Musk has been saying that on Twitter, but in Twitter's court filing they exhaustively outline that a) it isn't true and b) it isn't even a valid request from Musk under the contract. Considering how misleading and full of shit Musk has been about this whole thing at this stage I am well inclined to believe Twitter.
> Musk has been saying that on Twitter, but in Twitter's court filing they exhaustively outline that a) it isn't true and b) it isn't even a valid request from Musk under the contract.
I've read the entire complaint, and this is my take as well. Twitter bent over backwards to comply with these requests even if they were invalid.
Twitter played this brilliantly. They kept complying and playing along even with the most obvious nonsense, letting Musk run his impulsive and overconfident mouth.
The number of times he legally shot himself in the foot is just staggering. There's documentation of everything, because he happily provided it. Musk's lawyers and bankers must have been dying a thousand deaths reading his tweets and other public remarks.
If twitter was a house he was buying, I think the analogy is he waived his right to a house inspection being a cause of breaking the contract. He can still have the house inspected though.
Merger & Acquisitions and Real Estate are really separate things so trying to use them for analogies is going to break down rather fast.
If Musk was buying a house (Twitter) we're basically at the point where He's made an offer, they accepted, Musk fulfilled all contingencies (including financial), they both signed the papers transferring ownership, and then Musk decided rather than moving in and wiring them the money he'd rather not. (Analogy doesn't work so well).
Sure, if you own a house you can call anybody to come inspect it but you still need to wire the seller the money.
My point was that the contract to purchase waived inspection results (aka percentage of accounts being bots, etc.) being a cause for breach of contract. That diligence can still happen, it just can't be used to back out of the contract.
Any analogy breaks down. I thought this was a good one because in the current housing market many buyers have to waive inspections as a contingency because of bidding wars, etc. They can still get the inspections done though (and should).
Thats not quite the analogy, and the differences are important.
If twitter was a house he was buying, the analogy is he waived his right to a house inspection and highlighted that fact in numerous ways to attain either a more favorable price (since there won't be post-deal negotiation on anything he finds and decides to argue) or to make Twitter more likely to accept. Or a combination of both. And in addition to that, in your offer to buy the house you also made legally binding statements that "I have been able to inquire about anything I might be concerned with about the home, and have been given answers and opportunity to find my answers on those questions, and as a result I am fully satisfied with how that transpired".
The only possible way to then get a home inspection is that you also included a clause that the deal is contingent on a loan being used and its possible that the loan may require certain information or processes. Now, if as a side-effect of getting that loan, a home inspection is required and if that home inspection causes the _bank_ to back out of financing then that is now possibly a cause to break the contract. Even this isnt fully accurate in this case though. Because there were specific guarantees and public statements made around financing that 1) the financing is already lined up (i.e. not contingent on an inspection) and 2) even if that fell through Musk would have the available capital to close the deal.
The question they need to answer is more along the lines of "Did Twitter purposefully mislead investors in their filings to the SEC to such a great extent that it greatly lowers the future potential profitability of Twitter?".
The answer to that is almost certainly going to be no.
> It demonstrates that Twitter is inflating their value and lying to their shareholders. Whats so hard to understand about that?
No it doesn't. Twitter not handing over its bot data demonstrates...that Twitter is not handing over its bot data. Does Musk have actual _evidence_ that Twitter is inflating its value and lying to its shareholders? You do understand that "Twitter not handing over its bot data" isn't evidence.
Anyway if the question of handing over "the bot data" data is irrelevant to Twitter's claims, then it doesn't matter if it's handed over. The legitimacy of those claims would then be unaffected by the bot data itself.
Lets put it this way - say I have a company that makes cars, and I tell you - a potential investor of more than a billion dollars - that I have shipped a million cars this year and you should give me money on the basis of that revenue, are you an idiot if you don't ask to see the actual receipts that show that I have actually, indeed, shipped a million cars this year?
Yes, I think you would be, and anyone who has given you money to spend on this act, should think so too .. Trust, but verify: This is a pretty basic business rule.
Twitter has a responsibility to demonstrate that the trust they expect in their own estimations of their own market value, is actually verifiable - and with an issue of humans/bots ratio, they should surely be willing to be as open and honest as possible about this issue.
Twitters core value, the basis of their own estimation of the value of their stock, is entirely derived from the actual # of human eyeballs they have attached to their systems.
If those eyeballs are really just blind sockets on the outside of a software-based bot, then Twitter is factually lying about how many humans it has in its system. This would be essential for any buyer to know beforehand, and I really am astonished at the efforts you are going to justify this omission on Twitters' part.
The bot to human ratio is a KEY factor to understand in correctly evaluating Twitters real value - how anyone can argue that Twitter don't have the responsibility to demonstrate the accuracy of their estimation of market value, especially in the HN environment, is beyond me.
Perhaps the Musk-hate rage is blinding you to the rationality of Musks' request. "Hey, you say you are worth this much because <blah>, please show me that <blah> is actually a truthful and accurate estimation .." - this is not at all an unreasonable request.
Twitter board executives DO have the responsibility of answering the claim that their user group is a certain percentage human.
The fact that they haven't done this easily and openly is telling, in and of itself - and I would wager that most making the claim that they don't have a responsibility of being honest about the number of users in their system, are in fact engaged themselves in deceit and dishonesty on the issue of "actual users" versus "pretend users". How else can you justify the non-response?
Twitter should be able to easily answer the question: bot to human ratio? It is fundamental to their core purpose as a business to know the answer to this question. The fact that they can't, and are instead engaging in an anti-Musk agitprop campaign, is very, very telling ...
Multiple people have already said this, but I'll ask just for the sake of it: Are you aware that Elon forewent his due diligence by simply skipping that part and going straight to signing the deal?
That means that Twitter DOES NOT have the responsibility that you claim. Sure, you may think that according to a certain moral framework they do, but in the context of this deal, which is what the thread is about and what the people you are responding to are talking about, it is irrelevant.
I might add as well as a counter to your accusations of "Musk-hate rage", that perhaps it's you who's suffering from Twitter-hate rage with a dash of Musk-fanboyism, and that it's Elon who's twisting the truth for his own gain rather than Twitter. Could that not be the case?
Lastly, it's not a "non-response". Twitter has continuously provided Musk with the data he's asked for, he just keeps asking for more. Also, even if you ridicule the idea, some data is simply _not_ appropriate nor necessary to share before a sale. Otherwise you could find out any trade secret from anyone simply by making an offer and then reneging on it.
> Lets put it this way - say I have a company that makes cars, and I tell you - a potential investor of more than a billion dollars - that I have shipped a million cars this year and you should give me money on the basis of that revenue, are you an idiot if you don't ask to see the actual receipts that show that I have actually, indeed, shipped a million cars this year?
Yes, if you agreed to, for a slightly different but more relevant example, buy a social media company where there was some doubt about the degree to which it's claimed user base was actually bots for $44 billion dollars, of which you were personally on the hook for $33 billion in cash with the rest financed, you would be an idiot if you also agreed to waive due diligence as part of that agreement without first having satisfied yourself on the real user numbers.
But you having been an idiot and signed that agreement, the fact that the agreement required the social media company to provide you information reasonably necessary to help you complete the acquisition would not give you a right to data who's only purpose would be to allow you to perform the due diligence you had waived.
As much as the bot data may arguably be relevant to the due diligence any sane investor would perform before such an acquisition—an argument you do a valiant job of presenting—it is not something that there is any reasonable argument that Twitter has an obligation to provide in this case, because Musk was so desperate to get Twitter to sign that he agreed to waive due diligence.
> how anyone can argue that Twitter don't have the responsibility to demonstrate the accuracy of their estimation of market value
The problem is that the person who made the unprompted offer of $54.20 per share - thus estimating the market value at $44bn - spent weeks going on about how they thought Twitter's bot estimates were too low and that they were buying Twitter to fix this bot problem.
To then turn around and go "wah wah too many bots" is somewhat disingenuous, no?
(Also, Twitter have been using the same methods of bot estimation since 2013, afaik, and have submitted these numbers to the SEC every year. If they were plausibly wrong, someone would have flagged it before now, right? Because that would be submitting false data to the SEC and, I believe, they consider that A Bad Thing.)
He already signed the deal. Yes it would be rational to ask for all of this before committing to buying Twitter at a set price, but apparently he didn't.
You talk about "Musk-hate" but your post says you think he's an idiot.
Do these arguments defends against the claims made in the suit brought by Twitter? No? Well then how are they relevant? How are the bots relevant to that suit?
Of course Musk is free to counter-sue I guess and make the bots the point of contention.
Even if that’s the case, and that’s a big if, it’s not enough in and of itself to let him out of the deal. He needs to prove a material adverse effect of something like 20-40% of the value of the company - then the court may let him off the hook.
Another avenue for him might be if the banks pull their funding, then the deal falls through and he may just have to eat the $1bn penalty (but that can’t have been initiated or influenced by him).
He made an impulsive decision, the market went down making him regret it, and since then he’s been trying to squirm out of the deal he signed by grasping at straws and in the process hurting the company he promised to buy. He’s in trouble, and some potential minor discrepancy in how Twitter has represented their users will not absolve him of it.
If Twitter are lying about how many bots they have and how many real humans they have, that is not some potential minor discrepancy. That is a HUGE red flag which justifies bowing out of the deal.
Would you be happy investing in a company that lies about its sales figures and doesn't provide the statistics and real evidence to back up their claims?
This irrational Musk-hate is occluding rational thought.
> If Twitter are lying about how many bots they have and how many real humans they have, that is not some potential minor discrepancy. That is a HUGE red flag which justifies bowing out of the deal.
Well, no, if you had doubts about that going in (which Musk publicly did) but then agreed to a contract waiving due diligence (which Musk did), it would not justify backing out of the deal that you...suspected they might be lying and we're not provided sufficient information to assuage your concerns. There might be an argument that you stumbling into clear proof of deception that you didn't have before signing the agreement would justify that, but Musk has never claimed such a discovery, but there is no reasonable argument I can see that Twitter was obligated to satisfy Musk’s concerns here, when he explicitly waived the usual requirement in acquisition deals that would be the basis of such an obligation.
> Would you be happy investing in a company that lies about its sales figures and doesn't provide the statistics and real evidence to back up their claims?
No, and, more to the point, I wouldn't be happy buying a social media company where I was uncertain about the basis for it's claims of real users. But then, that's why I wouldn't agree to buy such a company—especially where I had doubts about those claims going in—and waive due diligence as part of the deal. That would be idiotic.
> That is a HUGE red flag which justifies bowing out of the deal.
Not according to law and precedent, which is what I’m telling you. Whether Elon can be allowed to renege on this deal does not hinge on whether you personally think Twitter has been telling falsehoods. Show concrete evidence of the very substantial discrepancy in Twitter’s value that would be based on these lies (again, it would have to be on the order of 20-40%), and I’ll concede that he might have a chance to win on that merit. The bar is that high, whether you like it or not.
A minor point about this new bot hysteria. Twitter is a very well-scrutinized company with many analysts covering it and a lot of big institutional ownership.
If there was some surprising element to musks bot assertions, it would be big news. In fact, there is nothing to see, and this is partly borne out by the lack of buy and sell side analysts collectively smacking their foreheads after realizing they has been completely wrong about Twitter the last 10 years.
> Twitter is a very well-scrutinized company with many analysts covering it and a lot of big institutional ownership
You missed out the most important group: advertisers.
If Twitter has been wilfully lying for years about their metrics there would be thousands of lawsuits popping up from advertisers of all sizes. It would be the death of the company by paper cut.
The legal standard is material adverse effect. It’s a very high bar. As commentators have noted, it’s unlikely any court finds for that legal standard. This is why Elons lawyers have been using pretextual reasons to walk away. He is notably not saying he is walking because of “too many bots”. He is saying that twitter is breaching an information convenant because he needs to find a pretext that will stand up in the court of law.
> Most views I've heard are that it is quite impossible to force someone to buy a company
Those views are simply ignorant; there are plenty of cases of the Delaware Court of Chancery ordering specific performance on merger deals. It is nothing even loosely similar to “quite impossible”.
a distinction without a difference, he doesn't own anything beyond the board seat that his equity holdings afford him. Vanguard owns more of Twitter than he does.
I see Musk walking paying nothing, or else a settlement with twitter at a lower price.