The stage for Twitter v. Musk farce is a Delaware courtroom
Hello, and welcome to Protocol Policy! Today, I’m writing about how anyone who’s gotten used to the slow pace of federal trials should buckle up for Twitter v. Musk in Delaware. Plus, the latest surprise in the chips saga, Binance’s “pivot” and the new mental health hotline.
Give us a chance(ry)
The fun officially kicks off this week — and by “fun,” I mean the part of Elon Musk’s bid for Twitter that will take place in a courtroom that literally derives its jurisdiction from pre-Colonial courts in Great Britain. No, a trial isn’t starting just yet, but we may find out in coming days if one will kick off by the end of summer.
If you’ve been dreading catching up, here’s where we are: Just last week, Twitter sued Musk to force him to buy the company for $44 billion after he tried to walk away from his bid the week before that.
- Musk claimed his unanswered questions about bots on the service rendered the contract he signed moot, while Twitter and most legal observers say that’s not a thing.
- The complaint landed in the Delaware Court of Chancery because the state’s corporate-friendly tax laws mean Twitter, like lots of other companies, is incorporated there.
- The court thus specializes in complex commercial litigation, sometimes specifically the old-timey practice of equitable remedies — aka, making people do things they don’t want to rather than just making them pay up.
Twitter is seeking a four-day trial beginning September 19, and the judge said she’d hear arguments Tuesday about whether that makes sense.
- If she decides to set that schedule, and if there’s no settlement in the meantime, and if Musk’s lawyers can’t keep him off the stand, he could testify before autumn officially begins. (OK, I admit I believe in a post-Labor Day start of fall, but I’m talking about Musk taking the stand before the night of Sep. 22.)
- That’s a lot of ifs, but even if the trial is scheduled for later and takes a few more days to complete, the court is still known for moving pretty quickly — often going to trial within seven months, according to Bloomberg.
- Twitter’s also urging shareholders to vote for the deal at an upcoming meeting,
On that schedule, Musk would take the stand by February or earlier, and in fact that’s the slower schedule Musk’s attorneys have reportedly proposed.
- Parenthetically, this is slightly mind-blowing for me as someone who is still in the middle of a nearly three-year lead time on when a Google antitrust trial could begin.
- Sadly, the Court of Chancery doesn’t broadcast its sessions, and historically has insisted that merely using the internet in the room “interferes with equipment used by court reporters,” so we might not get live feeds unless the court sets up a call-in line.
If the case does go to a trial (instead of settling), a key issue will be Musk’s claim that Twitter’s (purported) refusal to share data on bots creates a “material adverse effect” that allows him to get away scot-free.
- Basically, Musk is arguing Twitter’s actions are so unexpected, and the truth so deeply consequential to the long-run prospects of the company, that the deal is void.
- Most legal observers aren’t impressed with this way of looking at the contract Musk signed back when he wanted to buy Twitter to get rid of the bots, before he decided they were why he didn’t want to own the company.
- Also, such a theory has literally only been adopted once in Delaware.
- The whole saga has resulted in the hiring of lots of very expensive lawyers on both sides, though, and Musk’s will certainly put on the best case they can.
So is Musk going to be forced to go through with the deal for a company he doesn’t want? It’s not so simple.
- The breakup fee for the deal is $1 billion, so imagine that as the floor for negotiations, with or without eventual damages.
- The problem for Twitter is it doesn’t want to be ruled over by a hostile owner. But it can’t just accept what will happen to its stock if Musk, who thought the company was worth more than the market realized, can walk away because he got bored and/or nervous.
No one really knows how, when or how stupidly this ridiculous-from-the-start farce will end. Soon enough, though, we’ll at least get a sense of how it’s supposed to go, and that’s more or less what counts for fun in the policy world.— Ben Brody (email | twitter)
Republican Sen. John Cornyn seems to be back on board with a standalone $52 billion chips subsidy bill, clearing the way for a preliminary vote early this week (assuming no more twists in this ever-twisty saga). Cornyn’s move came after Democratic Sen. Joe Manchin again delayed (and in the process likely nuked) his party’s hopes for a climate package that Cornyn had said would stop him from supporting the semiconductor money.
FCC Chair Jessica Rosenworcel wants to boost broadband speed requirements. On Friday, she published a proposal to up minimum downloads speeds from 25Mbps to 100Mbps. That increase would make it more difficult for broadband providers to receive a passing grade from the agency as they work toward deployment goals, but it likely will need the stalled confirmation of a third Democratic commissioner to move forward.
A group of Democrats in Congress urged the EPA to require crypto miners to report emissions and energy use. On Friday, the group — which included Sens. Elizabeth Warren and Ed Markey — shared data from a Congressional investigation that found that seven of the largest mining operations used almost as much electricity as all of residential Houston. The investigation also concluded that more than a third of global mining occurs in the U.S.
Speaking of the FCC, the net neutrality debates are back … and going nowhere fast. Markey and fellow Democrat Ron Wyden plan to introduce the Net Neutrality and Broadband Justice Act, which would revive net neutrality and limit the authority of the FCC over key issues such as internet pricing and privacy. But the bill isn’t likely to be high on the priority list for Congress, and with midterms coming up and Republicans poised to take back at least the House, it isn’t likely to go far.
DHS buys extensive location data from data brokers and kept doing so even when its top privacy official tried to stop the practice, according to documents released by the ACLU from its litigation against the department. While the existence of the contracts has long been known, the documents reveal more about the extent of the data practices, which includes a period in 2018 when CBP got data that had been collected every few seconds.
Three privacy and civil rights groups released a new analysis insisting protections in the draft congressional data bill are as good or better than California’s, according to the Washington Post. It’s a rebuke to those from the state who say the draft lowers the national standard and imperils their own rules. It also seems to be a nudge to Democratic Sen. Maria Cantwell, who has refused to give her blessing to the measure over similar concerns, even as the clock ticks on this Congress and a Republican takeover looks more and more likely.
Consumer Reports, meanwhile, is out with suggested tweaks to the bill. The group was not part of the comparison to California, but in its letter, CR backed bipartisan negotiations and called the protections “desperately needed.” At the same time, it suggested fixes to make the bill cover more advertising, take a stronger line on de-identified data and redo the preemption of state laws.
In the states
San Francisco Mayor London Breed said the city needs to adapt to remote work. “Most employees want some level of work-from-home,” Breed said in a CNBC interview last week. Breed proposed a $14 billion annual budget for the city next year, even as the remote work shift contributed to a $400 million decline in tax revenue last year.
A MESSAGE FROM ALIBABA
Alibaba — a leading global ecommerce company — is a particularly powerful engine in helping American businesses of every size sell goods to more than 1 billion consumers on its digital marketplaces in China. In 2020, U.S. companies completed more than $54 billion of sales to consumers in China through Alibaba’s online platforms.
Around the world
A U.K. court halted an order for Meta to sell Giphy. The decision found problems with the review by the Competition and Markets Authority, which was completed last year. Tech antitrust reformers the world over had seen the CMA’s ruling as uniquely tough and savvy about digital markets. The CMA said it would try to get through its renewed probe in three months.
The Netherlands central bank fined Binance $3.4 million for operating without authorization. The company said it will pursue a license as part of a “long-awaited pivot in our ongoing collaboration with” the regulator.
Coinbase won regulatory approval to operate in Italy. The EU passed a new set of crypto regulations this month that require companies to obtain a national license before operating in member nations.In yet another final-ish step toward the DMA competition rules going into effect in the EU, the European Council signed off on the current version. There are still other signatures needed, plus publication of the final version, then six more months before the regulations goes into effect.
7.8%: It’s not just you: Airports this summer are even more hellish than usual. Between June 1 and July 12 of this year, 7.8% of flights coming out of Newark Liberty airport were canceled, compared to just 4.5% in that same period three years prior. The cancellation nightmare tells a bigger picture of our economic quandary, with demand returning to normal while labor supply lags behind.
A MESSAGE FROM ALIBABA
Using economic multipliers published by the U.S. Bureau of Economic Analysis, NDP estimates that the ripple effect of this Alibaba-fueled consumption in 2020 supported more than 256,000 U.S. jobs and $21 billion in wages. These American sales to Chinese consumers also added $39 billion to U.S. GDP.
There's help if you need it
The national 988 hotline for those experiencing suicidal thoughts and other mental health emergencies rolled out this weekend. The old suicide prevention line, 800-273-8255, will still operate, but the three-digit number is meant to be easier to remember for those in crisis. The federal government has provided $280 million for states to set up systems that will eventually connect callers with mental health resources, not just the police and fire that mostly respond to 911 calls.
Thanks for reading — see you Wednesday!