Takeaways From Elon Musk’s Legal Battle with Twitter

By | July 27, 2022
Takeover Lawsuit

It has been a few months since Elon Musk announced his intention to purchase the prominent, text-based social media platform Twitter, and a lot has happened since that news broke. The deal has fallen through as Musk reportedly decided not to go through with the eventual purchase, and an ugly legal battle seems to be on the horizon.

Twitter reportedly wants to hold Musk to his verbal obligation to purchase the company for around $44 billion, while Musk himself has decided to walk away from the eventual deal. Below we will unpack the enigmatic billionaire’s decision to walk away from the agreement, as well as what it could mean for the future of Twitter.

Why Did Musk Walk Away?

If reports are to be believed, Elon Musk made the personal decision to walk away from the purchase agreement after not being handed documents and information which he deemed essential to the buying process. Musk reportedly asked Twitter to provide him with information surrounding the large amount of bot and spam accounts that currently operate on the social media platforms database.

It is estimated that there are around 229 million daily accounts being used that are not run by actual human beings but are bot accounts. These accounts are programmed to like certain tweets, tweet certain lines of text, and reply to certain accounts whenever they tweet. Musk wanted this information in order to estimate the actual value of the platform and Twitter did not provide him with the documentation he wanted.

Twitter on the other hand argues that Musk already had a verbal agreement in place to purchase the company, that was not reliant on the production of these documents and information. The legal team at Twitter believes that Musk is only using this stumbling block as a means to get himself out of a deal he cannot afford due to the low amount of liquid assets and cash he has on hand. Twitter, however, are want to still hold Musk to his legal obligations and ensure that the agreement is fully carried out, otherwise legal proceedings will continue to be instituted against the Tesla EVCEO.

Why Twitter has the Upper Hand

It will not be easy for Musk to walk away from the agreement to purchase Twitter due to the legal obligations and ramifications agreed to in the initial contract to purchase. The only way Musk could walk away from the deal, according to the agreed-upon terms, is if circumstances arise that lead to a “material adverse effect” that could preclude Musk from following through with the purchase. If Musk was taking  a gamble here, it would have been better if he stuck to bingo for real money rather than trying to buy Twitter.

Many legal experts who have had a chance to look at the circumstances of the current case believe that the bot issue, and whether or not Twitter is hiding any information, would not create a material adverse effect. They believe that whether or not the documents are provided, Musk will still be legally obligated to complete the purchase.