5 ms·

If the item for sale has been misrepresented, there's probably some contractual wiggle room. Personally speaking, as somebody who has studied this a little bit

If the item for sale has been misrepresented, there's probably some contractual wiggle room. Personally speaking, as somebody who has studied this a little bit, I don't think it's realistic that just 5% of Twitter accounts are bots: it feels like much higher. Governments, activists, and NGOs use Twitter to affect public opinion. Businesses use bots to fortify their follower counts to rank higher in searches and to affect public perception. An army of independent spammers use bots to try and shill various products and websites. Social media manipulation is basically an entire industry. Where I think the key point is is either side willing to go to court to expose the dirty laundry. I'm sure you will find some emails in discovery (if things go to some kind of court) where Twitter employees express complaints about mass numbers of bots far in excess of their public statements. There's probably some backdoor dealings going on where both sides are playing chicken and threatening to expose the other, if I had to guess.

deleted 4y ago
[deleted]
nabla9 4y ago
>2.That contract does not allow Musk to walk away if it turns out that “spam/fake accounts” represent more than 5% of Twitter users. We discussed this last month, when Twitter admitted in a securities filing that it had (slightly) overestimated its daily active users for years. The merger agreement contains a provision that allows Musk to walk away if Twitter’s securities filings are wrong — and this 5% number is in its securities filings — but only if the inaccuracy would have a “Material Adverse Effect” on the company. (See Sections 4.6(a) and 7.2(b).) That is an incredibly high standard: Delaware courts have almost never found an MAE. An MAE has to be something that would “substantially threaten the overall earnings potential of the target in a durationally-significant manner,” the courts have said; there is a rule of thumb that an MAE requires a 40% decrease in long-term profitability. If it turned out that 6% or 20% or 50% of Twitter accounts are bots, that will be embarrassing and might even reduce Twitter’s future advertising revenue, but will it be an MAE? No.
- veltas 4y ago
  If Twitter overestimated actual users by like 200% then that wouldn't affect its profitability by 40%? It could do, not sure why Bloomberg is defending Twitter so hard.
  - deleted 4y ago
    [deleted]
  - codefreeordie 4y ago
    It makes more sense when you realize that it's really just Bloomberg continuing the media assault on Musk for disagreeing with the narrative
    - nabla9 4y ago
      This is Matt Levine and his Money Stuff newsletter, one of the most respected and best analysis in finance journalism. https://en.wikipedia.org/wiki/Matt_Levine_(columnist) https://en.wikipedia.org/wiki/Matt_Levine_(columnist)
- Bubble_Pop_22 4y ago
  > Delaware courts have almost never found an MAE Musk would win the lawsuit because of cult of personality momentum. Judges call him "Elon" up in Delaware when writing their motivations. Not Elon Musk, not Elon Reeve Musk. Just Elon. He should have gone down for Solarcity, Funding Secured, Pedo Guy and a millions of other violations. But "when you are a star they let you do it". It's also true for securities violations, breach of contracts, etc.
- logicalmonster 4y ago
  > Delaware courts have almost never found an MAE Not a lawyer, but I'd make the argument that social media is a relatively new industry that hasn't had the opportunity to make as many notable legal challenges. This is important because the nature of centralized "digital assets" like user accounts that a social media firm possesses makes it far easier for businesses to misrepresent their possible value. There's a big difference here. Their accounts are just entries in a database: their stated user accounts could just as easily come from real users as they could from some automated program churning out fake accounts, to sweat shops that use manual labor to promote businesses, to even artificially generated accounts that social media firms generate themselves to pump up their numbers and have a better chance at tens of billions in ad revenue. Without access to Twitter's database, you can't really begin to tell their actual story. And even with access to Twitter's database, it's kind of tough to "prove" that a user account is a real person or not. In contrast, older types of businesses generally possess physical or at least some tangible assets. These are much harder to fake. A logging company might have to actually buy acres and acres of valuable forest land in order to have that asset on the books. A mining company actually owns mineral rights in some area and performs assays and things. There's a real record of these things and it physically exists. It's hard to fudge these numbers too much. A manufacturer would have to own land and trucks and machines and other assets. There's a physical, verifiable record of it. It's hard to fudge the numbers of many traditional businesses too badly and these things can be audited in some way. In contrast, social media numbers could be grossly inflated very easily, and there's no way for Joe Citizen to be sure.
vba616 4y ago
>Where I think the key point is is either side willing to go to court to expose the dirty laundry. This was all covered in the other half of the column: "As one merger arbitrageur put it to me, “If you’re reading the contract, you’ve lost. Lots of people reading the contract this morning.” Sadly I am one of them, and I do feel like I’ve lost." ... "Elon Musk has made it very clear that the rule of law simply does not apply to him, and this has worked well for him. If he wants to ignore the merger agreement that he signed, he will. If you take him to court, he will put up a brutal fight and make things as unpleasant as possible for you. This puts his counterparties, like Twitter, in a tough position. They have a contract. But so what?"

deleted 4y ago

[deleted]

nabla9 4y ago

>2.That contract does not allow Musk to walk away if it turns out that “spam/fake accounts” represent more than 5% of Twitter users. We discussed this last month, when Twitter admitted in a securities filing that it had (slightly) overestimated its daily active users for years. The merger agreement contains a provision that allows Musk to walk away if Twitter’s securities filings are wrong — and this 5% number is in its securities filings — but only if the inaccuracy would have a “Material Adverse Effect” on the company. (See Sections 4.6(a) and 7.2(b).) That is an incredibly high standard: Delaware courts have almost never found an MAE. An MAE has to be something that would “substantially threaten the overall earnings potential of the target in a durationally-significant manner,” the courts have said; there is a rule of thumb that an MAE requires a 40% decrease in long-term profitability. If it turned out that 6% or 20% or 50% of Twitter accounts are bots, that will be embarrassing and might even reduce Twitter’s future advertising revenue, but will it be an MAE? No.

veltas 4y ago
If Twitter overestimated actual users by like 200% then that wouldn't affect its profitability by 40%? It could do, not sure why Bloomberg is defending Twitter so hard.
- deleted 4y ago
  [deleted]
- codefreeordie 4y ago
  It makes more sense when you realize that it's really just Bloomberg continuing the media assault on Musk for disagreeing with the narrative
  - nabla9 4y ago
    This is Matt Levine and his Money Stuff newsletter, one of the most respected and best analysis in finance journalism. https://en.wikipedia.org/wiki/Matt_Levine_(columnist) https://en.wikipedia.org/wiki/Matt_Levine_(columnist)
Bubble_Pop_22 4y ago
> Delaware courts have almost never found an MAE Musk would win the lawsuit because of cult of personality momentum. Judges call him "Elon" up in Delaware when writing their motivations. Not Elon Musk, not Elon Reeve Musk. Just Elon. He should have gone down for Solarcity, Funding Secured, Pedo Guy and a millions of other violations. But "when you are a star they let you do it". It's also true for securities violations, breach of contracts, etc.
logicalmonster 4y ago
> Delaware courts have almost never found an MAE Not a lawyer, but I'd make the argument that social media is a relatively new industry that hasn't had the opportunity to make as many notable legal challenges. This is important because the nature of centralized "digital assets" like user accounts that a social media firm possesses makes it far easier for businesses to misrepresent their possible value. There's a big difference here. Their accounts are just entries in a database: their stated user accounts could just as easily come from real users as they could from some automated program churning out fake accounts, to sweat shops that use manual labor to promote businesses, to even artificially generated accounts that social media firms generate themselves to pump up their numbers and have a better chance at tens of billions in ad revenue. Without access to Twitter's database, you can't really begin to tell their actual story. And even with access to Twitter's database, it's kind of tough to "prove" that a user account is a real person or not. In contrast, older types of businesses generally possess physical or at least some tangible assets. These are much harder to fake. A logging company might have to actually buy acres and acres of valuable forest land in order to have that asset on the books. A mining company actually owns mineral rights in some area and performs assays and things. There's a real record of these things and it physically exists. It's hard to fudge these numbers too much. A manufacturer would have to own land and trucks and machines and other assets. There's a physical, verifiable record of it. It's hard to fudge the numbers of many traditional businesses too badly and these things can be audited in some way. In contrast, social media numbers could be grossly inflated very easily, and there's no way for Joe Citizen to be sure.

vba616 4y ago

>Where I think the key point is is either side willing to go to court to expose the dirty laundry. This was all covered in the other half of the column: "As one merger arbitrageur put it to me, “If you’re reading the contract, you’ve lost. Lots of people reading the contract this morning.” Sadly I am one of them, and I do feel like I’ve lost." ... "Elon Musk has made it very clear that the rule of law simply does not apply to him, and this has worked well for him. If he wants to ignore the merger agreement that he signed, he will. If you take him to court, he will put up a brutal fight and make things as unpleasant as possible for you. This puts his counterparties, like Twitter, in a tough position. They have a contract. But so what?"