The Legal Fight Behind Elon Musk's Acquisition of Twitter
Elon Musk’s acquisition of Twitter began on April 14, 2022, and officially ended on October 24, 2022. In the months between, there was a slew of legal battles, financial disagreements, and general frustration between Musk and Twitter executives. In January of 2022, Musk began purchasing shares of Twitter, and by April, he was the company’s largest shareholder, with a 9.1% stake in the company. Twitter then invited Musk to join their board of directors, which Musk initially accepted but later declined. Clearly, for a man with Musk’s net worth, being on the board of directors simply just wasn’t enough, and on April 14, he made an unsolicited offer to buy the company for $43 billion. Twitter was caught off guard by the bold offer, and responded with a “poison pill’ strategy, which is the selling of shares at a discount, in order to dilute Musk’s stake in the company, potentially protecting them from a hostile takeover. However, on April 25, the board unanimously voted to sell Twitter to Musk for 44 billion USD, taking the company private. This was supposed to be the end of the transaction, but the legal battle was far from over.
In July, Musk announced that he intended to terminate the agreement, stating that Twitter misrepresented figures about the number of spam and bot accounts on the platform, which he then communicated over Twitter. In multiple tweets he stated that “Wachtell and Twitter deliberately hid this evidence from the court”. Twitter's legal counsel at Wachtell, Lipton, Rosen & Katz stated that Musk wasn’t holding up his terms of the agreement. Musk’s reasoning behind this statement stemmed from his desire to remove spam bots from the platform, believing that they cause a drop in users. Leaked messages between Twitter executive Yoel Roth and a member of Twitter’s staff named Amir were uncovered through a whistleblower at Twitter, who still remains unnamed.
In these messages, Roth stated that “Amir’s OKRs (A company's goals and the way to achieve them) were based on fraudulent metrics, and he may actively be trying to hide the ball”. He also added that this was “Exactly what Elon is accusing us of doing”. Musk was reportedly worried that Twitter has a “disincentive to reduce spam”, as it would reduce perceived daily users, some of which are bots and spam accounts. Musk then stated that he obviously paid more than the company was worth, prompting Twitter to file a lawsuit against Musk, to which he responded to with a countersuit. It looked like the stage was set for a long, drawn out legal battle between one of the world’s richest men, and one of the world’s richest tech companies. However, in October, Musk seemingly changed his mind and announced that he would move forward and purchase the company at a price of $54.20 a share, honouring the original agreement.
Now, as the owner of Twitter, Elon Musk is attempting to make significant changes to the platform. The most notable of these changes is the verification system. The “blue check” used to be a coveted mark of status on Twitter, reserved for celebrities, politicians and people of influence. Now, all it takes to get a blue verification check is to subscribe to Twitter Blue, a new service that charges $8 a month to use. Due to the low pricing and newfound accessibility, there has been a massive influx of verification checks causing impersonation issues on the platform. One example is the company Eli Lilly Co, a major producer of insulin. When an account with a verification check changed their name and profile picture to match Eli Lilly Co, they stated on Twitter that insulin would be free, causing the actual company’s stock to take a dive of almost 6%. This is just one of the new issues being experienced with Musk at the helm, showing him that running Twitter wouldn’t be as easy as he thought.
Image via Wikimedia Commons.