It is widely believed that Musk’s negotiations with the company set the stage for renegotiation of the offer price, or otherwise a complete withdrawal from the contract. However, no matter what happens next, one thing is for sure: Musk has made a big mess of Twitter, the effects of which will not be easily or quickly reversed. Meanwhile, employees, customers and shareholders of the company are hanging on.
In one scenario, Twitter is preparing for an innovative but volatile billionaire owner who is expected to lay off some staff, revise the leadership team and potentially undo years of efforts to moderate content with uncertain outcomes for remaining advertisers, users and employee morale.
In the second scenario, Twitter faces the prospect of a prolonged legal battle with the richest man in the world if he tries to quit his job, not to mention the possibility of other acquirers quitting their jobs. The result could be endless background noise that contributes to Twitter’s challenges to retain employees and regain momentum.
A long struggle
Shares of Twitter traded noticeably below $ 54.20 per share offered by Musk during the deal process, indicating investor skepticism as to whether the deal was completed or completed at that price. As of this week, Twitter shares have wiped out all gains since Musk first revealed he had taken a large stake in the company early last month.
In his latest public statements, Musk pointed to the possibility that Twitter has significantly underestimated the amount of spam and fake accounts on its platform in its quarterly posts, although it has yet to provide evidence to support the claim. In the process, some legal experts say, Musk seems to be trying to lay the groundwork for an argument that inaccurate information would be “materially harmful”, which could give him the right to withdraw from the agreement.
But the limit for such a claim is high. Twitter posted the same template - that spam accounts make up less than 5% of its active users - over many quarters. Moreover, a recent report of securities from Twitter revealed that Musk waived due diligence before making an offer to buy Twitter. The fact that the concern about spam can cancel the agreement is even more interesting, considering that Musk said that part of his motivation to get Twitter in the first place was to release him from such accounts.
If Musk eventually tries to drop the deal, he could be on the hook for a billion-dollar fee. He could also effectively open the door to lawsuits from Twitter to enforce the terms of the merger agreement and force him to buy the company.
Brian Quinn, a professor at Boston College Law School, told CNN Business that Twitter is in a “very strong legal position” if it tries to go to court and extort an agreement under the original conditions. But there are still business risks for Twitter in going that route, which could force the company to negotiate a slightly lower contract price.
As Vedbusch Ives put it: “Then it is caught in the courts for 12 to 18 months. It’s a significant turnaround on Twitter, and it’s just a fiasco because they’re basically just caught up in this circus show. ”
Twitter and Musk did not respond to a request for comment.
Challenges for Twitter anyway
Even if the deal is completed, the company could still be in a period of significant turbulence.
Musk said that he plans to remove the restrictions on the content on the platform in the name of what he calls “freedom of speech”, under which he said he meant all legal speech in the various markets in which Twitter operates. Musk also said that he would renew the order of former President Donald Trump on the platform and lift many permanent bans that Twitter and other platforms used to deal with repeated violations of their rules.
Such steps could bring Twitter closer to some less-than-moderate conservative social media sites yet to gain significant appeal, in part, some say, because many users and advertisers prefer not to be on platforms full of harmful content such as misinformation and harassment.
“Places that are just septic tanks without moderate content have not appeared,” said Kirsten Martin, a professor of technological ethics at the University of Notre Dame. Therefore, there could be a conflict between Musk’s stated goal of increasing Twitter’s business and his plans on how to deal with content moderation.
If the deal fails, Twitter could still face a re-examination of its business, a method of calculating spam and decisions to moderate content, after Musk spent weeks criticizing the company on these fronts.
For most of his life as a public company, Twitter has struggled to increase its audience and increase the price of stocks. Before Musk took over last month, Twitter shares were trading below the closing price since the first day of trading more than eight years ago.
If the deal fails, it could only re-encourage investor pressure on Twitter to spur growth - at a time when the expanding technology sector is struggling. It also raises the possibility that other customers will try to take over the company at a discount from what Musk offered.
Those strangers risk adding to the obvious chaos and uncertainty that has already caused Mask’s takeover of Twitter.
“If I’m currently an employee, I’m probably throwing away my resume, looking for new jobs,” said Angelo Zino, senior industry analyst at CFRA Research. “In this situation, you can potentially lose a lot of talent.
In fact, Twitter already is. The company confirmed to CNN Business this week that three senior employees have left the company. Twitter also announced last week that it had implemented a partial freeze on employment and parted ways with two longtime executives: CEO Kaivon Beikpour and revenue revenue leader Bruce Falk.
On Twitter last week, Agraval commented on why “the CEO of ‘Chrome Duck’ would make these changes if they still get us” and the difficult situation in the technology industry in which the company is moving.
“Although I expect the agreement to be concluded, we must be ready for all scenarios and always do what is right for Twitter,” he said. “Regardless of the future ownership of the company, we are here to improve Twitter as a product and business for customers, partners, shareholders and all of you … Our industry is in a very challenging macro environment - currently. I won, “Don’t use the agreement as an excuse to avoid making important decisions about the company’s health, nor will any leader on Twitter.