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Business

Elon Musk Buys Twitter, Immediately Fires CEO and CFO

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Elon Musk

fired several Twitter Inc. executives after completing his takeover of the company, according to people familiar with the matter, capping an unusual corporate battle and setting up one of the world’s most influential social-media platforms for potentially broad change.

Mr. Musk fired Chief Executive Parag Agrawal and Chief Financial Officer Ned Segal after the deal closed, the people said. Mr. Musk also fired Vijaya Gadde, Twitter’s top legal and policy executive, and Sean Edgett, general counsel. Spokespeople for Twitter didn’t comment.

Ask WSJ

The Musk-Twitter Deal

WSJ Financial Editor Charles Forelle sits down with Alexa Corse, WSJ reporter covering Twitter, at 1 p.m. ET Oct. 28 to discuss Elon Musk’s takeover of Twitter. What does the future hold for the platform? And what does this deal mean for Mr. Musk’s business empire?

Hours after those actions, Mr. Musk tweeted: “the bird is freed” in a seeming reference to Twitter, which has a blue bird as its logo.

Mr. Musk first agreed to buy Twitter in April for $44 billion, then threatened to walk away from the deal, before reversing course this month and committing to see through the acquisition. He previously indicated unhappiness with some of the top ranks at Twitter, at one point responding to a tweet from Mr. Agrawal with a poop emoji. He also used the site to mock Ms. Gadde, the top legal boss, tweeting an image overlaid with text that repeated allegations Twitter had a left-wing political bias.

It wasn’t immediately clear who would step into the top positions left vacant by Thursday’s exits. CNBC earlier reported the departures of Mr. Agrawal and Mr. Segal.

The deal, in which Twitter will again become a private company, adds to Mr. Musk’s expansive business reach, which includes running

Tesla Inc.,

the world’s most-valuable car company, and rocket company Space Exploration Technologies Corp., or SpaceX, among other endeavors. Mr. Musk, who had become Twitter’s largest individual shareholder, previously said he would pay for the acquisition mostly with cash, some contributed by co-investors, and $13 billion in debt.

There were signs this week indicating that Mr. Musk was moving closer to acquiring the social-media platform by Friday’s 5 p.m. deadline. Banks started sending money backing the deal, The Wall Street Journal reported. Mr. Musk also has changed his Twitter bio to “Chief Twit,” showed himself walking into the San Francisco headquarters of the social-media platform, and issued a statement on Twitter explaining his vision for the site to advertisers.

Closing the deal ends a monthslong saga of whether Mr. Musk would or wouldn’t purchase the company. The acquisition also puts one of the world’s most prominent social-media platforms under the control of the world’s richest person, with implications for the future of online discourse.

A self-described free-speech absolutist, Mr. Musk has pledged to limit content moderation in favor of emphasizing free speech. However, that approach risks causing conflicts with some advertisers, politicians and users who would prefer a more-moderated platform.

Elon Musk completed the deal for Twitter a day before a court-imposed deadline.



Photo:

Carina Johansen/NTB/Agence France-Presse/Getty Images

In a message to advertisers on Twitter on Thursday, Mr. Musk said he was buying the company to “have a common digital town square, where a wide range of beliefs can be debated in a healthy manner.” He said Twitter “cannot become a free-for-all hellscape, where anything can be said with no consequences!”

Mr. Musk said the platform must be “warm and welcoming to all” and suggested Twitter could let people “choose your desired experience according to your preferences, just as you can choose, for example, to see movies or play videogames ranging from all ages to mature.”

Mr. Musk’s decision to go through with the Twitter takeover came two weeks before a trial in Delaware was set to begin over the stalled deal. The judge presiding over the legal clash agreed to pause the litigation, granting a request by Mr. Musk for more time to complete the takeover. The judge gave Mr. Musk until Oct. 28 to follow through with his offer, or said she would schedule a November trial.

Mr. Musk offered in April to buy Twitter for $54.20 a share—higher than the company was valued at the time. In the months since the deal was struck, Twitter has faced efforts by Mr. Musk to abandon the deal, a whistleblower complaint in which Twitter’s former head of security accused the company of security and privacy problems, and unsuccessful talks to negotiate a lower price with Mr. Musk.

The New York Stock Exchange has suspended Twitter shares from trading, starting Friday. The stock closed Thursday at $53.70.

Mr. Musk’s takeover leaves big questions over the future of the platform, including how he might revamp its business model and how he might implement changes he has proposed for the way it polices content.

Like other social-media companies, Twitter heavily relies on digital advertising and has faced headwinds in recent months due to broad economic uncertainty. It will also be saddled with billions in debt as a result of the deal, and payments on those loans will add costs for a company that has posted a loss in eight of its past 10 fiscal years.

Twitter will be saddled with billions of dollars in debt as a result of the deal.



Photo:

Godofredo A. Vásquez/Associated Press

The deal turned into a wild business drama with little precedent. Mr. Musk moved to buy Twitter in April. After signing a merger agreement, however, he accused the company of misrepresenting the prevalence of fake and spam accounts on its platform, which Twitter denied.

He formally tried to abandon the deal in July, prompting Twitter to sue him to enforce the original merger agreement. Mr. Musk countersued.

In early October, Mr. Musk suddenly abandoned his legal battle with Twitter, with little public explanation. After his reversal, he tweeted that “Buying Twitter is an accelerant to creating X, the everything app.” He previously suggested he could create a social-media platform named X.com if he didn’t buy Twitter.

Eric Talley, a law professor at Columbia University, said after the most recent about-face that several factors were piling up against Mr. Musk, including rulings from the court denying some of Mr. Musk’s discovery requests. Chancellor Kathaleen McCormick, who was overseeing the case in Delaware, had called some of his data requests “absurdly broad.”

“He has spent months with various attempts to figure out ways out of this deal,” Mr. Talley said. “All those windows had started to close and some of them closed completely.”

Vijaya Gadde, Twitter’s top legal executive, whom Elon Musk mocked on the site, is among the ousted executives.



Photo:

Martina Albertazzi/Bloomberg News

Mr. Musk’s specific plans for the company remain unclear. He could return Twitter to public ownership after just a few years, the Journal previously reported.

By taking Twitter private, the billionaire entrepreneur likely can take more risks to jump-start the company’s business. “It’s going to be bumpy,” said Youssef Squali, lead internet analyst at Truist Securities. “He can take it away for a couple of years, really kind of re-engineer the whole thing,” Mr. Squali said.

Mr. Musk has suggested he wants to shift Twitter away from its advertising-heavy business model to other forms of revenue, including a greater emphasis on subscriptions. Advertising accounted for more than 90% of Twitter’s revenue in the second quarter of this year.

He said he would allow former President Donald Trump back on the platform, though Mr. Trump has said he doesn’t intend to return to it. Twitter banned Mr. Trump in the wake of the Jan. 6, 2021, attack on the U.S. Capitol, citing what the company called the risk of further incitement of violence.

“Twitter is obviously not going to be turned into some right wing nuthouse. Aiming to be as broadly inclusive as possible,” Mr. Musk said in a message that was among a trove released as part of the legal battle.

The prospect of Mr. Musk taking over Twitter, as well as the subsequent uncertainty over the deal, roiled many Twitter employees. Twitter has told employees that they will hear from Mr. Musk on Friday, according to an internal note reviewed by the Journal.

—Erin Mulvaney contributed to this article.

Write to Alexa Corse at alexa.corse@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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Business

Elon Musk Says Twitter Won’t Be ‘Free-for-All Hellscape,’ Addressing Advertisers’ Concerns

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Advertisers are concerned about the billionaire’s plans to soften content moderation and what they say are potential conflicts of interest in auto advertising, given that he is chief executive of

Tesla Inc.,

say people familiar with the situation.

Mr. Musk said this spring that as owner of Twitter he would reinstate former President

Donald Trump’s

account, which the platform suspended indefinitely after linking Mr. Trump’s comments to the Jan. 6 Capitol riot. That would be a red line for some brands, said Kieley Taylor, global head of partnerships at GroupM, a leading ad-buying agency that represents blue-chip brands.

About a dozen of GroupM’s clients, which own an array of well-known consumer brands, have told the agency to pause all their ads on Twitter if Mr. Trump’s account is reinstated, Ms. Taylor said. Others are in wait-and-see mode. Ms. Taylor said she expects to hear from many more clients if Mr. Trump’s account returns.

“That doesn’t mean that we won’t be entertaining lots of emails and phone calls as soon as a transaction goes through,” Ms. Taylor said. “I anticipate we’ll be busy.”

In a message to advertisers on Twitter on Thursday, Mr. Musk said he was buying the company to “have a common digital town square, where a wide range of beliefs can be debated in a healthy manner.” He said Twitter “cannot become a free-for-all hellscape, where anything can be said with no consequences!” Mr. Musk said in addition to following laws, Twitter must be “warm and welcoming to all.”

He said Twitter aims to be a platform that “strengthens your brand and grows your enterprise.”

Twitter’s chief customer officer, Sarah Personette, tweeted that she had a discussion with Mr. Musk on Wednesday evening. “Our continued commitment to brand safety for advertisers remains unchanged,” she wrote. “Looking forward to the future!”

Mr. Trump has said he wouldn’t rejoin Twitter even if allowed. Representatives for Tesla and Mr. Trump didn’t respond to a request for comment.

Mr. Musk has completed the acquisition of Twitter, according to people familiar with the matter, after a monthslong legal battle in which he tried to back out of the $44 billion deal he agreed to in April. The judge overseeing the legal fight had said if the deal didn’t close by Friday she would schedule a November trial.

Twitter sent an email to some ad buyers earlier this week letting them know that the company is working with “the buyer” to close the acquisition by Friday and to acknowledge that Twitter is aware that advertisers have a lot of questions, according to the email, which was reviewed by The Wall Street Journal. The email, which didn’t name Mr. Musk, said Twitter would work “with the potential buyer to answer quickly.”

Advertising provided 89% of Twitter’s $5.08 billion revenue in 2021. Mr. Musk has said he hates advertising. In a series of tweets earlier this year, he suggested Twitter should move toward subscriptions and remove ads from Twitter Blue, a premium program that gives users additional features. 

Twitter will become a private company if Elon Musk’s $44 billion takeover bid is approved. The move would allow Musk to make changes to the site. WSJ’s Dan Gallagher explains Musk’s proposed changes and the challenges he might face enacting them. Illustration: Jordan Kranse

Mr. Musk describes himself as a “free speech absolutist” and has said Twitter should be more cautious about removing tweets or banning users.

Mr. Musk may have reasons to avoid any drastic changes to Twitter’s ad business. Twitter will take on $13 billion in debt in the deal. The online-ad markets already are shaky, amid concerns about the economy, with

Snap Inc.

and

Alphabet Inc.

posting lower-than-expected revenue results for the September quarter.

Like other ad-supported social-media platforms, Twitter provides advertisers with adjacency controls, tools that are meant to ensure ads don’t appear next to certain content the brands deem objectionable.

Ask WSJ

The Musk-Twitter Deal

WSJ Financial Editor Charles Forelle sits down with Alexa Corse, WSJ reporter covering Twitter, at 1 p.m. ET Oct. 28 to discuss Elon Musk’s takeover of Twitter. What does the future hold for the platform? And what does this deal mean for Mr. Musk’s business empire?

Some ad buyers said Twitter lags behind its competitors in providing so-called brand safety features. Joshua Lowcock, global chief media officer at UM Worldwide, an ad agency owned by Interpublic Group of Cos., called Twitter’s adjacency controls inadequate and “poorly thought through.”

Ad agency

Omnicom Media Group

evaluates the major social-media platforms’ progress on brand-safety tools every quarter. In July, Omnicom rated Twitter’s progress behind that of YouTube,

Facebook,

Instagram, TikTok and Reddit, according to a document reviewed by the Journal. Robert Pearsall, managing director of social activation at Omnicom Media Group, said Twitter has made agreements to improve its brand-safety controls to meet Omnicom’s standards, but it hasn’t introduced those changes to the market yet.

“There are significant concerns about the implications of a possible change to content moderation policy,” he said. Twitter has said it is working on tools to give advertisers a better idea of where their ads appear.

Advertising provided 89% of Twitter’s $5.08 billion revenue last year.



Photo:

Justin Sullivan/Getty Images

Automotive manufacturers have expressed concerns about advertising on Twitter under Mr. Musk’s ownership, given his role at electric-vehicle juggernaut Tesla, some ad buyers said. Advertisers often share data with Twitter and other platforms—on their own customers or people that are in the market for a car—to help target their ads at the right people. Some auto companies will be wary of doing so, out of concern that data may leak to Tesla, the buyers said.

Though Twitter relies on ad dollars, it isn’t one of the biggest players in the digital-ad economy. The company gets about 1.1% of U.S. digital-ad spending, according to Insider Intelligence, a much smaller slice than Google, Meta Platforms Inc. or

Amazon.com Inc.

Already, there have been signs of anxiety on Madison Avenue about Mr. Musk’s takeover of Twitter. In July, the company reported a 1% decrease in second-quarter revenue, which it blamed on uncertainty over the deal as well as broader pressures in the digital ad market.

Given Mr. Musk’s past remarks on advertising, some advertisers wonder if Mr. Musk may exit the ad business entirely.

“The question we keep getting asked is: Do we think Musk will turn off ads completely?” said UM Worldwide’s Mr. Lowcock.

Write to Patience Haggin at patience.haggin@wsj.com and Suzanne Vranica at suzanne.vranica@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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Business

Elon Musk’s Twitter Reversal Revives Takeover Bid for a Now-Weaker Firm

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Elon Musk’s

latest about-face over his $44 billion deal to buy

Twitter Inc.

TWTR -1.35%

has him poised to take over a company that is weaker than it was before he tried to abandon the agreement—thanks in part to his own actions.

Broad economic concerns have intensified since July 8, when Mr. Musk made public his intention to terminate the deal. The Federal Reserve has raised interest rates by 0.75 percentage point at a second and third straight meeting, the Dow Jones Industrial Average last week fell into what investors call a bear market, and Twitter’s social-media rival

Snap Inc.

is slashing jobs.

While Twitter’s stock price has held up because of Mr. Musk’s potential acquisition, its performance has declined. The company reported a surprising decline in revenue in the second quarter that it blamed on weakness in the advertising industry and uncertainty related to Mr. Musk’s acquisition.

Twitter this year is expected by analysts to report one of its slowest annual rates of sales growth ever as a public company, at 4.5%. In 2021, revenue rose 37%.

Mr. Musk has given few specific details about his plans for Twitter, but the billionaire chief executive of

Tesla Inc.

has said he wants to transform Twitter as a private company and unlock what he called its extraordinary potential as a platform for free speech.

He has talked about modifying Twitter’s rules around content moderation, reducing its reliance on advertising—which provided more than 90% of its revenue in this year’s second quarter—and making Twitter’s algorithms open source, which would allow others to view and recommend changes. Mr. Musk also has proposed “defeating the spam bots and authenticating all humans.”

In texts released last week as part of the litigation between Twitter and Mr. Musk over his effort to abandon the deal, Mr. Musk said in April that his biggest concerns were Twitter’s head count and expense growth. He also said he wanted to oversee software development at Twitter and works better with engineers than people with business degrees.

Twitter will become a private company if Elon Musk’s $44 billion takeover bid is approved. The move would allow Mr. Musk to make changes to the site. WSJ’s Dan Gallagher explains Mr. Musk’s proposed changes and the challenges he might face enacting them. Illustration: Jordan Kranse

There are no guarantees that Mr. Musk will follow through with his proposal and close the transaction. Mr. Musk and Twitter are scheduled to go to trial Oct. 17 in Delaware over his effort to abandon the deal, and that could still go forward.

On Wednesday, the Delaware Chancery Court judge presiding over the legal battle said she is pressing ahead with preparing for the trial and issued a ruling that asked Mr. Musk’s legal team to produce more of his text messages to the extent they haven’t done so already.

Should a deal occur and avert a trial, the resolution could ease some of the uncertainty surrounding the company’s future.

“Assuming the deal closes, it’s a good price for shareholders,” said Jason Goldman, former Twitter product chief and board member. “But it’s a bad outcome for everyone else,” including employees who have labored under the uncertainty and users who rely on the product, he said. Mr. Goldman said he didn’t think Mr. Musk has presented serious ideas about how he would lead such an influential platform.

Mr. Musk has proven doubters wrong before in becoming the world’s wealthiest person. He has turned Tesla into the world’s most valuable car company and a leader in electric vehicles, and his SpaceX company is the world’s busiest rocket-launch operation.

Mr. Musk’s legal team declined to comment Tuesday about his proposal. Twitter on Tuesday confirmed receipt of Mr. Musk’s letter and said it intends to close the transaction at the original price of $54.20 a share.

The outlook for the social-media industry has darkened in recent weeks.

Snap Inc.

in August said it was slashing one-fifth of its workforce and curbing investment in a range of areas after a slowdown in its business. Facebook parent

Meta Platforms Inc.

last week told employees it was implementing a hiring freeze and looking for other ways to cut costs.

In July, Twitter said in a regulatory filing that attrition was slightly higher than in normal economic times, but remained in line with current industry trends. Twitter said Tuesday that it had anticipated higher attrition this year even before the merger agreement.

In addition, Twitter’s former head of security,

Peiter Zatko,

emerged in August with a whistleblower complaint listing a litany of criticisms about the company’s management of security and privacy issues. That complaint prompted new scrutiny from Washington lawmakers. Twitter CEO

Parag Agrawal

told employees in a memo at the time that the spotlight on Twitter would “only make our work harder.” Twitter also said that Mr. Zatko’s claims were inaccurate.

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Despite the industry’s challenges, Twitter said in July that its audience has grown, reporting a second-quarter average of 237.8 million monetizable daily active users, up 17% from the same period a year earlier. Advertising revenue increased 2% in the second quarter compared with the year-earlier period.

Mr. Musk, when he met with Twitter employees in June, was asked about what he would consider successful for Twitter five to 10 years from now, and said a substantial increase in daily active users to over a billion, according to people familiar with the meeting. He also said during the meeting that Twitter should be entertaining, like TikTok, and that he admired the Chinese app

WeChat,

which is used heavily in China for a range of purposes including e-commerce and social networking.

Asked about his stance on free speech, Mr. Musk drew a distinction between freedom of speech and freedom of reach, according to attendees. He said that meant people should be allowed to say pretty outrageous things within the law but didn’t necessarily deserve to have their tweets amplified and spread virally across Twitter.

In the texts released last week, Mr. Musk said in April, “Twitter is obviously not going to be turned into some right wing nuthouse. Aiming to be as broadly inclusive as possible.”

Accomplishing that balance will be a challenge, content-moderation analysts said Tuesday.

“Elon Musk and his new leadership are about to get a crash course in the complexities of moderating harmful content,” said Eddie Perez, a former Twitter employee who worked on civic integrity and misleading information and is a board member at the OSET Institute, a nonpartisan election-technology group.

Write to Alexa Corse at alexa.corse@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Elon Musk Texted Twitter CEO About Lawyers Before Deal Pull-Out: Report

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Twitter sued Musk after he decided to back out of the $44 billion takeover deal. (File)

Washington:

The dispute between Tesla CEO Elon Musk and Twitter is taking many twists and turns.

As per new reports, Elon Musk recently, but before pulling out of the deal, sent a text to Twitter CEO Parag Agrawal on June 28, informing him that the company’s lawyers were trying to “cause trouble” after they sought information on the financial details that Musk was planning to complete the acquisition of Twitter.

“Your lawyers are using these conversations to cause trouble. That needs to stop,” Musk’s text reportedly read. Musk sent the particular message after Twitter asked Musk how he would finance the Twitter deal.

A few days ago, Twitter sued Musk after he decided to back out of the $44 billion takeover deal.

As per The Verge, the lawsuit was filed in Delaware’s Court of Chancery on Tuesday, accusing Musk of hypocrisy.”Twitter brings this action to enjoin Musk from further breaches to compel Musk to fulfil his legal obligations and to compel consummation of the merger upon satisfaction of the few outstanding conditions,” Twitter wrote in the lawsuit. The lawsuit marks the beginning of what could be a protracted legal battle as Twitter seeks to hold Musk to his deal to pay USD 54.20 per share for the company. Twitter, which is being repped by M&A powerhouse law firm Wachtell, Lipton, Rosen & Katz, alleged that Musk looked for an escape from the deal, which required a “material adverse effect” or breach of contract.”

Musk had to try to conjure one of those,” the lawsuit stated. Musk announced the termination of the Twitter purchase deal in a letter sent by Musk’s team to Twitter earlier this month.

Musk decided to suspend the deal due to multiple breaches of the purchase agreement. In April, Musk reached an acquisition agreement with Twitter at USD 54.20 per share in a transaction valued at approximately USD 44 billion. However, Musk put the deal on hold in May to allow his team to review the veracity of Twitter’s claim that less than 5 per cent of accounts on the platform are bots or spam.

Back in June, Musk had openly accused the microblogging website of breaching the merger agreement and threatened to walk away and call off the acquisition of the social media company for not providing the data he has requested on spam and fake accounts. Musk alleged that Twitter is “actively resisting and thwarting his information rights” as outlined by the deal, CNN reported, citing the letter he sent to Twitter’s head of legal, policy and trust, Vijaya Gadde.

Musk demanded that Twitter turn over information about its testing methodologies to support its claims that bots and fake accounts constitute less than 5 per cent of the platform’s active user base, a figure the company has consistently stated for years in boilerplate public disclosures.

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Business

Elon Musk Files to Kill Twitter Deal, Twitter Will Sue

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Image: Chris DELMAS / AFP (Getty Images)

On Friday evening, Tesla CEO Elon Musk finally made it crystal clear that he has no interest in adding “owner of Twitter” to his list of titles. The move was months in the making. Twitter is planning to sue in response.

In a letter to Twitter’s Chief Legal Officer Vijaya Gadde filed with the Securities and Exchange Commission, Musk notified the social media company that he would terminate the $44 billion acquisition deal he made in late April. However, it is not yet clear whether Musk can unilaterally end the agreement.

Musk has fixated on the number of spam accounts on the social network. Citing their proliferation of automated bots, he first claimed Twitter was in breach of its merger agreement in early June. Musk’s lawyers argue that the billionaire is backing out of the agreement because “Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect.”

Twitter plans to sue Musk in response. Twitter CEO Parag Agrawal retweeted the company’s board chairman Bret Taylor’s promise of legal action minutes after the news broke in defiance of the Tesla CEO.

“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery,” Taylor wrote.

In an email to staff on Friday obtained by the Verge, Sean Edgett, Twitter’s general counsel, told folks not to share any commentary on the merger on Twitter or Slack.

“Given that this is an ongoing legal matter, you should refrain from Tweeting, Slacking, or sharing any commentary about the merger agreement. We will continue to share information when we are able, but please know we are going to be very limited on what we can share in the meantime,” Edgett wrote. “I know this is an uncertain time, and we appreciate your patience and ongoing commitment to the important work we have underway.”

Jesse Fried, a Harvard Law School professor, told Gizmodo in an email on Friday that Musk could not “simply walk away from the deal” and is probably trying to lower the price of the acquisition.

“He is bound to buy Twitter if he has adequate financing, as it seems he does. There are narrow outs,” Fried said. “Given the contract and Twitter’s post-signing conduct, Musk is highly unlikely to get a Delaware court to give him a ‘get-out-of-merger free card.’ He has presumably been told that by his lawyers.”

The news that Musk is backing out of the acquisition agreement follows months of public buyer’s remorse expressed on Twitter itself. The company says automated bots and spam accounts make up just 5% of the social network’s users, a figure Musk believed was much higher. He requested and received more data on Twitter’s user base but ultimately said the information provided was insufficient.

On Thursday, the Washington Post reported that the billionaire’s deal to acquire Twitter was in “serious jeopardy” and that Musk had stopped engaging in funding discussions. The outlet cited doubts from Musk’s team over the data provided on the number of fake accounts and spam bots provided to it by Twitter.

The back-and-forth with Musk has had detrimental effects on Twitter. The stock price of the company had fallen to $36.10 as of Friday, well below the $54.20 he offered. The company laid off members of its recruiting team on Friday as well, though layoffs have struck the tech industry writ large as the stock market has tumbled in recent months. Musk cited the layoffs in his deal termination letter as well as several high-profile resignations. In June, amid a flurry of Musk mayhem, Twitter said it was still committed to closing the deal and hinted that it was unafraid to take legal action. When asked about the Post’s report early today, Twitter reiterated its June response: “We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement.”

Musk, Twitter’s largest shareholder, has behaved like Twitter’s owner for weeks now: He’s taken questions from Twitter employees in a town hall, given them product advice (make Twitter more like TikTok).

Fried said it’s all probably just a game to Musk.

“Litigation will be costly for Twitter, and it may agree to lower the price to settle the litigation. This is probably Musk’s game plan here,” the professor said.

Musk’s lawyers delved into further detail of Twitter’s perceived slights and contract violations, the majority of which centered on the blue bird company apparently declining to provide or providing incomplete information to the billionaire.

The billionaire’s accusations are as follows:

Spam and Fake Accounts

As is to be expected, Musk complained about a lack of information from Twitter related to Twitter’s spam and fake accounts. His lawyers state that the social media company did not provide the following:

“(1) daily global mDAU data since October 1, 2020; (2) information regarding the sampling population for mDAU, including whether the mDAU population used for auditing spam and false accounts is the same mDAU population used for quarterly reporting; (3) outputs of each step of the sampling process for each day during the weeks of January 30, 2022 and June 19, 2022; (4) documentation or other guidance provided to contractor agents used for auditing mDAU samples; (5) information regarding the user interface of Twitter’s ADAP tool and any internal tools used by the contractor agents; and (6) mDAU audit sampling information, including anonymized information identifying the contractor agents and Quality Analyst that reviewed each sampled account, the designation given by each contractor agent and Quality Analyst, and the current status of any accounts labelled “compromised.”

The billionaire said he did not receive data on the methodology Twitter uses to suspend spam and fake accounts.

According to the letter, Musk apparently wanted “access to the sample set used and calculations performed” to determine that less than 5% of Twitter’s mDAUs are fake or spam accounts, which is what the company claims. The request included the daily measures of mDAUs for the past eight quarters. The letter states that the social media company has provided “certain summary data” regarding its mDAU calculations, but not the complete daily measures. In addition, Musk requested materials provided to Twitter’s board about mDAUs’ calculations. Again, he claims he received incomplete information.

“Preliminary analysis by Mr. Musk’s advisors of the information provided by Twitter to date causes Mr. Musk to strongly believe that the proportion of false and spam accounts included in the reported mDAU count is wildly higher than 5%,” the letter states.

Materials Related to Twitter’s Financial Condition

Furthermore, the billionaire’s lawyers claim that he is entitled to certain financial data related to Twitter, including information that aims to help him secure financing for the deal. Musk purported asked for a Twitter’s financial model and budget for 2022, an updated draft plan or budget, and a “working copy” of the Goldman Sachs’ valuation model. He reportedly has only received a PDF copy of Goldman Sachs’ final board presentation.

Access to APIs and Query Restriction

When Musk was provided with information, his lawyers claim it came “with strings attached.” For instance, they claim that Musk was initially not given the same access given to customers to eight Twitter developer APIs. This was only remedied after explaining the lack of access to the company.

Nonetheless, the APIs reportedly contain a “query cap” that prevents Musk and his team from carrying out their desired analyses of the data. The cap was only removed after Musk complained about it twice.

Twitter Fired Two High-Level Execs, Laid Off People, and Froze Hiring

Finally, Musk’s lawyers state that Twitter was obliged to “preserve substantially intact the material components of its current business organization,” something they claim it did not do. The violations in this area began when the blue bird app fired Kayvon Beykpour and Bruce Falck, its general manager of product and general manager of revenue, respectively, in May.

The letter also cites Twitter laying off 30% of its talent acquisition team this past Thursday and its hiring freeze. As if that wasn’t enough, Musk is also purportedly mad that Twitter didn’t stop its head of data science; the vice president of Twitter service; and a vice president of product management for health, conversation, and growth from leaving.

“The Company has not received Parent’s consent for changes in the conduct of its business,” Musk’s lawyers wrote.

Update 7/9/2022, 6:26 a.m. ET: This post has been updated with information about Edgett’s email to staff.

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Business

Elon Musk Says Twitter Deal At Lower Price “Not Out of the Question”

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Elon Musk last week said his bid to buy Twitter was “temporarily on hold”

Miami:

Elon Musk stoked speculation that he could seek to renegotiate his takeover of Twitter Inc., saying a viable deal at a lower price wouldn’t be “out of the question.”

Twitter shares fell 8.2 per cent at the close of trading in New York. The stock has been dropping on speculation that Musk could walk away from the $44 billion acquisition. That concern has grown in the past week as Musk has questioned Twitter’s publicly disclosed data on the percentage of spam and fake accounts on its social media service.

Musk pressed further on that front Monday at a Miami tech conference, estimating that fake users make up at least 20 per cent of all Twitter accounts. That was the low end of his estimate on the number of bots on the network, and he asked rhetorically if it could be as high as 90%, according to a livestreamed video of his remarks posted by a Twitter user.

“Currently what I’m being told is that there’s just no way to know the number of bots,” Musk said at the conference. “It’s like, as unknowable as the human soul.”

Twitter declined to comment. The San Francisco-based company reports quarterly that spam accounts make up less than 5 per cent of total users.

Musk, chief executive officer of Tesla Inc. and SpaceX, last week said his bid to buy Twitter was “temporarily on hold” pending details about how many spam and fake accounts are on the platform. Over the weekend, he tweeted that he planned to do his own analysis of Twitter’s user base by using a random sample of 100 user accounts. Shortly after, Musk claimed that Twitter’s legal team called to complain that he had violated their non-disclosure agreement by publicly sharing the company’s methodology.

Twitter CEO Parag Agrawal disputed that on Monday in a tweet thread that offered more details on the company’s approach to spam accounts. Agrawal said Twitter manually checks thousands of accounts every quarter to determine how many should be counted as spam, but added that the process could not be conducted externally because of user privacy concerns.

Agrawal said Twitter “shared an overview of the estimation process with Elon a week ago.” Musk replied to the CEO’s tweet thread by first asking why Twitter doesn’t just call users to verify their identity — and then by posting a poop emoji.

Musk spoke at a conference hosted by a podcast called “All-In” run by Chamath Palihapitiya, Jason Calacanis, David Sacks and David Friedberg. The $7,500-per-person event was sold out, and organizers said journalists were excluded from attending. Musk appeared at the Miami summit via videoconference.

The 50-year-old billionaire began buying Twitter shares in January and disclosed a 9.2 per cent stake in the company on April 4. Twitter’s board accepted Musk’s $44 billion bid to buy the company and take it private on April 25, but the deal is months away from closing, and Twitter’s shares are trading far below the offer price.

The spread between Musk’s $54.20-a-share bid and Twitter’s share price continues to widen, wiping out all the gains the stock had made since Elon Musk disclosed his stake in the social media platform.

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Elon Musk Says His $44 Billion Twitter Deal Is ‘On Hold’

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Elon Musk

said his planned acquisition of

Twitter Inc.

TWTR -9.67%

was “temporarily on hold” because of concerns about fake accounts, a surprise twist that jolted investors and raised questions about his willingness to go through with the $44 billion transaction.

Mr. Musk’s grenade came in a tweet posted at 5:44 a.m. Eastern Time that was followed just over two hours later by another saying he was “still committed to acquisition.” Lawyers close to Mr. Musk urged him to send that follow-up tweet, according to people familiar with the matter.

The initial announcement was unorthodox not just in its timing and format, but because Mr. Musk referenced a recent Twitter disclosure about fake and spam accounts that it has made consistently for years—and because Mr. Musk has already signed an agreement for the purchase and waived detailed due diligence on the deal.

The sudden shake-up fueled questions about whether Mr. Musk is committed to a deal that was struck amid a sharp decline in technology stocks that has made Twitter less valuable on paper than it was a month ago when he made his offer of $54.20 a share. Twitter shares, which were already trading well below that level, closed down 9.7% in afternoon trading at $40.70.

People in Twitter’s camp said Mr. Musk’s first tweet was a surprise and that he hadn’t reached out to the company ahead of time. But they played down its significance and said the second tweet, indicating that the deal is still on, is the one that matters. The company continues working to complete the acquisition and is supplying Mr. Musk with all the relevant information under the terms of the contract, according to a person familiar with Twitter’s response.

Twitter CEO

Parag Agrawal

on Friday said “while I expect the deal to close, we need to be prepared for all scenarios,” a day after he internally announced a hiring freeze and cost cuts.

Mr. Musk was aware of questions about fake and spam accounts on Twitter when he agreed to the acquisition—he has raised concerns about it in his own tweets for years. In Friday’s post on his verified Twitter account, he said: “Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.”

He linked to a May 2 report about a Twitter securities filing that said it estimates that false or spam accounts represented fewer than 5% of its daily active users. The company has reported the same figure in its annual reports since it went public in 2013.

It couldn’t be determined if the latest tweets were a negotiating tactic to abandon the transaction or reprice the deal.

The tweets come as many big tech stocks have been falling on Wall Street, including shares of Tesla, which retreated 29% since Mr. Musk’s investment in Twitter became public. Mr. Musk is using his Tesla holdings to help fund the Twitter deal. Meanwhile, Twitter’s stock price had traded below Mr. Musk’s offer price as investors wondered if the deal might get reworked or not get done.

Susannah Streeter,

an investment analyst at

Hargreaves Lansdown,

said there will be skepticism whether the fake accounts are the real reason for the delaying tactic. “The $44 billion price tag is huge, and it may be a strategy to row back on the amount he is prepared to pay to acquire the platform,” she said.

After Hindenburg Research LLC, an activist short seller, this week called the Twitter deal overpriced and said that there is “significant risk” it could get repriced lower, Mr. Musk tweeted in response: “Interesting. Don’t forget to look on the bright side of life sometimes!”

If the deal does fall apart, Mr. Musk could owe Twitter $1 billion depending on the reason for the breakup. The size of the breakup fees, at just over 2% of the deal value, is about average for similar transactions. Also called termination fees, the penalties are meant to deter parties from breaking agreements and address the expense and inconvenience of a failed deal.

Because Mr. Musk waived doing detailed due diligence on the deal, it could make it more difficult for him to back out over something like a discrepancy in the number of spam accounts. If he tries to, the company could attempt to force him to complete the deal under a legal protection called “specific performance,” though that maneuver is rarely successful in practice.

In 2020, luxury-goods conglomerate

LVMH Moët Hennessy Louis Vuitton SE

tried to back out of a deal to buy Tiffany & Co. for $16.2 billion after the pandemic hurt demand for high-end jewelry. Tiffany sued to enforce the agreement and LVMH countersued, arguing the business had been so deeply damaged that their original agreement was no longer valid. The two sides later agreed to cut the price by a relatively modest $430 million and settle related litigation.

Mr. Musk’s initial tweet Friday could be seen as critical of Twitter, which could further complicate things. The merger agreement stipulates that he can tweet about the deal so long as he doesn’t disparage the company or any of its representatives.

Before Friday, Mr. Musk had appeared to be moving forward on the deal in meetings with Twitter and hadn’t attempted to restart negotiations, but he had started asking questions about the number of spam accounts on the platform, people familiar with the matter said. A Twitter spokesman said Mr. Musk had visited the company May 6 as part of the transaction-planning process.

Twitter has warned that its estimate of fake and spam accounts is based on a sampling of accounts and that “the actual number of false or spam accounts could be higher than we have estimated.”

Mr. Musk’s tweets Friday are the latest twist in the unorthodox attempt to take over the social-media giant by the world’s richest man. It began with Mr. Musk buying a large chunk of Twitter shares on the open market earlier this year as a passive investor, which soon turned into a full-fledged buyout offer, outlined in a four-paragraph letter and several text messages to Twitter’s chairman.

Elon Musk has cultivated close ties with Beijing to build Tesla’s business in China. Now that he is buying Twitter and focusing on free speech, WSJ looks at how China has used the social-media platform to promote its views, and why that’s raising concerns. Photo Illustration: Sharon Shi

The per-share offer price of $54.20 contained a veiled reference to marijuana. The latest bombshell comes on a superstitious date: Friday the 13th.

Truist Securities analyst

Youssef Squali

said he could see a scenario where Mr. Musk tries reducing the offer price by 15% to 20%, to $46 or $43 a share. “If he’s successful, then his ability to secure funding while lowering his reliance on Tesla shares increases pretty dramatically,” Mr. Squali said.

In addition to financing from Wall Street, Mr. Musk has had to sell at least $8.5 billion worth of Tesla shares to fund the deal. He has also assembled a cast of 19 investors, from a Saudi prince to Silicon Valley stalwarts, to put up another $7 billion.

Meanwhile, federal regulators are investigating Mr. Musk’s late disclosure last month of his sizable stake in Twitter, a lag that allowed him to buy more stock without alerting other shareholders to his ownership, The Wall Street Journal reported Thursday, citing people familiar with the matter.

Mr. Musk made his filing on April 4, at least 10 days after his stake surpassed the trigger point for disclosure. He hasn’t publicly explained why he didn’t file in a timely manner. An attorney for Mr. Musk didn’t respond to a message seeking comment.

Amid Mr. Musk’s takeover attempt, Twitter has been dealing with the disruptions in the digital advertising market from global economic turmoil and the war in Ukraine. The company said Thursday that it was pausing hiring and looking to cut costs and announced the departure of two senior executives.

“Effective this week, we are pausing most hiring and backfills, except for business critical roles,” Twitter’s Mr. Agrawal wrote in a memo, which was viewed by The Wall Street Journal. Twitter’s move adds to broader upheaval in the tech industry in recent weeks in which several companies have been cutting staff and spending or slowing hiring.

—Georgia Wells, Anna Hirtenstein and Dave Michaels

contributed to this article.

Write to Sarah E. Needleman at sarah.needleman@wsj.com and Cara Lombardo at cara.lombardo@wsj.com

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What Elon Musk Said To A Tweet On Parag Agrawal, Other Indian Tech CEOs

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New Delhi:

Tesla CEO Elon Musk on Monday gave a shout out to Indian talent in America after Parag Agrawal was appointed the chief executive officer of Twitter.

“USA benefits greatly from Indian talent!” Mr Musk said in a tweet.

The entrepreneur was replying to a tweet on how Indian-origin persons are now at the helm of some of the top tech companies like Microsoft, Google and IBM.

Mr Agrawal, 37, is the latest Indian-origin person to head a major US-based tech company, following the likes of Google-parent Alphabet’s CEO Sundar Pichai and Microsoft CEO Satya Nadella.

On Monday, Twitter co-founder Jack Dorsey announced that he would be leaving the company. Mr Dorsey steered the social network during the tumult of Donald Trump’s presidency and surviving an activist investor’s ouster bid in 2020.

Mr Agrawal takes over the reins of Twitter at a time when the company is looking to steer towards growth and away from free speech battles.

He joined Twitter in 2011 and became the Chief Technical Officer in 2017. In his message to the staff, Mr Dorsey said that Parag Agrawal has been behind every critical decision and has helped turn the company around.

“He leads with heart and soul, and is someone I learn from daily. My trust in him as our CEO is bone deep,” Mr Dorsey said about Mr Agrawal.



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