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The Musk/Twitter saga feels like digital theater

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When billionaire Elon Musk officially petitioned the Securities and Exchange Commission (SEC) on Friday to buy out of his deal to buy Twitter, I once again wondered why the parties involved are going to all this trouble. What were Musk’s motives for buying Twitter? And why would Twitter want its employees to work for a man who doesn’t seem to care much about their company?

These are all very intelligent and (I think) rational people we are talking about. But right now, their actions seem cryptic, scrambled, and performative. Over the weekend, analysts and some people directly involved in the action tried to make sense of Friday’s bomb.

Casey Newton, on his Substack newsletter platform game, begins with a rational reason for Musk’s apparent desire to exit the deal: Musk offered $44 billion for Twitter and planned to borrow against Tesla stock to raise the money. When technology stocks crashed, Musk’s bid suddenly seemed very high, leading to serious buyer regret.

“And so he decided to get out of the deal. He wouldn’t put much energy into coming up with a plausible pretext,” Newton wrote. “The same reason he gave for wanting to buy Twitter — which, in his estimation, was full of bots and spam — could suddenly be used as his reason for not wanting to buy Twitter.”

Musk would further tell his lawyers to request endless amounts of data about bots from Twitter, including some that Twitter was unable to provide for privacy reasons. The company’s refusal to provide that data naturally became the basis for Musk’s “breach” of the contract claim — his escape hatch from the deal.

But even this sounds like some kind of weird theater. Musk, his attorneys, and anyone involved in the deal reading the merger terms should know that his collision claim doesn’t make sense. as a lawyer and Bloomberg columnist Matt Levine explained in June: “Musk thinks, or says he thinks, that this assumption (that Twitter accounts are less than 5% bots) isn’t true. But even if he’s right, he can’t get out of the deal unless it’s is untrue and would have a “material adverse effect” on Twitter’s business.”

Now Musk and Twitter appear to be heading for the courtroom. Twitter chairman of the board Bret Taylor tweeted as much on Friday:

Now, this whole drama is no doubt having an effect on Twitter employees, who have to watch as their potential boss mocks Twitter leadership and corporate policy in front of his 100-plus million Twitter followers. Musk also doesn’t seem to have any respect for the years of work put into Twitter to get disinformation under control and only being offered broad range solutions to this complex problem. No wonder, then, that many Twitter employees are already planning to leave the company, Newton said.

But on the other hand, Twitter employees who own stocks, including CEO Parag Agrawal— have a lot to gain financially if the deal, which offers a generous $54.20 per share, goes through. Shares of Twitter took a beating during Musk’s strange dance with the company.

There may be another, bigger reason, directly related to Twitter’s growth prospects. Here, analyst Ben Thompson writes in his… strategy newsletter Monday:

“Here’s the problem: The most valuable piece of Twitter right now is the acquisition deal with Musk, and [Bret] Taylor and the board definitely have a fiduciary duty to Twitter’s shareholders to hold Musk to it, even if . † † it’s bad for the business.”

So can there be real winners here (other than the lawyers)?

The point is, Musk may be playing for things that you can’t capture on a balance sheet, or even understand with common sense. It’s possible that for Musk, this whole ordeal is, at least in part, some kind of joke. Levine wrote in Bloomberg

He seems to like this, and why not? When he pretends to buy a publicly traded company, a big drama ensues with him at the center. He takes control of people, mobilizes legions of bankers and lawyers and funding sources and random followers in hopes of closing the deal; and when he is bored, he can tell all those people to go home. “Haha, I’ve got you,” he can say, and they can all have a good laugh, or he can.

There is a precedent here. Musk threatened/famed to take Tesla private in 2018, a stunt that cost him a $20 million fine, courtesy of the SEC. In a way, he does the same with Twitter; and at best it looks like he’ll have to pay Twitter a $1 billion breakup fee.

Since Friday’s withdrawal, Musk has been having his usual fun with the affair, posting on Twitter:

It’s interesting and a little sad to compare Musk’s apparent attitude toward Twitter to that of co-founder Jack Dorsey (who supported the deal after its announcement on April 25). If Musk especially believes in the drama of the deal, Dorsey is a true believer in Twitter itself.

“Basically, I don’t believe anyone should own or control Twitter,” Dorsey wrote in a tweet on April 25. “It wants to be a public good at the protocol level, not a business.” Dorsey explained that Twitter also has to work as a business to survive, and he believed Musk could put it on a course of solid growth.

However the Twitter deal ends, we’ll probably always remember this long and weird journey: a time when a cheering (and very wealthy), impostor bought — or said he would buy — a highly influential social media company and then ditched the deal. to move on to his next trick. Once the dust settles, the Musk myth may be even bigger than it was before. He may end up looking more like Howard Hughes’ version of our generation. And he would probably like that.


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