try. Even if they settle (which more than >90% of cases do) maybe he cuts that penalty in half…even if he knocks 10% of financially it’s well worth it. Even if he loses and ends up paying his legal fees and their legal fees its clear he has determined it’s well worth it.
He’s not on the hook for $1 billion. That was just a break up fee if he couldn’t secure financing. He’s on the hook for the entire deal value.
Ding ding ding
Musk is (was?) not selling Tesla stock. It would be very hard to sell $8.5B of stock without completely crashing its value. He was taking out a loan secured against that stock.
According to this regulatory filing with the SEC, and others, he did, as I said a smoke screen to distract from the fact he most certainly did crash the stock as you suggest. A total sale of about $8.5B, but the total Twitter purchase price was $44B and that difference is where you are likely getting the idea of the loan against his remaining stock.
https://www.sec.gov/Archives/edgar/data/0001494730/000089924...
It's a matter of public record that MUSK ELON REEVE sold precisely $8,517,410,779 worth of Tesla stock between April 26th and April 28th [1].
https://finance.yahoo.com/quote/TSLA/insider-transactions?p=...
> Who could possibly be on the side of the buyer?
Except you can just buy up supporters by gaslighting huge masses of people on Twitter. The house in question.
Its so ridiculous. Musk's popularity is largely *BECAUSE* of his Twitter antics. So this "buyer" is basically someone who has come to house-parties / benefited from the house in question for the last decade.
And the people arguing against the (current owners) of the house are also the party-guests of that very same house.
> Musk's popularity is largely BECAUSE of his Twitter antics
I don't really buy this. I knew loads of Musk fanboys who were crazy about him before Teslas even become available. The 50+ folks that I'm friends with have mostly never used Twitter or read a Musk tweet, but they think Teslas are cool and are reminded that StarLink brought rural Ontario better internet than our own government tried to do for decades. Obviously Musk is an ass on Twitter (and probably in person), but like a lot of neuroatypicals, their talent seemingly makes up for their abrasiveness.
note, musk created his twitter account in 2009... shortly after he became tesla's CEO. So unless you're talking about the original roadster, his twitter account existed before those people learned about tesla/musk.
Musk has pretty much used Twitter has his primary media communication method. Going so far as to say Tesla has no marketing budget because he's such a star on twitter. He has practically zero reach elsewhere. Sure, if he publishes on another platform, people will pay attention, but he doesn't... twitter is pretty much the way he communicates with the world.
If you dont think twitter is the reason you know Musk, then let me ask you this: who was the CEO of Fiskar? They released their EV product shortly before the model S. But you dont know the guys name do you? The product isnt why we know musk.
I'll say as a person who was just coming out of HS and not in tech yet at that point I don't think I had any idea who Musk was until after he come into Tesla. I'll also say he wasn't as wild on his twitter till after Tesla and SpaceX bumped up his public profile.
> Musk was pretty well known prior to Tesla because he was one of the PayPal co-founders
Well known outside of tech? I don't think so.
The fanboyism is quite considerably amplified by his public statements.
Without them, we may not get much press at all from him, he may be a bit of an unknown quantity.
His Social Media / PR is a gigantic part of his value. It distorts reality to a much, much larger audience.
Do you remember 'Maroon 5' the band? They had 'Really Big Hits' back in the day . Banger / Chart toppers. But it wasn't until the lead singer was on 'The Voice' did it make them a 'Household Global Name'. There were a poppy band with a tiny bit of an edge that appealed to a demographic, now, they are like 'Jeopardy and Wheel of Fortune' - multigeneratoinal giants.
Musk has fanboys that are Dentists in Malaysia, street kids in Cairo, wannabe ballers in mid level cities in China etc. etc..
Musk's companies have done some truly amazing things. He absolutely created enough buzz with Tesla to put EVs on the map, after they were fading. Battery tech. StarLink. SpaceX. They are all long overdue.
Also: He's a complete hobgoblin of a human being.
Both things can be true.
He still does the car for the same reasons, and it's still 'a good thing for green' he's just a bit older, a bit fatter, a bit richer (and targeted by 'socialists' a bit more often), he's a bit more irritated, and frankly, anyone who starts to let loose on Twitter is going to make waves.
About 80% of the people that I respect, I have lost respect for because of Twitter.
They just can't help themselves with the populism.
Your father is like most people.
That said, Musk is nowhere near as outrageous as those talking heads.
Off topic, but the reason Levine joined The Voice is because Maroon 5 had famous hits for 10 years.
And the band was more popular before The Voice. Levine is more famous since.
> I don't really buy this.
I think you're both correct. My experience is as you described, but Musk has also developed a following among political conservatives attracted to his abrasive, thumb-nosing antics.
Liking him for railing against government agencies and brash style doesn't necessarily mean they are EV fans.
Neither was Musk, which is sort of the whole point of Tesla.
Conservatives still aren't a proponent of EV, especially government mandates for them or to pay for them.
That has nothing to do with Conservatives liking or disliking someone. I guess Conservatives are just better at respecting people they don't agree with on everything.
I appreciate your analysis, but would like to add that I feel that "traditional conservatives" seem to have largely disappeared or become voiceless not only in the US but also in other places like e.g. the UK. I imagine in decades prior traditional conservatives would have found people like Trump or Boris Johnson obscene and distasteful.
However, I don't see many of that old guard speak out against them. It seems with the reducing success projections due to changing demographics, many see winning as more important than values. Or at least that is my only explanation.
If his popularity is due to what he posts on twitter it would appear that a large proportion of the human race are deranged morons.
He can be popular due to Twitter and people can also not be deranged morons.
Twitter is very popular with a few niche groups: Journalists and people in tech for example. The former is influenced by Elon's antics on Twitter and end up writing news stories or making documentaries [1] about him. People learn about Musk through these respectable publications. The latter group spreads the gospel of Elon's TED talks and press conferences to their friends and family. Being subject matter experts, they're more likely to be believed.
Previously the coverage was mostly positive, but Musk's antics on Twitter have caused both the former and some of the latter to turn slightly negative from what I can tell. For example, it's now a common joke that Elon's wealth is partially due to being born wealthy. His family owned emerald mines. I didn't notice that in the popular consciousness until very recently. Phoney Starks is also making it's way into popular usage.
1 - https://www.nytimes.com/video/NYT-Presents/100000008464087/t...
> But like I mentioned above if owning a profitable mine of some type was all it took to be an entrepreneur at Musk's level we would be drowning in them and he wouldn't be such a big deal in the first place.
I don't have an opinion on how big being born wealthy plays in his success. Just curious though -- how many profitable mines do you think are in operation and how many people do you think own them as a percentage of total global population?
This assumes that everyone who has lots of money and advantages chooses to try to run companies. That's not the case at all. I grew up around ultra-wealthy people and many of them wanted to focus on the arts.
So you have a small sample size - extremely wealthy people. Then you cut that down massively again - those people who also want to run businesses. Then a bunch of other things to narrow the pool lol. But then, finally, you cut it down to "and then the ones who succeed".
I don't think, at that point, the numbers are going to be behind you.
Wow, even being critical of Musk can’t prevent the downvotes if you dare mention some of his accomplishments.
While I agree that the emerald mine stuff is overblown, I don’t buy the idea that Musk was self made and independent. He didn’t always have free capital, but he seems to have a solid network through his extended family from early on that helped him.
That meant he had a readily available set of investors, advisors, and partners. That ranged from Greg Kouri, pivotal in forming Zip2 and X.com, to Roelof Botha. Roelof is the grandson of Pik Botha, the last apartheid South African foreign minister who had built up extensive connections amongst the US elite.
Success is so much easier when you go to knock on doors and find them already opened for you.
I don't mean to represent that I think it's a fact, only that people are increasingly repeating it, which represents more negativity than I think Elon has received in the past.
Interestingly though, it was Elon who said his family owned an emerald mine:
https://web.archive.org/web/20140802011449/http://www.forbes...
That was a Forbes interview in 2014.
The relevant section:
> JC: How do you handle fear?
> EM: Company death – not succeeding with the company – causes me a lot more stress than physical danger. But I’ve been in physical danger before. The funny thing is I’ve not actually been that nervous. In South Africa, my father had a private plane we’d fly in incredibly dangerous weather and barely make it back. This is going to sound slightly crazy, but my father also had a share in an Emerald mine in Zambia. I was 15 and really wanted to go with him but didn’t realize how dangerous it was. I couldn’t find my passport so I ended up grabbing my brother’s – which turned out to be six months overdue! So we had this planeload of contraband and an overdue passport from another person. There were AK-47s all over the place and I’m thinking, “Man, this could really go bad.”
Who knows what happened between when he was 15 and 17 to his family wealth that made him essentially penniless in a foreign country.
Edit:
https://twitter.com/elonmusk/status/1375212880790913025
This is where Elon says he arrived in Canada with only ~2500 CAD.
anti musk sentiment mostly stems from the post-2016 leftist surge. most of the mainstream internet was technocratic before
A hundred years ago, you just traveled from city-to-city with your posse of 20-guys. Those 20 guys would pretend to be an interested crowd (which draws in / astroturfs fake interest) Real people then start to join the crowd. You then show off your snake oil product working ("guest#1 from the crowd", who is of course your buddy), and then the real people will get excited, and buy your snake oil.
Today, you just buy a bunch of likes / retweets to perform the same astroturfing on a larger scale. Bonus points if you "meme" it and "go viral". You want all those people out there to be spreading your message at no cost to you.
A little bit of astroturfing goes a long way. People want to feel as part of a community. So a bit of fake-generated content and fake-interest helps at seeding the crowd and popularity.
---------
Stage magicians still do this today for entertainment purposes, rather than illegitimately hawking fake snake oil. Its a very good bit of entertainment. It does take some practice but once you get the technique, its quite repeatable.
Turns out that human psychology / group dynamics are in fact, predictable and consistent.
On TV it's the Laugh Track
With everything that's happened in the past decade, don't we know that already by know?
It would definitely appear that our monkey brains aren't very good at reasoning through social interactions that happen through mass media.
Whether or not this makes most of us deranged morons or not is in the eye of the beholder.
Most people don't pay that much attention.
They like the 'vibe' and that's that.
They may not specifically clue into the mapping of 'vaccine hesitation / conspiracy' to 'health outcomes', they might just view it as 'opinion' - which it is of course, but most responsible people understand the 'dots have to be connected'.
I think it's a bit part of the reason why a place like HN won't grasp populism: we are almost by definition 'anti populist' by our very outlook.
Even smart young people are usually busy with school, partying, social things, they don't all have time to parse all of the shifting nonsense, and those that do are more often than not trapped down rabbit holes, I think searching for 'an identity' more than they realize it.
This is populism. We (the crowd) make decisions on rough statements, headlines, a few words here and there, prejudices, assumptions etc.. Some of use a bit smarter than others, almost none of us see our blindspots.
Yes
Welcome to earth?
got bad news for you
> Except you can just buy up supporters by gaslighting huge masses of people on Twitter. The house in question.
What's the path from the masses on twitter and courts which will hear the case? Public opinion doesn't matter here. The case over the contract doesn't even have a jury if I understand correctly.
> Public opinion doesn't matter here.
Public opinion doesn't matter with regards to winners/losers of the case. But public opinion matters from the perspective of Elon Musk continuing to build his brand and grow his fanbase.
Even if Elon Musk loses the court case, he still want to turn this whole charade into a positive for himself. IE: Fail upwards, etc. etc.
Your comment implies that there was a time when he was actually trying to buy the "house" in good faith. I'm not convinced that is true... It gave him a great excuse to liquidate Tesla stock without the market responding as strongly as it normally would when a CEO unloads billions of dollars of shares in a company
> I think he was buying it in good faith.
My personal theory, which more or less matches Matt Levine's theory from his Bloomberg opinion column...
Musk wanted special features on his Twitter account. He made a stink on Twitter about it, hoping to get more features as one of its most popular users. When that wasn't working, he tried to join the Board of Directors to lean heavily onto the CEO to grant special features on his Twitter account.
Upon realizing that the board position doesn't come with those kinds of benefits, Musk quit the board, bought 9% of Twitter, and tried to push these "special features on my account" proposal that way. Board still didn't budge.
Elon Musk, realizing he has to buy the company to actually get what he wants, starts to buy the company. Then the stock price collapses and its turning out to be a horrible loss. So Musk then starts to throw another tantrum to get out of this one.
------------
The benefits of this theory, is that this "story" proposed by Matt Levine makes every single decision of Elon Musk reasonable (albeit sociopathic, but reasonable and self-serving). From his tantrum in early March 2022 on Twitter, to his 9% buyout, to his flirting as a board member (and then quitting), to the eventual buyout.
It also doesn't require "4d chess thinking genius". Each decision, while reasonable, isn't really that advanced or difficult to follow individually.
Elon Musk just want special treatment on Twitter. I don't know what that "special treatment" is (maybe a bigger, bluer checkmark. Maybe guarantees on the global Twitter Timeline. Etc. etc. Something along those lines...), but special nonetheless.
And as a billionaire, Musk has a number of strategies at his disposal that you or I wouldn't have. Musk is willing to pursue those strategies because he's so rich, and its really not a big deal to his finances.
--------
It just fits so neatly to what has happened, that its the most reasonable proposal of his behavior for the past 6 months so far.
> I think he was buying it in good faith.
> He believed he had "bought the dip" in stocks. He had bought 3bn worth, announced that he had bought some stock and made 1bn in a day on it - worlds smartest man everyone.
> Once he realised he wasnt buying the dip but was actually holding the bag, deal cancelled.
But these concepts don't even apply to taking a company private. Once you do that, there is no stock price. You can't meaningfully claim that your stock is up or down. And what the stock does between when you agree to buy it and when you take possession isn't relevant to... anything.
I don't think anyone is confused on this point.
Except this is not a house. It’s a public company. And a lot of people own a piece of that company. And a lot of them were unhappy about how Twitter’s leadership was running things.
I honestly don’t care, I’m not on either side. But this was not a house sale, and Musk wasn’t a crazy dude approaching a home owner. He had a lot of support from shareholders since day 1.
Yes. And he promised those shareholders $54.20 per share, signed the contract, and now the same shareholders are suing to get the money. They don’t care what happens to Twitter if Musk takes over since they’ll have cash instead of shares at that point and can reinvest in something more promising.
He didn't promise shareholders anything. He signed a contract, which is almost the opposite of a promise.
"a written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law."
Why would he buy the company after the stock crashed? He could buy the company for way cheaper publicly. Who cares what the contract says, theres different rules for billionaires than there are for the contracts I sign. No sane person would go through with it after the stock crashed, its not a financially smart move. A lot of geniuses in this thread but lack basic social and common aptitude as usual. Life is not a fantasy, its corrupt and rich people can do what they want.
> It crashed because of his antics.
Is this true? My understanding is that the "crash" is inline with other tech companies losing value in the same period. IIRC (and I might not!), it only looks like Musk caused the crash if show only the Twitter price. Once you overlay it with some other stocks, it looks pretty normal.
To continue the terrible analogy of a home, what appraisal was done where on preparing to move in you find rising damp, nests of rats under the floorboards and the slap of paint on the roof was hiding the need for a full roof replacement?
Analogies are like cars, they're never perfect but that's OK.
> Who could possibly be on the side of the buyer?
The buyer is rich and if I side with the buyer maybe one day I'll be rich too!
I think it usually works the other way around: "one day I'll be rich, so ..."
As someone who has been on Twitter for years almost every day, both parties acted in bad faith. Twitter bots are out of control and hard to detect because of newer SMM/bot tech scheduled tweets, and bot runners have had ages to perfect their craft on Twitter, because they were allowed to run free for so long. It's been TOTAL HELL for undiscovered user accounts to break ground on Twitter for almost a decade now at least, and many authentic people have simply stopped logging in long ago. Last time I looked, Twitter's ad minimum was $50, which is far too much of a gamble for someone small who just wants to grow followers on the platform, and chances are high that they'll often only attract bot accounts as followers if they gamble that money/
There are authentic accounts on Twitter, but it is nowhere near as vibrant as it once was, there is far too much run by scripting on the site and not enough support and fair human moderation. Elon as well likely realized the market crash, and how much it would take to bring Twitter back to prominence (which is a risk either way) and then decided to back out. Even with major functional changes there is still a wild risk that Twitter can be too "burnt out" to bring a user base back in.
Just my opinion, but I think everyone is waiting for something totally new to replace Twitter, and it would cost a lot less than the Twitter acquisition fee to build a new app from scratch. (And no, "something new" does not mean TikTok or even Truth Social). :{
What circles are you in? I basically never, ever see bots on Twitter, let alone enough to suggest that Twitter is "nowhere near as vibrant as it once was".
Yeah I’m a daily twitter user and the only bots I see at all are the cryptocurrency scam ones replying to Elon tweets.
Other than that, I find twitter works as it always has, and I’m continually finding interesting new people to follow. If anything, I think twitter is the best it’s ever been at least for my hobbies (maker/hacker/diy type stuff).
The IT world on Twitter may be a bit more responsible because there are too many tech savvy people reading everything... I also work in entertainment, and it's a dumpster fire daily though because competition is more fierce, and I guess credibility comes based on followers and likes rather than resumes and skill sets.
I think it may involve what field you work in for perception of the matter, but a lot of others complain about botting in Crypto (etc) and a few other industries... I think on the inverse, there are still a lot of community issues that have affected everyone on the platform...
Has your account grown in followers over time? Do you interact well with other users on you account?
Many people have complained that organic growth/discovery has stalled and that interaction is low across the site for ages now to drive ad sales.
Same. And in any event Twitter has never claimed the platform isn’t rife with bots, all their reporting about it has been around what % of mDAU they represent. Where m is “monetizeable”. They didn’t want to sell, Musk forced them into this negotiation on the basis of the whole bots thing. It’s staggering to me anybody is giving him even an ounce of benefit of the doubt here. From the very beginning he’s acted in bad faith and like he knows he’s unable to be held accountable for anything should he not want to be held accountable.
I agree. He approached Twitter and waived ordinary DD. How can misrepresentation be relevant in the slightest?
I work in the music industry.
The clearest sign that something is suspect is constantly trending celebrity names when they have no new/real news involved.
The other indicator is accounts that have over 10k followers on them, nut every tweet they make has only 10 or less likes on it. They cover that activity up by retweeting others/old posts that have multiple likes on them.
I won't mention names, but just the other day I made a tweet about a news outlet reporting on a terrible homicide and the news outlet was using a celebrity's photo rather than a photo of a victim in the incident or no photo at all, and suddenly the celebrity artist's name started trending with tons of old posts retweeted and obviously simple (bot-like) posts were made tagging the artist's name to bury my comment out of view... It happened twice that day.
I am used to the dysfunction and subtle marketing tactics used on the site, not really anything worth protesting against any more.
Except it's kinda funny because the 'homeowner' has spent 10 years developing the primordial cesspool that the buyer has evolved out of and it's kinda funny that some famous rich narcissist they've built an entire social network around empowering is now fucking them over.
A publicly traded company is nothing like a house. I say no to this analogy.
The investors funding the buyer’s antics.
I hate Twitter. They are turning a huge profit with massive negative externalities to society. I hope this whole ordeal costs them billions.
You left out the part where the buyer will also destroy the city in which the house is located purely out of spite if he is forced to go through with the purchase. That is, I fully expect Musk to go full troll mode and reverse bans on all the bad actors who have been rightfully kicked off the platform if he's forced to buy Twitter. He'll claim it's for free speech when it's really just to own the libs.
Very unlikely for him to deliberately destroy Twitter.
Most of the deal is financed by banks and they have a vested interest in Twitter having at least a shot at being more valuable or profitable.
He is but it with cash but (mostly) not his own so deliberately running the company into the ground could make him liable for damages.
Just like the libs blocked every account they could to own the conservatives in the name of protecting feelings.
Their house, their rules. See 'Truth (sic) Social' for another example.
>He'll claim it's for free speech when it's really just to own the libs
Those 2 goals are aligned.
This would make a perfect episode if Knight Rider ever got another reboot.
> The buyer starts harassing the homeowner to sell to them, they say no, so he buys up the mortgage lender and tries to force a sale.
It's more complicated. The incumbent management of Twitter are not the owners of Twitter.
Initially, Musk bought shares of Twitter on the open market from willing sellers (previous homeowners in your analogy).
Because of various regulations he could not just keep doing that, and instead had to go via the complicated takeover route.
Twitter's incumbent management is a bit like the janitor in an apartment block, not the homeowner.
(Just to be clear, I am not making any moral arguments here. And when in doubt, I defer to whatever Matt Levine says on the topic.
I have opinions on 'hostile' takeovers, but this comment is not trying to express any opinion on whether the 'janitor' should have a right to interfere with 'homeowners' who are willing to sell.)
I'd say they are more like the property managers that also hold some ownership of the property. The janitors at Twitter HQ are like the janitor that cleans a property.
> I'd say they are more like the property managers that also hold some ownership of the property.
Are you referring to Twitter management also holding shares? Or some other aspect?
For my argument, it's perfectly fine if some shareholders are also employees. In their role as shareholders, they would still be selling voluntarily (or not selling, as the case may be).
I go to a mercedes shop to buy a car I can show off with, arrange a loan then get demoted and paid less. I'm "effectively" too broke to buy the mercedes. So I return the next day and claim "the lights are to curved!" Is the way I look at it.
TLDR: The worlds richest man, insecure about his wealth decided to show off and failed due to a lack of wealth. To somehow save face he claims that his change of heart is not financially motivated.
Lesson, no one in this world is above being insecure about their wealth or status. It just happened to the worlds richest dude.
>They repeatedly demonstrate that they are a company of bullies, with how they ban people from their service that don't conform to the left orthodoxy.
So the manner in which they conduct their private business, which is well within the rule of law, makes them ineligible for protection from those violating securities and contract law?
> makes them ineligible for protection from those violating securities and contract law
GP said he doesn't feel sorry for them. He said nothing about legal protections being inapplicable to Twitter. You just brazenly made this up out of whole cloth.
I said that I don't feel sorry for Twitter. The law should apply without consideration of political ideology.
I'm referring to the law in the context of the purchase offer from Elon, as the person I'm replying to quite clearly stated "securities and contract law".
It’s not a violation of contract law to sue the other party. That lawsuit may find that the complainant did violate contract law, but the act of bringing the lawsuit is not in itself a violation.
So at this point, pending adjudication, Twitter has not been “denied protection.” The court is the protection. The two parties are suing each other, and the court will decide the appropriate remedies for whatever each of the parties has been “denied” due to any willful breach of contract by the other.
> This gets my curiosity going, so now I'm paying a lot more attention to conservatives than is normal for me (on Substack, YouTube, and Instagram).
This is a phrase right out of this playbook. No thank you.
https://medium.com/@DeoTasDevil/the-rhetoric-tricks-traps-an...
I don't get how his comment relates at all to your article. Paying attention to conservatives makes him a white nationalist?
Paying attention to them is fine, I think curiosity is an excellent trait. GP's comment is extremely similar to the "thanks for pushing normal people even further to the right" phrase in my linked article. GP is implying that right-wing talking points are being indirectly validated by twitter, and GP values are being changed because of that.
It's called the Streisand effect.
How is it fake? I'd have never learned about, e.g., some of the gender critical viewpoints, if Twitter hadn't banned people expressing them. It wouldn't have come on my radar. But since Twitter did ban some of those people, those viewpoints came on my radar (being relayed by others via screenshots), which raised my awareness of it. That fits the definition of Streisand effect.
Even if we grant the accusations of enforcing a leftist orthodoxy, that's twitter's prerogative, you may not like left wing people but they are allowed to have a website that caters to a left wing audience.
What personal consequences do you think should come to the members of the administration that sent lists of accounts to Twitter and other social media companies requesting bans?
Here's the first article that popped up. Easy to find from a simple google search. https://nypost.com/2021/07/15/white-house-flagging-posts-for...
What are your thoughts on TruthSocial, which is also "a company of bullies, with how they ban people from their service that down't conform"?
I haven't used TruthSocial, but if they do the same (but towards liberals), then TruthSocial has already failed.
I don't use the site, but I read that that was indeed the case:
https://www.businessinsider.com/truth-social-is-shadow-banni...
The fact you think that Twitter supports "left orthodoxy" just means the conservatives have successfully moved the goalposts to make you believe they're the real victims.
Twitter is full of very prominent hard-right voices. Douglas Murray! Charles Murray! Tucker Carlson! Dave Rubin! Ben Shapiro! Edit: Bannon! Paul Joseph Watson! Jack Posobiec!
I see lots of people getting banned for, e.g., being gender critical, or for sharing the actual stats from vaccine trials when those stats make the vaccines look bad. Twitter seems to respond to coordinated complaints against conservatives. My guess is that you can get Twitter to silence a conservative that doesn't have too many followers through these ambushes, but you can't get Twitter to silence established and well-known conservatives such as those you mentioned.
I know leftists that have been banned from Twitter too.
I'd encourage you to read this thread about moderation on social media platforms from the former CEO of Reddit: https://twitter.com/yishan/status/1514938507407421440
So you're an asshole and think others should have to put up with you? I doubt they do in real life, why should it be different online?
What about that comment warrants your calling the GP an asshole? That's incredibly rude and if the irony of your comment having not been flagged is lost on you, then congrats, you won the stupid game.
I don't understand this comment at all.
> allows some opinions while banning others
Me: Holy shit! You were censored for wanting lower taxes?
Con: LOL no...no not those views
Me: So....deregulation?
Con: Haha no not those views either
Me: Which views, exactly?
Con: Oh, you know the ones
https://twitter.com/ndrew_lawrence/status/105039166355267174...
Contradicting the official narrative on Covid19 isn't automatically 'misinformation', the official narrative held that masks are useless in the first months, then insisted on it religiously the following months, when, in fact, they are indeed mostly useless in the face of latest variants. Both of those convictions were held against evidence, and intelligent and knowledgeable commenters and organizations tried to point out what was wrong in them only to be met by "debonking" and censorship.
Reality is not harassment. If somebody is upset they can't control someone's else words or perception, they can go to therapy about it. This remains true even if you invent a couple of dumb words to describe the words or perceptions that upset you, like 'deadnaming' or 'misgendering'.
There is a difference between deliberate selectivity based on ideology, clearly and nakedly what twatter does, and simple errors and human variability.
Yes, I'm entirely free to think anything I want and disparage any website or any other group\institution of people for not agreeing with me, and being happy that dumb anti-free-speechers are dragged to court and toyed with for months. What I don't understand is how your dumb role-playing of an imagined strawman of me in your first reply says anything about me or my opinions.
> Legally ? I don't know, I'm not a lawyer, and law can frequently have surprising implications in the twists and turns of the its logical structure, which - as a bonus - differ by time and exact place.
The contract states the place of the law. Specifically: in the Delaware Chancery Court. The contract also states the time and conditions of the contract.
Have you read the contract? Its public. Furthermore, the date of the court case has been set for October. It seems unlikely that Delaware law is going to change dramatically between then and now.
How does any of this change or contradict what I said?
And doesn't the US legal system allow for escalation to the Supreme Court, which can override lower courts? So technically whatever the Delware Court is not the final say on whatever happens.
>Trial date set to October
This is so so awesome, I will get to see Twatter defenders rage and fume for 2 more months? ^__^
>There's no twist or turn of the law I can possibly imagine
If you're not a lawyer, this has 0 value. If you're not a highly paid team of several top lawyers, this has less than 0 value. Their entire profession is to spin circles around common sense or naive reasoning, so just wait and see. Law is harder than you think. Don't Dunning-Kruger your way into a highly complex domain, it never works.
>What kind of "surprise legal twist" do you think will happen over the next 2 months
By my own admission, I'm not a lawyer. So I don't understand why you think you or me can answer or predict this question better than those studying for decades and highly paid for months to think about it.
If there is an issue of federal law raised (which can emerge during the case, e.g., if there is a due process issue with the handling of the case, even if it isn't initially part of the case) state Supreme Court decisions can be appealed directly to the US Supreme Court, though (like all appeals to the Supreme Court) such appeals are heard at the discretion of the US Supreme Court, not by right.
https://www.youtube.com/watch?v=3WShMzwT-nM
For best experience, read it with the Benny Hill theme in a background tab.
It appears to me that the seller was, in your analogy, misrepresenting the condition of the house. This is my totally unscientific analysis based on my private random sample of accounts I interact with, so, not particularly robust as a decision making tool for a big sale.
In the analogy, the contract was done with no intentional representations by the seller at all, and the buyer waived contingencies/bought as-is.
It’s almost impossible for a seller to misrepresent anything material in that situation.
The issue being that Twitter actually did (afaik) make various representations about bots, spam, paid actors, etc and the validity of those representations was later called into question. So the analogy as originally proposed at the top of this thread is a misrepresentation.
None beyond their normal public filings I believe, which are highly qualified and if wrong beyond those qualifications they’d have been in hot water a long time ago. In the analogy, it would be like claiming the Public appraisals/tax records with the county were lies all of the sudden (when they aren’t) to try to get out of the deal.
But if you have evidence to the contrary, please post.
Not the best analogy. In many (most?) US states, the buyer can just walk away from purchasing a house at any time for just the earnest money, typically 1%.
You may need to have a reason that's called out in the deal to walk away from the deal. If you've e.g. waived inspection contingency and later find some issue w/ the house, you may be forced to close the deal anyway (there may be other contingencies like problems w/ securing financing, but I think that ship has sailed for Elon as well). Not a lawyer, but I expect there may be some way to walk away if you can prove the seller knew about the defect - that also doesn't seem applicable to Twitter deal, since IIUC Twitter gave Elon access to the data they have. We'll see how it plays in court, but I think it's a decent analogy.
Imagine it playing out in a romance! "You cad. I never wanted to marry you, but I felt compelled to accept your proposal. But now that you are trying to back out, I am trying to force you to marry me, you idiot."
Although in this case, contrary to what it's arguing, Twitter doesn't actually want the marriage to happen. It just wants to keep the $1B engagement ring.
You're not caught up with things. Twitter is suing to force the deal to go through at the original price, not to get the $1B.
I'm aware of the latest developments, but let's work through this.
There are basically two categories of Twitter shareholders: Those who are invested in the business's long-term success, and those who could care less about the business and want to dump the stock as soon as they can get a good price for it.
Right now, the latter category want the sale to go through so they can divest; they don't care if Twitter burns to the ground afterward.
But what is the outcome that people invested in Twitter's long-term success actually want? Twitter's lawyers are arguing that Musk is an incompetent businessman who made a really terrible knee-jerk decision, and in the same breath they're saying that he should be compelled to be made Twitter's new owner -- an unwilling, incompetent owner who will likely tank the business even if he doesn't make any more stupid decisions, just by virtue of how this all played out.
These people, one would think, would prefer to get the $1B parting fee and be done with Musk, even if that means passing up on the potential for a short-term gain that an outright sale might give them.
Similarly, in a romance, whatever short-term benefits you might get by having a wedding, they're never going to be worth the trouble if it means marrying a terrible person.
Granted such people exist but twitter i.e. the board acting in shareholders interest, in fact wants the deal to go through, not to get the $1B thing.
Well this analogy leaves out Twitter censorship, which makes Twitter unlikeable.
I think Twitter is in a tough spot when it comes to deciding how to handle hate speech and harassment.
In many ways they are like Amnesty International in that no matter which human rights issue they report on, there will be a contingent that says, well everything else you says is true, but the stuff you said about me is completely wrong and you've loss all credibility.
It is a hard spot to be in trying to be neutral in a world of actors who only want the other side criticized or censored and never themselves.
I am glade I do not have such a role. I wouldn't be able to take the constant flak from all directions for actions or inaction.
Adding to the analogy: The current owners of the home regularly remove swastikas spraypainted on their house by vandals, and some people call this a violation of free speech.
Removing swastikas graffitied all over the place, political correctness gone mad.
You really think the only speech Twitter censors is hate speech? Terrible.
This further adds to my point that there's no violation of free speech taking place.
Twitter, the platform where trans people are routinely called pedophiles and groomers by prominent figures and nobodies alike, has a censorship problem? I can't imagine the kind of vitriol you have to spew to get banned off Twitter that's not just tripping the automatic ban for telling someone to die (which everyone is aware of at this point).
Here we go with that bullshit again.
Do you have a link of an example of what you say ? Were the people in those linked example not banned at the time? On average, how many people calling your precious "trans people" pedophiles and groomers are banned vs. how many of the trans people themselves get banned when they say things equivalent or far worse ?
It's mindblowing to me how the most coddled and put-on-a-pedestal group in public discourse is complaining about censorship and unfair treatment. They literally ban people for not using pronouns. It's honestly laughable.
I am one of those people. Last March one person went down on my profile and replied to multiple tweets calling me a groomer and a pedophile, with those exact words, and was not banned after I reported them.
I'm not going to acknowledge the second paragraph because it's just hilariously out of touch with reality.
> All the while, this is of course taking your attention away from your day job
If the Project Veritas videos are anything to go by then there's not much attention being given to the day job in the first place.
I am, not because I think “the buyer is right” but because I hate the seller with a passion.
Twitter has done terrible harm to society and whatever and whoever does it harm, it’s doing a good job in my book.
Quite funny than the person doing twitter 'harm' is exactly the kind of famous, pompous narcissistic asshole their entire platform has been built around enabling.
If it helps, I think both twitter and musk are two turds. I like seeing turds suffer and harming each other. Best outcome for my personal satisfaction would be twitter gets dragged for years in the courts and loses tons of money and at the end musk is forced to pay that billion dollars or however much the break clause is. Both side can go f themselves.
> Who could possibly be on the side of the buyer?
I don't know. It just strikes me as weird as forcing someone to buy something that they don't want to own or run. Especially after fighting it for months and even adopting a poison pill.
Imagine if you agreed to buy a house for $1 million and the housing market crashes and the house is worth $500k. And now multiply those values by 50,000. Why wouldn't you try to get out of the deal?
> forcing someone to buy something that they don't want to own or run
After they signed a contract to do so... and that is the entire purpose of writing up the contract.
I really can't see any other outcome besides Musk getting his ass handed to him by the Delaware Court of Chancery.
It's always important to look at incentives and motivations when trying to read the tea leaves, and if you look at Delaware's incentives, it's very clear. The whole reason everyone incorporates in Delaware is because they have centuries of handling business cases and have built out a clear set of rules and procedures. That is, businesses go to them more for stability and predictability than anything else.
Musk signed a contract. The BS reasons he is trying to use to back out of it are borderline laughable, and even he knows this, so if anything is just really trying to negotiate better terms. The Delaware Court has every incentive to hold up the established rules of contracts, especially business acquisition contracts, and I'd be pretty shocked if they ruled in favor of Musk on any of his claims.
Actually I have to take you up on this, people who run large corporations say that it's the strong legal regime they have. In reality, it's a tax shelter. The only question is "How much does Delaware care about their status as a real legal regime vs their actual purpose: a tax haven". They know it's difficult to defend "We're a tax shelter sucking revenue out of the rest of the union", so they argue "We have strong legal structures" but we all know that Coca Cola wouldn't be incorporated in Delaware if they could save a cent by being incorporated in Georgia.
What tax, specifically, is Delaware a haven from? Incorporating in Delaware doesn't get you out of Federal income taxes, or state income taxes (to the extent your operations, which are probably not based in Delaware, subject you to income taxes from various states), or sales taxes, or property taxes, etc., etc.
There are some taxes that are avoided by incorporating in Delaware, as opposed to some other jurisdiction, but they round to zero when compared with taxes imposed without regard to where you happen to be incorporated.
This isn't really true, for the simple reason that where a company is incorporated has little impact on the tax a company pays. Yes, there are some business tax benefits for being incorporated in Delaware, but they're negligible for a large corporation, and for a smaller business will probably end up costing you more.
I mean, if your headquarters are in California, you have employees in California, and you get lots of revenue from California, the California government doesn't care much where you are incorporated - they'll get their pound of flesh regardless.
I think it's both. Many states could compete with Delaware by also becoming tax havens. They can't anymore, because there is now more to it that simply being cheap.
> That is, businesses go to them more for stability and predictability than anything else.
You really think this is the reason and not the extraordinary removal of income taxes for companies and shares?
All of this is just a theatrical farce by business guys. The market went down, Elon doesn't want to pay, Twitter has a pretty good negotiating position, the parties will settle out of court for $3-5 billion.
Why settle? There is a reasonable shot of forcing musk to pay a 200% premium. $3-5 billion is a steep discount. Twitter should settle for nothing short of specific performance.
Why would Twitter settle?
To close the sale and end litigation
So right now the Twitter market cap looks to be about $12 billion dollars lower than the standing offer.
I'd naively assume that the price to settle starts at $12 billion dollars, and maybe goes up rather than down -- right now that $42 stock price is at least anchored by the probability of Musk being forced to buy it at $54, so if this ends without a sale, we might expect the stock price to go down.
>So right now the Twitter market cap looks to be about $12 billion dollars lower than the standing offer.
You also have to factor in almost every other social media company is down 50% YTD. If the deal falls through, the market will price TWTR like how they did to facebook which shaves off another ~$15B off their market cap.
So TWTR actually stands to gain ~$27B in value.
I mean, if the options are "go through with the sale and be forced to sell enough shares of Tesla to lose control of it" or "pay $12 billion for nothing, but maintain control of Tesla"...
Few accounts post as much vapid engagement-bait and as frequently as @elonmusk does, so I have sympathy for the bot analysis tool.
I couldn’t take it and had to block elonmusk on Twitter. It was just dumb bait tweets but everyone was constantly reacting to them. Horrid and I have better things to do with me time.
Thats not what bot means...
It is possible that this means Musk's spam analysis tool is defective. But, there is another logical possibility...
If Musk can prove that he is a bot, then he wins this lawsuit.
Imagine the gasps in the courtroom when his lawyer walks in and people notice it's actually a prototype of his Optimus android, that somehow managed to pass an online law degree.
Presumably it would then announce that it is an expert in "bot law" and the judge would have no choice but to let it argue Musk's case.
And then people look even closer and notice that its the same prototype of the Tesla android revealed to much fanfare in 2021, and now that they can see it up close and in person - they realise its actually just a person in a gimp suit, it always was.
Just in case anyone isn't seeing through the bullshit of Elon Musk, let me lay this out for you:
On April 14th: Twitter stock was worth about $45. Tesla stock was worth about $985. Elon's contract said he would sell $13B worth of Tesla stock (about 13.1m stocks) as part of the plan to buy Twitter for $44B, $54.20 per share. A good deal for the Twitter shareholders even at the time. (23% higher than the market said it was worth).
On May 13th: Twitter stock is worth $40[0]. Tesla stock was worth about $769. So now Elon would have to sell 16.9m shares of Tesla, 28% more, to get a company worth 12.5% less. All signs pointed to both stocks continuing to decline along with all of tech, so the deal was getting worse and worse every day for Elon, and better and better every day for Twitter's shareholders.
Elon Musk will say or do anything he has to in order to cut his losses. There's that well-talked-about $1B get-out-of-deal fee that everyone thinks he'll be able to use. But that's actually not a valid thing- that was only if the SEC blocked the deal. He's contractually obligated to buy the company.
Elon is screwed. All the noise he is making is not going to get him out of it because the Twitter shareholders will hire lawyers just as good and expensive as his- and they are in the right.
[0]And even then $40 is only because the stock was pumped up from Elon saying he's buying it all. If not for that, it would be even lower- meaning this is an even better deal for the shareholders.
Even though you are totally right, I can’t fault Elon for having a sour grape feeling and trying to renegotiate hard with all the tools he’s got. Millions of lawyer fees are nothing compared to the billions of losses he is going to have from the deal.
Realistically he may not take a loss in the end. If Elon does buy it and is able to get into payments and charge Businesses for their account, they could quite possibly quadruple or better their income.
I'm still convinced he's just gonna use it to suggest that a judge should meet him in the middle; make him buy the company, but use the allegations of large numbers of bots to reduce the price.
I don’t think there’s any world where that happens.
I think a judge would either order specific performance (e.g. do the thing the contract says, as specified in the contract), or we’re talking about damages (e.g. pay Twitter $X, but you don’t get anything in return).
I think a purchase at a lower price would probably only come from a settlement between the parties, and… I think that’s likely. Twitter didn’t want to be purchased in the first place, and now has Musk over a barrel. I think Twitter is going to use the threat of specific performance to try and extract a damages settlement greater than the contractual $1B from Musk.
I agree there won't be any meet in the middle. Neither Musk nor Twitter want Musk to own Twitter now though. What's happening today is negotiating the break up fee which starts at the difference between current market cap and 54B (~22B today).
The accelerated trial date put Musk on notice. The SEC may not take enforcing the rules seriously, but Delaware has made it their business to enforce the rules that make it attractive for big corps to incorporate under. I don't think this makes it to trial where Musk will get destroyed, and bet they end up settling in the ~10B range.
Musk got himself in between a rock and hard place here. Either he has to buy Twitter at a higly inflated price with all kinds of efdects on his Tesla shares and, maybe, even SpaceX ownership. And he looks like a bad business man.
Or he vets out of the deal, has to pay billions for nothing and still looks like a bad business man.
Since all his wealth is based on Tesla, and more specifically on Tesla's public perception as tech company and not a car maker, all of which in turn is based to significant extent on yhe public's perception of Musk as a genius, this change in public perception is incredibly dangerous for Musk.
> And he looks like a bad business man.
Musk already looked like a corporate bottomfeeder to anyone who was actually paying attention to his behavior.
You're right, though. Obviously, other facets of this situation were going to affect Tesla, but I hadn't really thought about the effects on Musk's reputation could impact his companies' share prices. TSLA is as much a cult of personality as it is a stock.
Why settle for only $10B? Musk's shenanigans have resulted in significant long-term damage to Twitter in the form uncertainty and distracting Twitter from focusing on operating and growing the business (because they've changed internal policies / direction, and shared a lot of information with Musk, as per the acquisition agreement).
It's only fair for mullosk to be on the hook for the full purchase or at the very least the full differential.
We'll see what happens in about two months.
$10b cash will go a long way to remedying that damage. They might even not ban Musk's account as a show of goodwill. Let him continue to bloviate impotently about the evils of censorious social media.
There's value in ending it sooner than 2 mos. for the reasons you bring up. I'm sure the court is also encouraging them to settle. While the court has forced transactions to complete before, I'm not so sure they want to be forcing a 54B transaction to go through. 10B would be ~$13/share that Twitter could 1-time dividend if they chose.
> I think Twitter is going to use the threat of specific performance to try and extract a damages settlement greater than the contractual $1B from Musk.
Yeah that's what makes the most sense. Musk doesn't want to buy Twitter anymore, forcing him to buy it is not a very good solution. It's possible to do, and certainly enforceable, but not a desirable outcome for anyone.
But, having him pay $10 or even $15 billions as a price to renege on his word, on the contrary, is an excellent outcome.
Presumably if the fine is bigger then the delta between the current share price and what Musk offered, he'd be better off buying the company and then trying to turn around and sell it then paying the fine.
Similarly, if the fine is smaller, Twitter share-holders would be better off just forcing him to buy and forgoing the fine.
So a settlement number seems kinda hard to agree on, unless they have differing opinions on what the company is currently worth.
> Presumably if the fine is bigger then the delta between the current share price and what Musk offered,
Not necessarily. There's a world where Musk really can't get the financing together, and stumping up the $44B in cash is too much of a hurdle to be worth-while.
Imagine, you could either pay $1,000 as a fine, or spend $10,000 on a car that you're pretty sure you could sell for $9,200. Obviously, in absolute terms you're better off buying and selling the car. But if you only have $5,000, it might not be worth the hassle to raise the other $5,000 to be able to buy then sell the car. Not to mention the risk that once you get the car, and go to sell it, there's a chance it only sells for $8,800.
If I were a Twitter share-holder, I'd be fine with getting a slice of a $10B settlement, keeping my stake in a successful social media & analytics company, banning Musk's account, and watching him squirm. I don't know if it'd be a perfect financial move, but it would feel good.
True. However there is a distinct possibility that Musk could run Twitter into the ground out of spite, if he's made to buy it. So there's a negative externality to force him to buy.
A fine close to the spread, but still a bit lower, accounts for that.
But is there a world where Musk would rather pay $15B and not get anything in return rather than pay $50B and get Twitter in return?
Short term he would fork out a lot more money, but long term he has a company that can grow...
There was a good article the other day, I'll see if I can find it, that breaks down why legally Musk can't really be asked for specific performance since he's an individual.
It comes down to anti slavery laws
so probably not enforceable, though he could be fined.
https://www.barrons.com/articles/twitter-elon-musk-thirteent...
If the agreement is with the company, and not him as an individual, then he could just shut the company itself down, as it probably has zero assets.
The funny thing is that stalling is probably enough to pay less. He's partially financing the operation by selling tesla stocks, if the market goes back up and takes tesla stock price up with it then buying twitter will cost less money.
My opinion is this is just a stalling tactic, he thinks the market will recover by next year and this is a pretext to wait until then.
Both are probably true. There are likely more bots than Twitter admits, and Musk will likely agree to buy Twitter for a lower price (in fact, I believe he outright said that).
How much of this show and dance is really about covering up something else that Musk did? Is it possible this is done to overshadow other newsworthy stories that would be even more detrimental to his reputation?
Simplest explanation is that he wanted to buy it and then got cold feet after the market crashed.
There must be a million cheaper ways of drawing attention away. Here, let's come up with a couple:
Musk announces that in order to help repopulate the world he's looking for 10 female "paid volunteers" to come stay in a compound during 2023.
Musk begins a run for Senate in Wyoming.
Or even more simply: Keep talking about purchasing Twitter, but don't actually write up an offer!
It will be an incredibly expensive show and dance. Not sure it is really worth it.
Musk seems like a smart guy who got overconfident and out of his area of expertise and made a series of incredibly stupid decisions. Pretty much every legal and financial professional without a vested Musk related interest seems to think similarly. Matt Levine has been lights out on this topic. Everyone knows his bot claims are just FUD to try and weasel out of writing a check he no longer has the guts to cash with current valuations.
Prediction: They settle for a couple billion OR Musk buys them at a slight discount to the currently agreed price. Maybe $49.69 because he is a clown?
Twitter replies to counter claims: https://s22.q4cdn.com/826641620/files/doc_news/2022/08/Twitt...
Do you mean he only recently got overconfident? Just a reminder that he already got fined $40 million for his "going private at 420" joke.
The private at 420 thing was absolutely worth $40 million. It helped elevate Tesla to the meme stock stratosphere even more than they already were. His Twitter antics turned a 200 billion dollar company into a trillion dollar one.
> It helped elevate Tesla to the meme stock stratosphere even more than they already were. His Twitter antics turned a 200 billion dollar company into a trillion dollar one
Zoom out! Everybody loved GagnamStyle and Baby Shark too, but they are not getting on radio and people would be indifferent to the disappearence of the artist who made those songs.
MarketCap is a flawed measure for tons of reasons (in my opinion FCF is king) but if you want to use such flawed measure then time spent in the S&P500 would be a meaningful way to go about it.
Tesla has been in the SP500 for how long? 1.5 years?
If JPMorgan went bankrupt tomorrow you'd see people literally in the streets crying (for a whole bunch of reasons both at the macro and micro level) much like when Michael Jackson died. If Tesla went bankrupt tomorrow it would be like if PSY of GagnamStyle fame died, a bunch of hardcore devote followers would mourn but the world would move on pretty quickly.
Well musk has already sold a bunch of Tesla shares and made a lot of money off the tweet. Way more than $40 million
Sounds like twtr is worth $800B then? ;)
Just to put this in perspective: if your net worth is $100,000, this is the equivalent of being fined $14.
(Based on Elon's net worth of $278 billion, according to Google)
Still not a great example of a supposedly superior intellect.
And that court case is scheduled the week after this one. Musk has 3 major trials in October.
I have understood the same. This is Delaware, meaning they aren't going to give special treatment if they want to keep companies there. Deal is a deal. And Musk will pay, now how much might vary, but it will not be 1 billion cheap.
By the downvotes it Looks like musk fan boys cant handle their lord and savior being called out for making a series of dumb decisions.
Where was there ever evidence Musk is a smart guy? His only skills appear to be self-aggrandizement and being born rich. Musk is proof that our economic system rewards being already rich, not creating value.
He did not found Paypal, Tesla, SpaceX, or anything else that's been successful with his name attached. He did not contribute any tech to those efforts. At best he's contributed publicity, but it's only ever with a flavor of celebrating how great he is.
He's an example of an utter failure of capitalism. I suppose it shouldn't surprise me that he's celebrated for it. Everyone wants to fail like him. But most people skipped the step where they're born rich, and it's just too hard to recover from that miss.
Even most people being born richer than him and why happen to have a better relationship with the family wealth don't become billionaires not to speak of the richest person on the planet.
So he definitely has some skills in leading businesses through hard times and making them succeed in the end (I've no idea how or what he does so).
Founding a company doesn't matter as much as making it grow and succeed.
Ray Kroc didn't found McDonald's (he didn't even join early) but he turned it into the massive company it is today, so it doesn't really matters who once initially signed the incorporation form.
I think that’s a little much. Definitely was estranged from his dad and it seems for good reason. No evidence his alleged childhood wealth funded his adult businesses.
Founding doesnt matter as much as making them as viable as they are today. Seems to have a knack for something, either PR, hiring others, repeatedly betting the farm, slamming his head into a wall etc. whatever it is its on average working.
His companies create thousands of jobs and pay billions in taxes, capitalism seems to be doing its thing very well. (Yay global reduction in poverty!)
Friends who have worked with him say he is very sharp and extremely relentless and hard working. I don’t think he’s a pure confidence man. I do wonder if he has had a bit of a mental break in the past 5yrs or so.
I hope this seriously bites Musk in the ass. I hope he's forced to buy it, and then it's such a pain in the ass for him that he immediately tries to turn around and sell only to discover no single entity or investment group wants to privately own Twitter. I hope he makes another dumbass tweet that results in another legal action removing him as the president/ceo/whatever and then decides to just take Twitter public again so he can divest himself.
I hope Twitter users don't have to deal with too much chaos as a result, but if it half bankrupts an idiot who openly accused a rescue diver of being a pedophile, despite knowing nothing about the man, and merely because he told Musk not to interfere with rescue operations, then let Twitter deal with a little chaos.
To be fair, that's a realistic mistake that twitter users might make too. Musk has one of the most faked accounts on the site, with lots of bots running Musk impersonation crypto scams. IMO this says more about the problems with twitter than about an inaccuracy in Musk's script.
Why is twitter so desperate to sell to Musk? Are they really out of ideas? If they just want to squeeze out an extra $11.50 / share I can think of tons of ways to do it, they don't have to just copy Facebook's monetization model. They could let people buy followers; they could add an onlyfans clone to the service; charge a monthly fee for premium features; charge a premium to be the first to know about trending topics - could be useful for news orgs, hedge funds, governments, etc; do what cameo does, let users pay popular accounts to make customized videos and take a cut of revenue. This is just off the top of my head, if you're just trying to squeeze money out of the rock and don't really care about long term brand impact I feel like they can get a lot more than $11.50 / share.
What makes you think the features you suggested are worth $11.50 a share? Some of them I think would tank the share price like buying followers so they’d have to be worth even more. There are 765 million twitter shares.
I don’t know for sure what will work, but they don’t seem to be trying anything other than forcing Elon to buy them out as hard as they can
Would their be any benefit to Musk going through this ordeal meanwhile fully intending to buy Twitter all along?
Yes, he could end up negotiating a lower price. Even a tiny discount might make it all worthwhile.
It will be hard to negotiate a lower price while a lawsuit about specific performance is still open.
Since Twitter has a real (not guaranteed, but not terribly unlikely) of having a court force Musk to buy Twitter at the original price, I don’t think they’d seriously consider selling at a massive discount. I could see a small haircut to the price in a settlement, so maybe that’s the angle.
But… with the threat of specific performance looming, I just don’t see Twitter moving the needle on their price much.
Real chance does not mean 100% chance. As long as there is a threat (and fear) of losing, negotiations can happen.
Oh, I wouldn’t say specific performance is close to 100%.
I have no real basis for this, but if I had to put a number on it I’d say it’s a 40% chance (if you let me put a range I’d say between 20-80%, so I don’t have really any confidence in my guess).
But if they don’t get specific performance (which gets them a good sale price, but loses them Twitter), they are very likely to get damages (maybe capped at $1B, maybe not capped at that), which gets them a decent amount of liquid assets while they don’t lose Twitter.
So, I agree, there’s room to negotiate in the uncertainty of the ruling but not getting specific performance doesn’t really mean Twitter loses. The alternative to specific performance could still be a big cash payout with no loss of assets.
So, I think the fear of losing for Twitter is very small. And specific performance is I think a bigger threat towards Musk than its a desirable outcome for Twitter.
I suppose he could save some billions.
It seems to me that any reduction in price would also cause a reduction in value, no? I.e pay less because it’s worth less?
Yes, but if he is taking it private that doesn't change anything.
I have no idea what is his plan to make money with Twitter, but that is why I'm not multi-billionaire.
I think it may be: "Don't throw me in that briar patch."
The more vocal Twitter users were quite dismayed by the prospect of Musk owning their favorite forum. There was talk of getting the Government to block a deal somehow because "one person can't be allowed to own the public square."
Now they're as likely to be overjoyed if a court "forces" him to conclude the deal, even with a slightly smaller price than originally advertised. Whatever principles were served by the initial objection are less important than Dunking on Elon now that he's become pariah.
It is impossible for neutral companies to get mDAU data for Twitter. Twitter needs to provide proof. You can’t use Twitter professionally without using bots btw.
There is a food market at the ground level of Twitter HQ with an awesome beer selection. More valuable than most Twitter accounts. :)
I have 30 Twitter accounts, but only one is used. It's only used to be able to occasionally search for news on Twitter.
I wonder if those other 29 accounts are actually removed from the active accounts count when trying to sell their numbers.
I mean your answer is pretty self evident. If you don't use it, it's not active daily, and so it's not a monetizeable daily active user, now is it?
I wish this whole saga ended, and Musk buys reddit instead.
This current saga is pure entertainment, which will end up in some kind of settlement and will leave the lawyers a lot richer.
I'm amazed by how reddit has turned itself around from "the place where the commenter zeitgeist involves wishing physical violence on the CEO" to "the place I append to all my searches with a site: prefix to find meaningful Web discussion and product reviews".
There was a surprising and unpredictable community turnaround from about 2015-2021; don't know if it will last, but it's surprising how much better it is now.
I don't think it ever changed: Reddit was always good for things like that, easily for over a decade now.
Its just that the userbase has broadened, and is no longer early-internet enthusiasts, and also censorship is far higher now
I use it for product reviews, but don't ever use it for meaningful discussions. The average age of Reddit users has dropped significantly since the mobile app launched.
For tech solutions, Stackexchange is the place to go.
It's also the place where the same group of moderators moderates all politics subreddits for 15 years without challenge. And international subreddits can be often worse. Moderators run the show now, and they ve become extremely vicious
What you 're observing is not some magical reddit improvement. It's because forums have become unmonetizable, and reddit has consolidated all of them in one place. There is nowhere else to go for comment-like discussions (HN, but it's limited). Their success and moat lies in their legacy userbase. It's not because of their performance
Musk buying Reddit would turn it into corporate 4chan even faster than is already happening.
The number of bots on Reddit is likely much higher than on Twitter.
Where does he find the time to run Tesla and SpaceX? I'm starting to conclude that he's fake and the man was created by investors to serve their purpose.
To be fair Musk’s Twitter does read like a bot full of illogical, nonsensical tweets. So yeah any well written algorithm could classify it as a bot :)
plot twist: the spam analysis tool is correct, and Elon is actually a robot, ala Stephen Byerley in Asimov's "Evidence".
I quite like the plot twist where Elon isn't actually a robot, but he becomes fully convinced he is. He's already expressed sympathies with arguments we're all living in a simulation, right?
His Tweets are all done with an iPhone, as Twitter allows you to see what client a tweet was made from. The only way bot behavior could be done on a smartphone, is if the phone is an iOS virtual machine, and the tweets are programmatically generated using some algo.
You're neglecting the simple solution of a hot dog moved around by a few actuators. Musk could totally be replaced by one of these.
Or some other stylus that you can use on a touchscreen with your hands in non-conductive gloves. But a hot dog is funnier.
In the same vein: https://www.youtube.com/watch?v=UXacA35s6vo
I'm now seeing Elon Musk in that one universe from Everything, Everywhere, all at Once.
Not if the bot has a physical form and is able to interact with a physical iPhone.
If I bought Twitter shares today ($42) would Musk be forced to also buy my shares at $52 if the sale was forced through?
Yes — and this possibility has been factored by the market into that $42 price. It's among the reasons why the stock isn't trading significantly lower.
TL;DR:
> Specifically, Musk used "an Internet application called the 'Botometer'—which applies different standards than Twitter does and which earlier this year designated Musk himself as highly likely to be a bot," Twitter said.
Note the “Earlier this year”. Article continues:
> This morning, Botometer gave Musk's account a rating of 1.2 out of 5, indicating that Musk is more "human-like" than bot-like as of today.
The legal brief continues:
> The Botometer thus does not even purport to apply Twitter's definition of a false or spam account. In fact, some bots (like those that report earthquakes as they happen or updates on the weather) are often helpful and permissible under Twitter’s platform manipulation and spam policy, to which Twitter respectfully refers the Court.
The latter, in my estimate, is irrelevant to the question here. Because the metric in question is “monetizable daily active “. If one person runs, besides their personal profile, 10 bots, it doesn’t matter if those bots are all “permissible“ according to Twitter‘s terms of service. These accounts still constitute, from the point of an advertiser as well as from the point of investors, just one monetizable daily active user, and not eleven.
As someone unfamiliar with the US juridical system: when can we expect an outcome in court?
Or put otherwise: if we assume Musk is stalling in the hope that tesla shares go back up. How long can he keep this going?
I just find it a little hilarious that Twitter is even attempting to counter the bots claim.
You have to spend 5 minutes reading the replies to tweets by prominent politicians to know that its filled with bots
Yeah, but that just shows there are a lot of bots. There are a lot of twitter users too. 5% of a lot (of Twitter users) as bots equals a lot of bots. So, that's consistent.
What about all the tweets that aren't famous politicians? What about the orders of magnitude more people who just read, and maybe like, tweets?
I don't think "I see a lot of bots" is an argument that the 5% number is wrong.
None of my tweets ever got a bot reply.
Now that is most likely because they are all about very local topics or things related to my specific field of work.
They are also not very popular (a handful of retweets) and mostly cater to people I know in real life.
I know at least 10 people who regularly use Twitter through the app (aka being shown ads) but never ever tweeted a single thing.
They would be counted as real users by Twitter but 1000 bots who never viewed an ad wouldn't. That is all that Twitter claims in their SEC fillings.
That there are roughly 200 million active daily users who are being shown ads and that of those 200 million (very roughly) 5% are bots but "who knows it's a guess", says Twitter.
If there were an additional 50 Billion bots who never saw an ad, Twitters statement would still be true.
If he isn't forced to buy it, then he was given a free multi billion dollar call option, paid for by Twitter shareholders. That's effectively theft.
To be fair, Musk himself stated when he hosted SNL that he "runs human on 'emulation mode,'" so calling himself a bot might be consistent.
Musk actually has a tiny man inside his "body", acting as the operator.
https://i.postimg.cc/BQprkpLv/Screenshot-20220805-171518-Ins...
a lot of people have said a lot of things about this
if I was going to buy something for billions of dollars, you'd better believe multi-year long negotiations, court cases, and backing off as a tactic would be an obvious strategy
i'll buy into either side's spam once something actually happens, premature judgement -> sensationalism in this case
Maybe that's because he is acting as a troll sometimes. Troll, bot. What's the difference.
My guess is Elon is just trying to slow down the takeover until he figure out the money source.
What happens if Musk loses? Will he be forced to buy the company, or just to pay a huge fine?
Twitter is sueing for specific performance (aka pay up the full price) and argues that Elon's funding by banks is still comitted and must be used to buy Twitter at 54.40 a share.
IANAL but this court already did enforce similar contracts in the past.
Of course the parties can also settle out of court at any time under any terms.
Musk has done irreparable damage to his name and brand. The decline from genius and eccentric to straight up fraudster and borderline unstable is just amazing actually. I now don’t know what to think of him as he still has amazing businesses and they haven’t even peaked yet. I may still buy stock in them but won’t work for him ever.
People knew Elon was crazy for a long time and it hasn't hurt their demand. If a few people don't want to work for them it's not gonna hurt them much as they are the #1 or #2 company that engineers want to work for.
> they are the #1 or #2 company that engineers want to work for
for real?
Incredibly irritating how much of everyone's time Musk has wasted on this
In the end, the real winners here are the lawyers and their billable hours.
I don’t think that I trust Twitter on this.
Let’s wait for the courts to look at the topic.
If it turns out that it is a bot though, it'd support Elon Musk's argument that we need to be afraid of AI.
This must be the best point for Elon Musk to tear off his human face to reveal the impassive robot metal underneath
read sperm analysis, was very confused. wouldn't have been surprising with all the sketchy stories we're hearing about him and his family, even if some are false
Urgh, Botometer. I guessed it would be that as soon as I saw the headline.
I used to work on fighting bots. Botometer has a long and storied history of making totally false claims about Twitter accounts. In the past it identified something like 50% of US Congress as bots. It has unfortunate credibility because it's a machine learning model produced by academic "research", but no credibility is deserved. The academics who created it are, in my view, guilty of gross intellectual misconduct.
Botometer has had an absurdly high FP rate for years and Twitter are right to call Musk out for using it, though presumably Musk was just as conned as everyone else who has used this tool. Really the Botometer papers should all be retracted, as should any papers that relied on it, and then the researchers who created it should be fired. Unfortunately this would require retracting huge chunks of academic social bot research - Botometer is just that prevalent.
A thorough debunking of the model can be found here by Gallwitz and Kreil:
https://arxiv.org/pdf/2207.11474.pdf
"In this paper, we point out a fundamental theoretical flaw in the widely-used study design for estimating the prevalence of social bots. Furthermore, we empirically investigate the validity of peer-reviewed Botometer-based studies by closely and systematically inspecting hundreds of accounts that had been counted as social bots. We were unable to find a single social bot. Instead, we found mostly accounts undoubtedly operated by human users, the vast majority of them using Twitter in an inconspicuous and unremarkable fashion without the slightest traces of automation. We conclude that studies claiming to investigate the prevalence, properties, or influence of social bots based on Botometer have, in reality, just investigated false positives and artifacts of this approach."
It took them years to get this paper published, and when they first announced their work the Botometer guys simply called them "academic trolls" and ignored the problems they reported (except for hard-coding their examples to be correct!).
If a full paper is too much, I've written a couple of essays about the problems of social bot research. This one summarizes an earlier/longer version of the GK paper above:
https://blog.plan99.net/fake-science-part-ii-bots-that-are-n...
and that earlier paper cites another essay I wrote back in 2017 about a non-Botometer based Twitter bot paper:
https://blog.plan99.net/did-russian-bots-impact-brexit-ad66f...
Given these issues it's not hugely surprising that Musk believes incorrect things about Twitter bots. The field of Twitter bot research is massive with over 10,000 papers. The original Botometer paper has been cited over 800 times. He is far from alone - many politicians and journalists have all fallen for these claims too. Twitter should probably have pushed back far more strongly, far earlier, but the general convention of never criticizing academics regardless of how dishonest they become defanged them and they never went further than a rather mildly worded blog post. Now the chickens have come home to roost. Misinformation spread by "misinformation researchers" is creating real world legal consequences.
story: critics didnt want elon to buy twitter; elon says he no longer wants to buy twitter; now critics want him to buy twitter
plot twist: elon probably still wants to buy twitter now everyone wants him too as well
So, it worked?
plot twist. it was always a bot.
sensible guess, isn't it?
"I don’t want to belong to any club that would accept me as one of its members." - Groucho Marx
"I don't want to buy any..." - Elan Musk
Already preparing some popcorn. This will be fun to watch.
I have seen no credible evidence that Twitter is wrong about their numbers. Nor do I even see any possible way an outsider could figure that number out.
Have you seen credible evidence that they are right about their numbers?
Without Twitter providing more context and showing their work, the number can't be trusted, thus it isn't credible.
If you claim you have such a low number of bots (5%), you better prove it, otherwise I'll assume the worst and go with 20%.
Anyone that goes on Twitter knows it's above 5%. All 3rd party estimations are well above 5%. Prove it Twitter. Prove it.
> If you claim you have such a low number of bots (5%)
Twitter has never made any such claim. It's incredible how hard it is for some people to actually read the extremely explicit process they lay out in their SEC filing.
Twitter has users. A subset of those users are "monetizable daily active users" - that is, users who log in to Twitter from platforms which are capable of showing them ads, or otherwise making money. A subset of users who would normally be counted as mDAUs may be discovered today to be spam bots, may be suspended for other reasons, or may otherwise turn out not to be monetizable - so they are excluded from future mDAUs. A subet of those users have been counted as mDAUs in the past: this is the subset that is estimated to be 5%.
There are plenty of bots on Twitter that are not mDAUs. Some are actually fully legitimate, like the earthquake or weather reporting bots: they are valid Twitter accounts who are bots and who are not counted as mDAUs.
It would be hard for them to be wrong about their numbers, given how subjective they are.
Their methodology is pick 100 users from the mDAU every day, then have a human decide botornot.
If you wanted to show those numbers were wrong, you might ask to see those specific users and come up with your own botornot score. Or if you thought those weren't inaccurate, but maybe not a representative sample, you might ask for 10,000 users counted as mDAU on a specific day (or each day) and botornot them and see if that matches the 100 sample. If you didn't trust twitter's sampling, you could ask for the full list of users and sample it yourself before botornot.
But instead, it seems like they were trying to count botornot for the full population without considering if they were in mDAU or not, which makes it a flawed comparison. The counterclaim says mDAU isn't the appropriate measure for some of the alternate revenue plans Musk was considering, and that's probably true, but it's not relevant to twitter's current business and if their numbers were accurate to the degree they were measured.
They literally never claimed this was accurate and even said their methodology could be wrong. Nothing in the contract says anything about bots. They don’t have to prove anything at all.
People keep trying to explain to you why you're wrong and you keep on ignoring them and persisting with your original false statement.
The 5% number claimed by Twitter is not the percentage of all accounts that are bots. That has never been the claim. Twitter separates its accounts into "mDAU"s and "other", and they are claiming 5% of the mDAUs are bots. You cannot falsify this claim with "bot experiences on Twitter", because all the bots you're seeing could be correctly classified as "other". Indeed, nobody outside Twitter can falsify this claim because it's a statement about Twitter's internal classification. The only thing that can falsify Twitter's claim is their own internal data, so that's why discovery is being done.
But that's the whole point - Musk waived his right to do due diligence, so he is pointing at this statement being wrong (and not unusable) as his way out.
Given the language twitter surrounded that number with, they probably could. They called out that it was uncertain, described how they estimated it in detail, and stated that reality could be higher or lower.
Given all of that, they could have said the number was .01% or 90%, and neither would have been misrepresentation.
Exactly, so what's the point of Twitter's number or using it for valuation?
Now knowing it's surrounded by loose language because the number is so loose, assume the worst prediction, which is 15-20% from 3rd parties.
There isn't, and it wasn't used for valuation. The number appears nowhere in the purchase document which assigned the valuation; nor does any reference to it. It could be 20%, or 50%, and it wouldn't have any bearing whatsoever on the purchase agreement.
Musk agreed that the number of bots not currently being caught was probably higher than 5%, which was a big part of his stated reasons for buying Twitter. Then the market took a turn, and now up is down, Musk is pretending this number matters.
It doesn't.
> Can we start a tip jar every time someone says the "he signed away his due diligence" talking point?
I would love to see how Delaware Chancery Court treats this concept. So going in front of a judge is the best way to find out!
I routinely accept contracts and agreements with parts I know I'm going to ignore or violate just because I understand the jurisdiction. It's more efficient than negotiating and actually having lawyers making revisions for months at great cost.
I'm not familiar with this nuance of Delaware but its not outside of the realm of possibility that there is an argument that can help Elon.
Twitter is making two claims that seem to contradict each other:
1) The 5% number is right 2) Musk's number is wrong because bot counting tools are flawed because bot counting is very difficult.
So... if it's very difficult... perhaps your 5% number is wrong?
"Twitter also ties mDAU goals to executive compensation. In 2020 Twitter based its executives’ cash bonus pool on revenue, operating income, and adjusted EBITDA. After Twitter missed those targets in 2020, and only 32% of the cash bonus pool was funded, Twitter determined that mDAU (a highly manipulable number) should be considered in determining whether executives received these bonuses. Following that change, in 2021, 100% of this executive bonus pool was funded. And since Twitter’s adoption of mDAU over MAU, it has reported ten straight quarters of “growth” despite stagnant financial results"
There is also this claim. Not sure why we should Twitter executives benefit of the doubt when they literally tweak metrics to get more money for themselves.
None of that matters when he waived due diligence.
Again all of that information is public knowledge through twitter's SEC filings.
> None of that matters when he waived due diligence.
Musk didn't though:
“Despite public speculation on this point, Mr. Musk did not waive his right to review Twitter’s data and information simply because he chose not to seek this data and information before entering into the Merger Agreement. In fact, he negotiated access and information rights within the Merger Agreement precisely so that he could review data and information that is important to Twitter’s business before financing and completing the transaction.”
> Again all of that information is public knowledge through twitter's SEC filings.
Can you point to the paragraph where Musk waive due diligence?
> Can you point to the paragraph where Musk waive due diligence?
Here it is mentioned in his own legal filing [0]:
> 60. Believing that due diligence processes can be costly and inefficient, the Musk Parties instead focused on bargaining for contractual representations that the information they relied upon in deciding to acquire Twitter is accurate.
Also, by definition, due diligence is something that happens before signing a contract.
[0] https://cdn.arstechnica.net/wp-content/uploads/2022/08/musk-...
Twitter replied seeming to say the clause was to provide information only for the purpose of consummating the deal, information that would cause the deal to fall apart by outing their fraud wouldn't be covered by the clause as something they have to hand over.
Twitter is dying this battle and their ceo is truly pathetic. From spending his day trying to reply to Elons tweets to prove himself to now spending time trying to force a billionaire to play out a contract to spend 45 billion when he does not want to. Imagine all the employees who have to watch their CEO cuck himself publicly while they work hard. They should focus on their own internal problems like banning the President of Anerica while allowing religious terrorists (iran leaders and taliban) to tweet on their platform. They show a consistency in not making smart moves. They have one of the most visited websites in the world that is imo one of the most engaging and popular social platforms ever and struggle to capitalize on it. People have to write their stories in series of tweets that have to be read upside down still.
Musk has a chance if he can show that Twitter knowingly mislead the public about the bot %. It sounds like their methodology was indeed pretty weak, arguably deliberately so, and they had people on staff that should've known this would produce poor estimates with a large margin on error.
Their stated methodology isn't weak though. It's pretty good actually,
Was it? TBH I'm a little confused by the downvotes - going by the 100 sample size number @ a 95% confidence level this is a 10 point margin of error. This seems like basic statistics but maybe I'm missing something. I think it's fair to assume that they had people who were taught basic statistics doing these calculations. If these people then say they think the number of bots is 5% without mentioning the margin of error due to their methodology that seems deceptive. I'm not a lawyer but if I was on a jury I could see being persuaded by that.
> This seems like basic statistics but maybe I'm missing something.
Yep, the thing you're missing is that it was 100 samples per week, over a quarter, so 900 samples per calculation. I don't remember the margin of error cited but I think it was about .5%. Its not your fault though, because this is a misunderstanding that Musk actively encouraged in his tweets.
Musk has actually shown quite a few times that he either doesn't know what he's talking about here or is trying to mislead the public. For example, he also confuses total bot count and the number of bots in mDAU, which are different things.
Twitter makes what seems like a good "gotcha" point here, but knowing a little bit about how social media bots work, I'd like to try and give my 2 cents about why Musk's profile is probably not a great one for this type of analysis.
1) Many people who create a brand new Twitter account just end up following a few celebrities and then either not tweeting much or forgetting about the account after a short time after deciding that Twitter is not for them. It's likely that somebody well-known like Musk has a ton of actual human followers who would likely be labelled as bots because they're users with basically blank profiles that would be seen as bot-like.
2) When programming any reasonably sophisticated bot that doesn't just blurt out spam as fast as possible until its banned, the programmer would design it to blend in, to avoid detection by any defense mechanisms that Twitter would have. It would likely be seeded with an array of well-known Twitter profiles to follow at random to appear like a normal person with normal interests. Any particularly well-known Twitter account would be loaded with bots just through bot authors starting out by seeding it with a list of accounts they're familiar with.
3) Due to his life and wealth, Musk probably also exhibits characteristics that makes him seem more bot-like: such as probably tweeting in random bursts at odd hours in many different geographical locations.
4) Given his status as an international figure that also has a role in geopolitics and even military action, it's not impossible that there are state actors with big resources who create bots that follow Musks account for anything from trying to influence him with responses and through polls, or to try and make him look bad by "exposing" his bot activity at a later date when they need to influence public sentiment against him.
The people who sign up for Twitter, dork around for a little while, and then leave and never return are not counted among the monetizable daily active users.
Botometer's test claims to use over 1000 individual features in its analysis and it is unknown (to me, please clarify if you know) if they use Twitter's exact definition of monetizable daily active users in their system.
What botometer does or does not do is completely irrelevant to twitter’s mDAU calculation.
No matter how many thousands of individual features botometer has, it cannot (and will never be able to) tell whether Twitter has served ads to that user today.
> What botometer does or does not do is completely irrelevant to twitter’s mDAU calculation.
Agreed, but this article was about the tool Musk used and that's what my comment was directed towards.
> No matter how many thousands of individual features botometer has, it cannot (and will never be able to) tell whether Twitter has served ads to that user today.
That seems likely, but I don't think that really means much given that Twitter's interest lays in serving as many ads as they can get away with.
All good points, and all proving that the methods used by Musk are unreliable for saying who is or isn't a bot - thus proving Twitter's point.
If I brought up good points, you should note that they apply more heavily to Musk than most other humans, which means that Twitter's response doesn't necessarily prove anything.
It's not the testing tool that's necessarily bad. Botometer claims to look at over 1,000 features, which is pretty impressive. The problem might be applying that tool on Musk's profile for the specific reasons that I brought up. Musk is an outlier in many ways and isn't necessarily a good sample for an individual test as he'd tend to draw more bots than an average users' profile.
> Twitter committed fraud by lying to the SEC about the mDAU numbers with the intent of inducing Musk to buy Twitter at an inflated price.
What is that commonly-used aphorism? "One man's trash is another man's treasure"? Like, even if this is true, Musk didn't do (and subsequently waived) due diligence.
> No, really, this is the allegation
No further comment on it.
> Count 2 is that Twitter committed [Texas fraud statute] by lying when it offered its shares. It's shotgun-pled, so I don't know which specific statements are supposed to be wrong, but I'm imagining it's basically the previous count recast under a different statute.
If it's due to Texas laws, is the appropriate jurisdiction is the Texas courts or... oh, he's trying to claim that the case should be heard in a federal court (for diversity reasons). Good luck though Musk.
> Count 3 says that Twitter broke the contract by failing to provide information.
What information? The contract is already in the public, but okay you want to waste court time.
> Count 4 says that Twitter broke the contract by instituting a hiring freeze.
Twitter could just point to its peers like Google, Meta and Microsoft.
> Count 5 is pretty please declare that Twitter lying about mDAUs is a materially adverse event that is cause to break the contract.
Yeah, at this point I'm convinced that Musk wants to just waste everyone's time, especially after the chancery court denied his petition to schedule the hearing next year.
> What information? The contract is already in the public, but okay you want to waste court time.
The contract stated that Twitter had to provide Musk with internal data as required to close the deal. His teams tokens were apparently rate-limited at some point and it took a while for Twitter to give him access to all data, a.k.a. 'the firehose'.
Just for completeness sake, Twitter seemed to still try (the token thing was probably a technical error) and whether giving him access to the firehose was actually necessary could even be contested, as he arguably wanted to use the data to not close the deal.
"His teams tokens were apparently rate-limited at some point and it took a while for Twitter to give him access to all data, a.k.a. 'the firehose'."
Here's the thing though:
None of that data was required to close the deal. Musk had no diligence rights, he explicitly gave them up, and the contract clearly says so. He doesn't get to do regular diligence through that clause, it's meant to cover the literal things necessary to close the deal (like financing info or whatever).
So Twitter didn't have to provide anything here, and certainly not access to the firehose.
His response is going to be smacked down pretty hard by a chancellor - it's 100% nonsense.
All that matters, against musk, is that however twitter claimed to count it's users was infact, how they counted.
Musk wanted to invent some means to count users in an effort to demonstrate fraud. But that's not fraud. Just because musk provides an alternate means to count users, doesn't demonstrate fraud.
Full stop. Unless he proves that they didn't count the way they claim, he has not claim. Waiving he due diligence clause is what makes his claims a non issue.
Quite derailing a bit, but Twitter executives are also saying that it tries to protect Twitter since that Musk indicated that he will launch a rival platform. Honestly this particular part sounds like Stac v. Microsoft (https://en.wikipedia.org/wiki/Stac_v._Microsoft)
Twitter was contractually obliged to give him data to help him close the deal, not to help him find a way to squirrel out of the deal.
I suggest reading the twitter complaint. It is not long, and it is very well written. They discuss many (if no all) things musk has been saying trying to avoid the acquisition.
If I recall correctly, Twitter says they had no obligation to provide the firehose to Musk, but they did anyway. Musk had issues with rate limit, but twitter fixed it in reasonable time.
Also I’m pretty sure Musk himself wrote on public Twitter that he would trim the fat once he owns the company ..
> Musk didn't do (and subsequently waived) due diligence.
Wasn't him collecting all of this MAU stuff to analyze it part of the due diligence needed in order to close the deal?
No. He signed the merger agreement without doing DD into mDAU, and didn’t write any contingencies around mDAU onto the contract.
You do your diligence BEFORE signing the merger agreement.
Exactly. This whole thing smacks of regret on an impulse buy. And as Musk should well know: regret is no cause for contract annulment. Twitter is going to be his Waterloo if he can't follow through on the deal, they're going to force him to perform which means he may have to sell a whole bunch more stock to people who know he has to buy. That isn't going to help at all.
It doesn’t really matter at this point, because he signed a binding agreement. He’s the one that made that move. Specifically why is just speculation now.
But, hey, we’re all here speculating anyway! My take is:
1) He’s a history of making impulsive decisions without thinking (or caring) about the consequences.
2) It forced Twitter’s hand because they couldn’t act like it was it a non-genuine offer.
3) He’s so rarely held accountable for the consequences of his decisions he knew it didn’t matter because he’s above the law.
Yes, Musk could have received that data and had time to analyze it before buying, these kind of merger contract processes have time built into them to allow prospective buyers to look into finances and other information that is not normally publicly available. Musk was so certain he wanted this that he signed additional documents waiving his right to a due diligence period, allowing him to immediately sign the merger agreement.
This next bit is mainly speculation, but the reason Musk is actually trying to back out is partly to do with the fact that signing the merger contract caused his other companies stock prices to drop and public speculation that his existing business would suffer if he needed to focus on running Twitter. The second and more widely believed version of events is that partly due in fact to his other stock prices dropping, Musk cannot afford Twitter without having to sell more of Tesla and SpaceX than he is willing to. Musk is already down to owning only 17% of Tesla and less than 50% of SpaceX, although that's complicated as some percentage of Tesla is owned by SpaceX and vice versa along with the Boring company in such a way that Musk effectively has majority control over SpaceX whenever he wants. If he has to sell additional stock to cover the purchase of Twitter he would very likely lose the ability to control everything except possibly the Boring Company.
What's more, the contract he signed effectively puts him in a position of buying Twitter at a substantial loss as the stock market has significantly fallen since Musk signed the deal. He would effectively be losing significant control of his two primary sources of wealth in exchange for something he has likely since discovered he cannot run the way he wants.
In short, this was a bad move financially when Musk first announced his intentions, it was extremely foolish of him to waive due diligence, and it became financially even worse shortly after he signed the deal, partly due to the facts that people lost trust in him for waiving due diligence while making a financially inadvisable move, partly due to the fact that he's actually pretty bad at math and doesn't understand the stock market, and partly because the stock market took a nose dive right after he foolishly waived due diligence and signed such a financially ruinous deal.
If you're thinking Musk is smarter than I'm making him out to be, please consider that Musk tried to insert himself into a cave rescue he had nothing to do with, was told not to interfere with the professionals that know what they're doing, and retaliated to being told to butt out by publicly accusing the rescue team lead of being a pedophile despite knowing nothing about the man.
Trying to offer to help without really understanding the situation isn't necessarily a bad thing, but randomly accusing someone of being a pedophile because they were critical of you is so far beyond acceptable behavior it's amazing Musk wasn't banned from Twitter as a result (it was where he made the accusation publicly). That level of harassment violates Twitter's ToS, plain and simple.
> I still can't get over the banana-pants insanity of the first count
As someone who's unfamiliar with this, could you explain what's banana-pants insane about a company inflating their hard-to-discover numbers, for profit? I thought that was, unfortunately, banana-pants standard? For example, the fiction that is Twitter or Reddit's user count.
It's insane because Twitter has been very careful to explain that the 5% number is not some sort of "promise".
> Additionally, our calculation of mDAU is not based on any standardized industry methodology and is not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. Similarly, our measures of mDAU growth and engagement may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology.
They covered themselves very clearly, and Musk has no standing here. He knew this, and decided to waive his due diligence and buy anyways.
[1] https://www.sec.gov/Archives/edgar/data/1418091/000141809120...
He claimed to buy Twitter, specifically, to clean it up; to get rid of bots. That was his stated goal.
"If our twitter bid succeeds, we will defeat the spam bots or die trying!"
https://twitter.com/elonmusk/status/1517215066550116354
David Sachs, prominent VC was one of those subpoenaed and he definitely seemed a little sensitive about it:
https://twitter.com/DavidSacks/status/1554258141876932608
While your comment is technically true standing alone, you've also slightly misunderstood what the 5% figure is about.
It's not "users who use our website or 1st party apps", it's "monetizable daily active users", which may be similar to the group of users you described, but most importantly Twitter can choose not to show any ads (or not to charge money for ads shown) to bot accounts.
So even if Twitter only had 1 single non-bot user, as long as that's the only user they are "monetizing" they would be at 0% of mDAUs being bots.
Therefore, as jcranmer commented elsewhere in this thread, the 5% is actually their estimate of their own false negative rate of detecting bots (i.e. deciding which accounts can be monetised vs not).
Yep, which I'm sure Elon and his entire crew of bankers and lawyers understand quite well. Musk is lying and sowing confusion in order to mislead people.
> They covered themselves very clearly,
I am shocked, just shocked that a company with six billion dollars of cash on hand is able to afford good enough lawyers who make their SEC reports ironclad against shareholder lawsuits. Who would've thought.
Best part is that if Musk loses and the court enforces specific performance, he just bought a company that just paid for all those lawyers to fight him out of the company treasury!
IANAL, but "we use our own metric" doesn't sound like an excuse for publishing numbers to shareholders that aren't a best effort estimation based on reasonable methods.
If the methods were reasonable is of course possible, but up for debate and at least questionable.
IANAL, but I'm not sure if it matters, as long as the methodology is published? "Here's the number, here's how we calculate that number, don't buy shares if you think our methodology sucks" sounds reasonable to me, especially if they don't have a different number internally that they use to drive the decisions?
That's not what the original poster implied. He implied it's crazy because of the duration and specific purpose of the supposed lie.
Doesn't seem strange to me. If I am suing a company for false advertising I'll claim that their behavior was aimed at inducing me to purchase the product at an inflated price. Not because I think they were specifically conspiring to target those lies directly at me personally, but because I am the one that is a party to the lawsuit. If Twitter was lying to inflate the stock price in general, then they were inducing everyone to buy at an inflated price and Musk is one of those people.
Twitter added a loop hole saying that their data might be incorrect. It seems disingenuous to absolve them of all sins if their data is hugely incorrect to the point where it's fraudulent just because they added that loop hole.
Yea, makes sense. Seems like it will be hard to prove malice over incompetence and vice versa.
Maybe, but that's just not how it normally works and Musks reality distortion field does probably not include the courts. You sign a terms sheet conditional on DD and only afterwards do you move to put in a binding offer. Doing it in a different order is a waste of effort, after all, what's the point of doing DD after you've already made a binding offer? You can't use it to change the deal parameters and you can't use it to break it up.
There's no standard or foolproof way to find bots, otherwise we'd be able to just ban them all. It all requires judgement. Twitter's statement is acknowledging this fact and legally covering themselves from people just like Musk who might go "well I have my own calculation metric and it says there's more."
Those are reasonable.
If said I count GB as 512MB, the court would say “nobody else does that, you’re just trying to defraud people, your disclaimer is not in good faith”.
I imagine the argument is whether the method Twitter used, and was seemingly acceptable by SEC, is ethically, morally, or logically a reasonable measure.
E.g. Can they 100% say that there are less than 5% bot accounts, or is that 5% number being pulled out of their ass - and saying "less than 20% of accounts are bots" would hold as much water? That is therefore then a misrepresentation, fraud IMHO - and stockholders should be suing not only Twitter but also the SEC.
So if you have a home inspector inspect a house before you buy it, and they say "yeah, it looks good" - but it turns out they didn't actually investigate in a way that arguably involves an adequate amount of integrity or in a reasonable way to determine as accurately as possible that everything is sound - then you don't think that home inspector isn't liable? And what if the professional organization who has the responsibility of regulatory oversight of that profession, what if they're been lacking and not being responsible as they are supposed to be, allowing for poor analysis as the standard - are they guilt-free too?
I think your intuition that the SEC passes judgement on reasonableness of made up metrics is...doubtful.
Twitter is a public company (and has been for 9 years), and has maintained the 5% mDAU disclaimer in its required annual reports for years. I don't know off-hand how long it's been doing so, but probably at least 4 or 5 years.
The allegation is saying not only that Twitter has been lying about that number--for years, on documents that land it in legal hot water if it's been lying--but that it was doing so specifically so that Musk would buy Twitter at an inflated price. The insane part is really that specific intent, not the lying about the numbers.
Well twitter would have been obscuring bots to obtain an inflated purchase price _by anyone_.
FWIW, academic research has questioned the 5% number for years. USC and IU put out a report 5 years ago that believed the upper bound for fake accounts was 15%[0]. This isn't a new allegation.
0: https://www.cnbc.com/2017/03/10/nearly-48-million-twitter-ac...
Twitter's lawsuit mentions this, stating only they know who is monetizable. IIRC Musk's lawyers deliberately push the same false equivalency in their filing.
As explained many times by many people, the 5% is not the number of bots on Twitter. It is the false negative rate of Twitter's bot detection algorithms.
5% of mDAU is a false negative rate.
5% of users is not a claim that Twitter made.
... "but that it was doing so specifically so that Musk would buy Twitter at an inflated price."
The insanity is people being perfectionistic in that it was specific intent to target him to buy it - even if it says "him" - it's absurd that people are taking that literally, and not simply to "make it seem valuable for someone to buy."
Whether they inflated their numbers or not, the burden would be on Musk to prove that and it would be completely impossible to do that with a 3rd party tool. You are a monetizable user on Twitter if you just log in and read tweets. Something that no 3rd party tool could possibly track.
> You are a monetizable user on Twitter if you just log in and read tweets.
Actually, even logged-out users (until they forced everyone to log in to read timelines) are monetizable, so Musk is really trying to make something to get out.
Another explanation could be, he’s not actually that good at running a business
A large portion of Twitter's complaint is describing how many times they tried to explain their methodology to him, including in written documentation that he admits he didn't read.
No, the burden is not on Musk to prove anything. He waived all rights to due diligence. There is nothing to prove or disprove.
One point not mentioned (and I’m just paraphrasing Levine from Money Stuff here):
It’s crazy because it would probably be BETTER if you had more bots. Then you could say that your revenue per user was higher and you could argue that you had more room for growth. So, if anything, lying and OVERestimating the bot count would help your valuation more.
Not really, because the revenue comes from ads not users. Twitter makes profit from ad buyers thinking they are reaching many users. The "revenue per user was higher" you mention is actually "cost per ad impression" and ad buyers want that to be low.
Ad buyers want this to be lower, but investors would love for this to be higher. I think that's what the parent was aiming at.
The fact that musk tweeted that he was buying Twitter to fix the bot problem.
So the fact that he's using his reason for buying to try and get out of buying seems... Insane.
There's a whole assumption that bots are a net negative to the platforms value besides any arguments over how many of them there are.
As a human, it's annoying to get get a reply notification only to discover it was bot spam, but from the platform perspective that bot just created user activity and content for you for free.
I have a theory that the most embarrassing thing to come out of this might be that Twitter doesn't really care about bots much more than issuing platitudes that they care about bots to assuage the user base.
I have like 9 twitter bots and they’re all cool and interesting. I wonder if Musk’s tool differentiates between cool and uncool bots.
In the past I tried to write bots that do things like reply to people, but that is a violation of the TOS and twitter would immediately identify and ban the account.
At that level of intelligence I bet it can drive a car.
If there are too many bot activities, user may completely turn off notifications and reduce the usage.
This provides a lot of insight into how that man got to the top. He clearly has no qualms about lying and bullshitting his way into and out of anything and no amount of proof to the contrary will ever get him to admit he was wrong.
I guess this is similar to the "reality distortion field" people claim Jobs had. Except the examples given there were more of him not believing people who said something couldn't be done.
Jobs’ RDF was a manifestation of his charisma: he could make people think something really hard was actually easy (when dealing with engineers and designers) or the other way around (when dealing with customers).
Jobs did bullshit, but AFAIK more on the design and marketing side than on the business side (give or take the backdated stock option thing and his first stint at Apple, when he wasn’t in control). Certainly nothing like Musk’s shenanigans.
> (give or take the backdated stock option thing and his first stint at Apple, when he wasn’t in control). Certainly nothing like Musk’s shenanigans.
Don't forget Jobs' prime role in having companies collude together to depress wages by not recruiting each other's employees:
https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
"an interconnected web of express agreements, each with the active involvement and participation of a company under the control of Steve Jobs...and/or a company that shared at least one member of Apple's board of directors."
> Don't forget Jobs' prime role in having companies collude together to depress wages by not recruiting each other's employees
Yes, indeed! I forgot to mention that.
I reach the opposite conclusion.
He offers to buy twitter on a whim, then changes his mind after signing a contract. That doesn't really seem like a good way of getting to the top.
People are missing the obvious story. He locked himself into a price, then the price of things crashed. It has crashed so much that he's honestly better off just walking away and losing the billion dollars... but he doesn't want to lose a billion dollars so he's gonna do whatever he can do to get out of it.
Twitter hasn't lost anything due to him? Their share price would likely be lower if not for his dumb shenanigans. The contract is pretty clear that he can walk away for $1B, which is a lot of money.
Possibly. But it seem unlikely. The deal explicitly says he can back out for a billion dollars.
> arguing that Twitter lied about its numbers for years specifically so that someone would buy it at an inflated price?
On one hand, venture-funded hockeystick-startups like Twitter definitely aim for a quick exit to make cash, so it's not totally out of the blue. On the other hand, Twitter is publicly traded and therefore already had its exit.
And the Twitter board was also very much publicly saying, "don't buy us."
Clearly reverse psychology, confirming that this was indeed their play all along!
I'm very much looking forward to my "I called it!" moment :-)
There will be members of staff who’s job depends on the value of the stock and countless more with total comp tied to it.
> Twitter committed fraud by lying to the SEC about the mDAU numbers with the intent of inducing Musk to buy Twitter at an inflated price.
LOL, their SEC filings basically say “these are our numbers but they’re highly subjective and could be way off”. Musk is either a liar or an idiot.
Both.
And keep in mind: Twitter wasn’t out there soliciting a sale. Elon came along and pretty much demanded he own it. Twitter tried to stop but he persisted. Should be a pretty clear cut case imo
Wouldn’t the first count apply to anyone interested in buying shares in Twitter? Artificially inflating the mDAU figure makes the investment appear more attractive and valuable than it really is.
Seems like this is the correct answer. Musk is just putting himself in that class.
I don't honestly believe either side cares about the merits of the legal case - this is all just a very public and showy exercise to negotiate on a new price during a settlement.
>I don't honestly believe either side cares about the merits of the legal case
TWTR is only down 1.6% YTD.
* SNAP is down 80%
* PINS is down 40%
* FB is down 50%
A good chunk of TWTR's current valuation is now being propped up by Elon's buyout offer. Elon could be looking at paying a 100-125% premium on what should be the fair market value for Twitter. Twitter's board should care deeply about getting as much value here as possible.
Twitter has the facts and the law on their side, so they most certainly care about the merits.
When the facts are on your side, pound the facts. When the law is on your side, pound the law. When neither is on you side, pound the table.
> this is all just a very public and showy exercise to negotiate on a new price during a settlement.
Why would Twitter want to negotiate on a new price? There's already the agreement at a high price - why would they go lower?
That's the nature of almost all civil cases - they are pretexts for negotiations.
BUT, accusing Twitter of actual federal and state crimes is going to raise the awareness of several regulatory bodies, so this is going to get hairy.
No it won’t, because those are baseless allegations thrown out in order to add more noise and confusion.
You might get some red state DA eager for some publicity to make a song and dance about it for a bit, but that’s it.
If Musk’s team could produce actual data and evidence of criminal law breaches they’d be reporting them to authorities not adding them as minor points in a civil suit filing in Delaware.
> arguing that Twitter lied about its numbers for years specifically so that someone would buy it at an inflated price?
I don’t think that’s the argument. Twitter is an ad supported business. As such, the incentive is to count the “monthly active users” rather higher than lower. Specifically, there us no incentive to make an effort to exclude automated accounts from that number at all.
What's so interesting about it? It's total nonsense dressed up in legalese.
> I still can't get over the banana-pants insanity of the first count... arguing that Twitter lied about its numbers for years specifically so that someone would buy it at an inflated price?
This describes the entire business model of WeWork (minus the self-dealing), why should Twitter be different?
Hmm tough question… Maybe because they are not the same company, are not managed by the same people, and do not have the same business model? Just a guess…
The point to me seems to be to set up things where this won’t go to court: if the primary claim is that Twitter misstated mDAU, the downside risk to Twitter is far greater than to Musk (I think) to have that fact finding occur. If it turns out the court agrees with Musk, then in one swoop the deal falls through, Musk is vindicated, the reputation of Twitter’s entire executive leadership and board is permanently damaged, and the market will punish the hell out of the stock due to the first and higher order impact of this on their valuation.
The choice for Twitter boils down to what level of price cut are they willing to make to remove that possibility.
Twitter seems pretty confident about revealing their process to calculate that figure: They’ve described it multiple times and been explicit in their SEC filings.
As they should have been, as it’s a sound enough process given constraints and doesn’t need to be 100% accurate. They have nothing to worry about.
I've been downvoted but what you state is exactly right: they have to decide exactly how confident they are in their own process holding up in court (which isn't exactly the same thing as it being accurate) - and to whatever degree they are not confident, back it out to a price change to de-risk the outcome I mentioned.
I agree with you that they seem confident, but the entire back and forth around mDAU originated with Musk and my belief is that choice of dispute was taken in the interest of setting things up so they won't actually go to court. The gambit of course may fail and it may go to court.
They’re going to court, because Twitter holds all the cards here and have the strongest legal case, so it’s in their best interests to have this adjudicated by a Delaware court.
Musk is trying to pretend the mDAU = number of active bots. It’s dishonest, and likely designed to hurt the company and tank its share price and therefore bully it into conceding. Given the strength of their case I don’t see that happening.
> I still can't get over the banana-pants insanity of the first count... arguing that Twitter lied about its numbers for years specifically so that someone would buy it at an inflated price?
Not a lawyer, so could you explain why this is banana-pants insanity? There's malicious fraud (unlikely) and then there's the more likely case of under-investing in bot-detection and expunging efforts, e.g. "in favor of other priorities", to keep DAUs and subsequently valuations high for a potential sale.
Twitter's methodology for checking bot accounts is clear, consistent, and has been detailing in its SEC filings for years. Anyone that cared could have easily double checked them. Recalling from memory, all they did is take a random sampling of accounts and have a human rate the accounts as a bot or not--back when Twitter had an API it would have been even easier to do this.
No. Nobody outside of Twitter can repeat the analysis.
First, only Twitter knows which users are active (the population being analyzed are the DAUs). People doing bot analysis from publicly available define activity based on the account tweeting, which will probably skew heavily toward spam bots.
Second, the mDAU metric is the DAUs with known bots having been removed. Nobody outside of Twitter knows which active accounts were excluded by Twitter from the metric. Even if 50% of Twitter DAUs are bots, as long as Twitter detects 90% of them as bots and marks them as non-monetized, the 5% number stands.
Third, nobody outside of Twitter can actually do a proper job of evaluating whether an account is a bot, since they have orders of magnitude more signals than a simple tweet stream / public profile information.
Twitters methology is far better than any publicly available bot detection would be, but the flipside is that it's not a replicable methodology.
> No. Nobody outside of Twitter can repeat the analysis.
This is true of most material statements provided by companies in every industry:
- Revenue? Trust the company, I cannot independently verify from outside the company.
- Retail same-store sales comparable? Have to trust the company's numbers.
- Headcount? I have to trust their number again here.
- Expenses? I have no way to verify this unless I work at the company, in a very senior position.
Outside verification of data is not a concern relevant to corporate disclosures.
I don't think it would be verified by somebody being given access to Twitter's internal data and redoing their process. At most both sides will trot out some expert witnesses to talk about whether the process / rating guide described in the internal docs are reasonable (what Twitter does doesn't need to be perfect, just not outright fraudulent). I look forward to finding what kind of a kook Musk finds as his expert.
Maybe Musk hopes to find something in discovery to discredit the process, e.g. evidence of the process not being followed, or of the numbers being tampered with.