Bulletins

Musk can't blame bots to get out of the Twitter deal

Experts said Musk could be preparing to take Twitter to court over the spam bot issue.

BRAZIL - 2022/05/22: In this photo illustration, Elon Musk's official Twitter profile seen on a computer screen through a magnifying glass. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

Elon Musk claims he has a right to call off the Twitter takeover.

Photo Illustration: Rafael Henrique/SOPA Images/LightRocket via Getty Images

Elon Musk doesn’t want to own a company with a spam bot problem. And now, he’s claiming that he has the right to bail on his Twitter takeover because the company won’t give him the data he wants on the issue, according to a Securities and Exchange Commission filing.

But finance and securities law experts said the claim won't actually get him out of the Twitter deal — and may set him up for a legal battle.


Musk claims Twitter denied him information about the number of spam bots on the platform, which would violate the terms of the merger agreement that entitles him to information for "any reasonable business purpose related to the consummation of the transaction." His letter states that Twitter needs to give Musk data about Twitter’s bot and spam accounts so he can conduct his own analysis of the issue.

"As Twitter’s prospective owner, Mr. Musk is clearly entitled to the requested data to enable him to prepare for transitioning Twitter’s business to his ownership and to facilitate his transaction financing," the letter, signed by Skadden attorney Mike Ringler, states. "To do both, he must have a complete and accurate understanding of the very core of Twitter’s business model — its active user base."

Now, Twitter has 30 days to cure breach, meaning the company can give Musk the information he's requesting about spam bots. But experts said no matter what, Musk's letter won't actually get him out of the deal.

“Musk does not have any ground to stand on to void the agreement that he signed,” David Kass, a finance professor at University of Maryland's business school, told Protocol.

Kass said Musk has two ways out of the acquisition: One would be a regulatory holdup, which doesn’t look likely now that the FTC’s window to intervene has closed. The other would be if Musk doesn’t gather enough debt funding for the deal to happen, in which case he’d pay Twitter $1 billion and break up with the company once and for all.

So if the letter won’t help him end the deal, Musk could be setting himself up for a court battle, in which case Musk could try to lower the price of the deal, according to Adam Pritchard, a securities law professor at University of Michigan’s law school. Tech stocks overall have plunged, and Musk has likely realized that $44 billion is a lot more than Twitter is actually worth right now.

“It's not like the understanding of the business has changed,” Pritchard told Protocol. “It's just that stock market valuations have gone south and he’s just paying way too much for this company now.”

Musk is digging himself into a hole. It would take a lot to get Twitter to lower the price of the deal, and it's already reiterated that his new letter won't change anything.

"Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement," the company said in a statement Monday. "We intend to close the transaction and enforce the merger agreement at the agreed price and terms."

Latest Bulletins

Ending a project that once sought to build a world-spanning financial network, Meta announced on the Novi website Friday that the pilot test of its blockchain-based money-transfer app would end in September.

Keep Reading Show less

In the wake of privacy concerns following Roe v. Wade being overturned, Google said Friday that it will start automatically deleting location history related to potentially sensitive places.

Keep Reading Show less

Voyager Digital said Friday it is suspending trading, deposits and withdrawals, in the latest sign of the deepening crisis in the crypto markets. Voyager said the move is meant to give the major crypto broker “additional time” to look for “strategic alternatives” as the company grapples with the impact of the market slump, CEO Stephen Ehrlich said in a statement.

Keep Reading Show less

BlockFi CEO Zac Prince said his company has signed a deal giving FTX the option to buy the crypto lender for up to $240 million as part of a credit financing agreement.

Keep Reading Show less

Tesla is facing yet another racial discrimination lawsuit, this one brought by 15 Black current and former employees who are suing the company in California.

The workers said the company’s culture allowed for “blatant, open and unmitigated race discrimination” and most of the alleged behaviors are said to have occurred at the company's factory in Fremont.

Keep Reading Show less

Klarna is close to raising new funding at a valuation of about $6.5 billion, which would be far below its last round raised last year, according to the Wall Street Journal. The move is the latest sign of the effects of inflation and the economic downturn on the fintech sector and "buy now, pay later" in particular.

Keep Reading Show less

Crypto companies will have to disclose just how much climate damage is tied to the tokens they're hawking. At least in Europe, that is.

Keep Reading Show less

Gene Levoff, Apple's former director of Corporate Law, pleaded guilty to insider trading, the Department of Justice announced Thursday.

Keep Reading Show less

New York state environmental regulators have declined to extend a key permit to a controversial cryptocurrency mining operation in the state's Finger Lakes region.

Keep Reading Show less

FTX is reportedly close to gobbling up BlockFi for about $25 million, though BlockFi's CEO has dismissed the talk as "market rumors."

Keep Reading Show less

The CFPB said it has terminated a sandbox deal that gave earned wage access provider Payactiv “temporary safe harbor from liability” under key lending regulations.

The CFPB granted Payactiv “special regulatory treatment” in December 2020 to offer “earned wage access” products that would allow employees to obtain wages they already earned before payday.

Payactiv gets paid back through a payroll deduction from the employee’s next paycheck. The company makes money through fees.

The CFPB said it had informed Payactiv early this month that it was “considering terminating the approval order in light of certain public statements the company made wrongly suggesting a CFPB endorsement of its products.”

The company requested that the CFPB end the sandbox order after notifying the agency that it planned to modify its product fee model, the CFPB said.

The move underlined the CFPB’s increasingly critical view of sandbox deals that the agency said “proved to be ineffective.”

Safwan Shah, Payactiv's founder and CEO, is credited with coining the term "earned wage access," which has been criticized by consumer advocates as being potentially predatory, especially when it comes to workers who don’t make much money.

Shah has argued that it benefits ordinary workers, citing a dieting principle: "The less you are paid, the more frequently you should be paid," he told Protocol in a 2021 interview. "If you're going to eat 500 calories, don't eat them in one sitting. Spread them throughout the day."

Correction: This story has been updated to correct the spelling of Payactiv's name. This story was updated June 30, 2022.

Samsung announced Wednesday that it has taken a significant step toward rolling out a next-generation manufacturing technology that has the potential to reshuffle the chip industry.

Keep Reading Show less

Amazon has censored search results related to LGBTQ+ products in the United Arab Emirates after being pressured by the government.

Keep Reading Show less

Grayscale is suing the U.S. Securities and Exchange Commission after the regulator denied the company's bid to convert its bitcoin trust into an exchange-traded fund.

Keep Reading Show less

App developers in South Korea can now use third-party payment systems, Apple announced in a blog post Thursday.

Keep Reading Show less

An employee working for OpenSea's email delivery vendor misused their customer data access to download and share email addresses with an "unauthorized external party," the NFT marketplace wrote in a company blog post Wednesday. The employee worked for Customer.io.

Keep Reading Show less

Javier Soltero is leaving Google Workspace, Google Cloud CEO Thomas Kurian announced Wednesday in an email to staff viewed by Protocol. Soltero will leave his role effective July 15.

Keep Reading Show less

San Francisco-based game development tools provider Unity is laying off hundreds of employees, according to a report from Kotaku.

Keep Reading Show less

Niantic is reportedly cutting between 85 and 90 staff members, or 8% of its workforce.

Keep Reading Show less

Crypto hedge fund Three Arrows Capital has reportedly received a court order to liquidate after creditors sued the company over unpaid debts.

Keep Reading Show less

Just months after committing to spend $925 million on carbon dioxide removal, a collection of major tech companies has announced its first purchases. The group, operating under the banner of Frontier, announced it had purchased nearly 2,000 tons of CDR services from five companies. It's a small ripple in the CDR pond, but one Frontier hopes will turn into a wave to bring down the costs of removing carbon.

Keep Reading Show less

The Federal Trade Commission has sued Walmart, alleging the retail giant "turned a blind eye" to fraud worth hundreds of millions on its money transfer services.

Keep Reading Show less

Eric Schmidt described his first five years at Google as "pure, naive techno-optimism," in that the company believed that applying American values like free speech is good for the world. But Google hit a brick wall when it bought YouTube.

Keep Reading Show less

The Biden administration's hot electric vehicle summer continues to zip along. On Tuesday, the White House announced $700 million in commitments for EV charging from private companies. The cash will up U.S. charging manufacturing capacity to 250,000 chargers a year and increase the number of chargers out in the wild. Not too bad!

Keep Reading Show less

Meta said it's working to correct enforcement errors that led to the removal of Facebook posts related to abortion pills and suspensions of user accounts behind the posts. The clarification came after Motherboard discovered that Facebook was instantly removing posts that said "abortion pills can be mailed," which the FDA legalized in 2021.

"Content that attempts to buy, sell, trade, gift, request or donate pharmaceuticals is not allowed. Content that discusses the affordability and accessibility of prescription medication is allowed," Meta spokesperson Andy Stone tweeted in response to the story. "We've discovered some instances of incorrect enforcement and are correcting these."

Keep Reading Show less
Bulletins