4 ms·

I haven’t read the article, but one multi-billion-dollar company “refusing to pay its bill” to another multi-billion-dollar company is simply part of the contra

by fwlr 3y ago

I haven’t read the article, but one multi-billion-dollar company “refusing to pay its bill” to another multi-billion-dollar company is simply part of the contract re-negotiation process, no? (In the case where one company refuses to re-negotiate - either directly by saying so, or indirectly by tying it up in endless customer support redirects - it is arguably a necessary step, even.) I get the sense that this reporting is trying to lean heavily on the usual implications of “refusing to pay the bill”, which is that one can’t pay the bill. But that implication obviously isn’t at play here; Google Cloud isn’t worried that Twitter is broke. In all likelihood what’s actually happening is that Google Cloud strongly expects the new contract to be less profitable for them, and thus they wish to delay and drag out re-negotiations so they can have the more profitable contract for longer. Refusal to pay invites a lawsuit; if the cost of the lawsuit exceeds the profit that would be gained by holding onto the old contract for longer, it makes more sense to re-negotiate now. I predict Google Cloud will launch a token lawsuit for non-payment and come to the negotiation table at the same time, and when new terms are agreed on Twitter will settle the lawsuit by paying the old contract rates up to the date of the new contract.

jsnell 3y ago
No, it isn't normal to not pay the bills for services already rendered in order to try to get a better deal in future contract renegotiations. I don't know why you would think it is the expected behavior.
- fwlr 3y ago
  I don’t think this is normal or an expected behavior, apologies if my comment gave that impression. My claim is more that ‘Twitter not paying Google Cloud’ and ‘me not paying my mechanic’ are both situations where the phrase “refusing to pay the bill for services already rendered” is a true and accurate denotative description, but the connotations are significantly different. For clarity’s sake, I completely agree that it’s a moral imperative to pay your bills on time and in full; what I’m saying here is that I’m not sure that moral imperatives are even the right framework for looking at these interactions between large companies (eg people have morality and ethics, companies have regulations and lawsuits).
  - rhaway84773 3y ago
    The only difference is if you refuse to pay your mechanic the mechanic can likely do nothing. The billion dollar company can take the other billion dollar company and procure the money owed + damages.
    - mwwaters 3y ago
      It is sort of the inverse. To be pedantic, mechanics have mechanic's liens which allows them to hold a car forever until they're paid. If it's worth enough for Google, Google could definitely bring full force of judgments. The only thing is the LBO debtors have a UCC lien which may be worth more than what Twitter is worth in a bankruptcy. Twitter does currently have cash and may pay a judgment to prevent an event of default on the big debt. But debtors always have to worry being behind secured debt.
  - ttymck 3y ago
    Well, in this case, I suspect Google can stop providing services, which would significantly hinder Twitter's operations. If your mechanic still had possession of your car, I guess it would be a similarly leveraged situation.
    - fwlr 3y ago
      Yeah, the situation is sort of like buying a car from someone, and you don’t like the previous owner’s agreed rate with the mechanic for ongoing maintenance, but you also park the car at the mechanic’s shop and if he stops doing daily maintenance your engine won’t start…
  - lotsofpulp 3y ago
    Twitter v Alphabet is tiny business versus huge business. I do not see why Alphabet would care if Twitter existed or not, so Twitter would not have anything to negotiate with.
    - Proven 3y ago
      [dead]
- PartiallyTyped 3y ago
  I may be naive, but isn’t having a good reputation and being cooperative with the people you depend on going to better for you when it comes to negotiations between companies?
skinnymuch 3y ago
I don’t think this is normal. If it was normal this would be happening a lot more. Obviously it’s being discussed because it’s Twitter but it would be helpful to provide some examples if you pieces so much together with no info. We don’t know what’s true right now anyway
blitzar 3y ago
> Google Cloud isn’t worried that Twitter is broke Twitter is broke. "The company" spends more than it collects in revenue, and it has massive debts - the interest on which alone is greater than the revenue it collects. Sure it can borrow more money, from its shareholders if it has to, but even that tap can dry up.
- suggala 3y ago
  If you liquidate in market half the companies in SP500 will seem like they are broke even though by definition you need to be profitable to get into SP500. But that is not how companies are valued at. They also are valued with potential. “Twitter is broke” is a drama created by Musk basically is a reason he says for all the actions. Share holder tap isn’t dried up. He just need to open the tap with lower share price probably less that quarter a price he actually bought it for. Nothing is in dooms day situation.
- JonChesterfield 3y ago
  Revenue below interest due on debts sounds unambiguously insolvent. I've tried to verify this claim and mostly discovered stuff that makes no sense to me. https://www.ft.com/content/25f67d89-2940-43b9-9a42-bfc34d262631 https://www.ft.com/content/25f67d89-2940-43b9-9a42-bfc34d262... is one of the clearer things. Twitter owes ~$12B from when it was acquired by Elon. Somehow twitter owes this, not Elon. How is that a thing? Twitter put itself ruinously in debt in order to hand over control to someone else.

by fwlr 3y ago

jsnell 3y ago

No, it isn't normal to not pay the bills for services already rendered in order to try to get a better deal in future contract renegotiations. I don't know why you would think it is the expected behavior.

fwlr 3y ago
I don’t think this is normal or an expected behavior, apologies if my comment gave that impression. My claim is more that ‘Twitter not paying Google Cloud’ and ‘me not paying my mechanic’ are both situations where the phrase “refusing to pay the bill for services already rendered” is a true and accurate denotative description, but the connotations are significantly different. For clarity’s sake, I completely agree that it’s a moral imperative to pay your bills on time and in full; what I’m saying here is that I’m not sure that moral imperatives are even the right framework for looking at these interactions between large companies (eg people have morality and ethics, companies have regulations and lawsuits).
- rhaway84773 3y ago
  The only difference is if you refuse to pay your mechanic the mechanic can likely do nothing. The billion dollar company can take the other billion dollar company and procure the money owed + damages.
  - mwwaters 3y ago
    It is sort of the inverse. To be pedantic, mechanics have mechanic's liens which allows them to hold a car forever until they're paid. If it's worth enough for Google, Google could definitely bring full force of judgments. The only thing is the LBO debtors have a UCC lien which may be worth more than what Twitter is worth in a bankruptcy. Twitter does currently have cash and may pay a judgment to prevent an event of default on the big debt. But debtors always have to worry being behind secured debt.
- ttymck 3y ago
  Well, in this case, I suspect Google can stop providing services, which would significantly hinder Twitter's operations. If your mechanic still had possession of your car, I guess it would be a similarly leveraged situation.
  - fwlr 3y ago
    Yeah, the situation is sort of like buying a car from someone, and you don’t like the previous owner’s agreed rate with the mechanic for ongoing maintenance, but you also park the car at the mechanic’s shop and if he stops doing daily maintenance your engine won’t start…
- lotsofpulp 3y ago
  Twitter v Alphabet is tiny business versus huge business. I do not see why Alphabet would care if Twitter existed or not, so Twitter would not have anything to negotiate with.
  - Proven 3y ago
    [dead]
PartiallyTyped 3y ago
I may be naive, but isn’t having a good reputation and being cooperative with the people you depend on going to better for you when it comes to negotiations between companies?

skinnymuch 3y ago

I don’t think this is normal. If it was normal this would be happening a lot more. Obviously it’s being discussed because it’s Twitter but it would be helpful to provide some examples if you pieces so much together with no info. We don’t know what’s true right now anyway

blitzar 3y ago

> Google Cloud isn’t worried that Twitter is broke Twitter is broke. "The company" spends more than it collects in revenue, and it has massive debts - the interest on which alone is greater than the revenue it collects. Sure it can borrow more money, from its shareholders if it has to, but even that tap can dry up.

suggala 3y ago
If you liquidate in market half the companies in SP500 will seem like they are broke even though by definition you need to be profitable to get into SP500. But that is not how companies are valued at. They also are valued with potential. “Twitter is broke” is a drama created by Musk basically is a reason he says for all the actions. Share holder tap isn’t dried up. He just need to open the tap with lower share price probably less that quarter a price he actually bought it for. Nothing is in dooms day situation.
JonChesterfield 3y ago
Revenue below interest due on debts sounds unambiguously insolvent. I've tried to verify this claim and mostly discovered stuff that makes no sense to me. https://www.ft.com/content/25f67d89-2940-43b9-9a42-bfc34d262631 https://www.ft.com/content/25f67d89-2940-43b9-9a42-bfc34d262... is one of the clearer things. Twitter owes ~$12B from when it was acquired by Elon. Somehow twitter owes this, not Elon. How is that a thing? Twitter put itself ruinously in debt in order to hand over control to someone else.