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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

by jjeaff 4y ago

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.

pauldenton 4y ago
"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
- AlexandrB 4y ago
  Scammers are doing this. It's called cryptocurrency.
- ncallaway 4y ago
  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.
  - jjeaff 4y ago
    We also can't forget that there was time for due diligence before the contract was signed.
- Spivak 4y ago
  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.
  - _djo_ 4y ago
    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.
- jjeaff 4y ago
  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.
- megablast 4y ago
  He was allowed to do due diligence, he chose not too. People said it was dumb at the time.
- jacquesm 4y ago
  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.
- rsynnott 4y ago
  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.
SketchySeaBeast 4y ago
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.
- lijogdfljk 4y ago
  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.
  - jjeaff 4y ago
    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.
    - snovv_crash 4y ago
      No, it is relevant. When the curtain is pulled back and it is revealed that all of the accounts are bots, advertisers will stop spending money with Twitter.
      - kevingadd 4y ago
        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.
judge2020 4y ago
> 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.
- pwinnski 4y ago
  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?
  - judge2020 4y ago
    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.
    - ryandvm 4y ago
      I suppose the next time Musk tries to buy something that costs $44 billion dollars he should do a little more homework. Waiving due diligence, though perfectly in line with his trollish vibe, is something he's going to regret for years. The bottom line is the guy gets off on being an irreverent, flamboyant dipshit and this time it's biting him in the ass. And I for one am here for it. After the last few years I have run out of patience with assholes with money/power thinking they can do whatever they want in broad daylight. Christ, at least have the decency to be surreptitious about it.

by jjeaff 4y ago

pauldenton 4y ago

"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

AlexandrB 4y ago
Scammers are doing this. It's called cryptocurrency.
ncallaway 4y ago
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.
- jjeaff 4y ago
  We also can't forget that there was time for due diligence before the contract was signed.
Spivak 4y ago
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.
- _djo_ 4y ago
  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.
jjeaff 4y ago
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.
megablast 4y ago
He was allowed to do due diligence, he chose not too. People said it was dumb at the time.
jacquesm 4y ago
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.
rsynnott 4y ago
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.

SketchySeaBeast 4y ago

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.

lijogdfljk 4y ago
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.
- jjeaff 4y ago
  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.
  - snovv_crash 4y ago
    No, it is relevant. When the curtain is pulled back and it is revealed that all of the accounts are bots, advertisers will stop spending money with Twitter.
    - kevingadd 4y ago
      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.

judge2020 4y ago

> 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.

pwinnski 4y ago
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?
- judge2020 4y ago
  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.
  - ryandvm 4y ago
    I suppose the next time Musk tries to buy something that costs $44 billion dollars he should do a little more homework. Waiving due diligence, though perfectly in line with his trollish vibe, is something he's going to regret for years. The bottom line is the guy gets off on being an irreverent, flamboyant dipshit and this time it's biting him in the ass. And I for one am here for it. After the last few years I have run out of patience with assholes with money/power thinking they can do whatever they want in broad daylight. Christ, at least have the decency to be surreptitious about it.