Elon Musk sometimes appears to act like the star of his own show, with his top billing more important than his company’s products. The impression is heightened by his numerous cameos in TV and films. Musk has played versions of himself in productions as diverse as Iron Man 2 and The Big Bang Theory, and has de facto confirmation of celebrity status through his appearance on The Simpsons.
And his non-takeover of Twitter might be part of that. Initially giving the impression of a rom-com, it kept the public guessing with its ‘will they, won’t they’ storyline. But then, in a shocking mid-season twist, it turned out it was all just a prelude to a bitter courtroom drama.
The battleground
Musk has long been one of Twitter’s superstars. With over 100 million followers, his tweets were rarely dull. A mix of business, politics, and the baffling, it created a sub-industry for those keen to analyse his thoughts and their meaning.
But a recurring theme has been his criticism of Twitter, its management, and practices he believes stifle free speech. It built until Musk formally made his bid to own the social media network, signing a deal to buy Twitter for $44 billion in April, but even that did not seem to smooth the relationship.
Remarkably, Musk continued to tweet, and tweet negatively, about Twitter. Rather than let the lawyers get on with the job, he offered an ongoing commentary, frequently continuing his criticism of Twitter, and highlighting his problems with the proposed deal. Claiming that Twitter were disingenuous about the number of bad-faith spambots on the platform, criticising its current lack of profitability, and stating he would reverse some major decisions, such as the life-ban issued to Donald Trump.
Finally, this month, he stated he would be withdrawing his bid to buy Twitter. Despite the widespread knowledge that Twitter, or at least most of Twitter’s staff, would rather not work for Musk, the company has not escaped unharmed. Having seen their share price plummet — just as Musk’s value has — the Twitter board are faced with the legal duty to protect their value by attempting to force through a deal they do not want.
Twitter vs Musk
Musk withdrew from the deal, essentially blaming Twitter of bad faith. Twitter, he claims, has not been open about the number of bots on the platform, undercounting them to inflate Twitter’s value. This, he claims, invalidates the deal which obliged Twitter to provide this information. He also claims that Twitter removed senior staff without his approval, again a violation of the deal they had agreed.
Unsurprisingly, Twitter denies these charges. Arguing that, throughout, Musk had shown little interest in these, despite Twitter’s best attempts to engage him.
Musk, according to Twitter, actually passed up chances to discuss bots with the company, repeatedly failing to agree to meet. And when a meeting was actually scheduled, Musk failed to attend, sending other staff who used the meeting to discuss not bots, but financial details.
They further alleged that the dismissal of two executives was first run by Musk, but he showed no interest and allowed their removal to go ahead. Indeed, they highlight that Musk had previously commented the company would need some ‘rationalisation’, suggesting that far from being concerned about the lay-offs, it may just have brought forward actions he would have taken.
At the heart of Twitter’s action is the accusation that Musk withdrawal was prompted by the slump in Twitter’s share price, not because of any actions by them. Essentially, Twitter believes that Musk was the cause of the 11% drop in their value, and, as a result, they now have a duty to oblige him to uphold their deal in court.
The arena
While many have focused on the drama between Musk and Twitter, fewer people have considered the setting for that drama, but the scene is often an important character in a drama.
The case is set to be heard in Delaware. Delaware is one of the US’s smallest states, with a population of just over a million people, but it has over 1.6 million registered corporations. This remarkable statistic is not down to a uniquely entrepreneurial population, but a state policy and legal framework designed to be corporate-friendly. The result is that many legal agreements, including Musk and Twitter’s, specifically give Delaware jurisdiction over disputes.
And that is probably not good news for Musk. Many legal experts point out that Delaware very rarely allows anyone an easy way out of deals. Musk may be the world’s richest man, but that will carry no clout in a court that will place much higher value on the law and the impact a precedent in this case would create.
Whether the case results in Musk owning Twitter, despite neither party wanting that, a hefty bill for breach of contract, or Musk securing a surprise victory, we’ve still a few more months of this particular episode of his drama to go.
