Judge gives Elon Musk access to bot-counting data from former Twitter executive

waclark

Posts: 568   +356
This is the crux of my original point. I'd question 5% Bots too. But given that all those reports from other services and analysts were readily available to Musk all along, and more importantly to everyone who has ever advertised or considered advertising on Twitter, how can Musk plausibly claim that his understanding of Twitter's bot situation is materially different now than it was at any prior point in the bid & diligence process?
I don't know the timelines, but it seems to me that Twitter produced the numbers and Musk debated them, possibly because he had seen different numbers. He can't dispute Twitter's numbers until he sees Twitter's numbers. Twitter has never revealed how they come up with the 5% number, so that is the problem Musk seems to be having.
My point is not that Twitter's definitions are correct or useful. My point is that no material change has occurred. Musk attempting to justify a back-out now as if he somehow knew less about Twitter's bots than say the posters on this forum until recently does not pass the smell test.
The change is that Musk didn't have those official numbers from Twitter, now he has them and is disputing them. He also doesn't have the explanation as to how they got to those 5% numbers.

I think Musk is trying to validate the numbers, so he can validate the value of Twitter and get agreement from his other investors. Seems pretty logical to me. Sort of like getting a home appraisal after you're made an agreement to buy the house.
That's what I meant by campaigns which I mentioned later in the sentence. They are large advertisers in their season, but are usually not backed by the budget of a single individual.
Some politicians are large advertisers, but many local politicians do fund their own campaigns. I'm talking about the small town guy running for mayor or city council, not a Senate or House seat in Congress.
 

Puiu

Posts: 5,747   +4,683
TechSpot Elite
You are loosing perspective.

It not based on whether or not he wants to buy the company....it's 100% based on how many real user have accounts with twitter. Desire is not what is holding the deal up... it is Twitter NOT WANTING to release actual data.

Secondly, you are correct, current users may NOT want Twitter to go Private and have to pay... because most of them would have to pay PER ACCOUNT and they have many accounts. But People like me and many others would move to Twitter, if it was private company, because we KNOW that fake people will be weeded-out and tweets will be based on RL people, not pushed agendas from a boiler room.

If musk walks away from the Deal, he won't have to pay a dime.... because he already fulfilled his obligation and it is Twitter who has squelched the deal. They are not being forthright and will not give the prospective owner legit accounting.

And yes Elon is serious.... only naive people think it was a joke, because they can't believe anything else. They do not want to believe that Twitter might go private. They do not want to believe it might cost them... or how can they afford $200/year (or a paid based subscription)... to spread their lies.

Elon gave the an inflated offer... and they are balking bcz they do not want the truth to come out. 20% or more of active users on Twitter are fake accounts... everyone knows this. The research has already been done we are just waiting for Twitter CEO to admit it, so the deal can move on.
What I said still holds true. Everything else is just fluff. It doesn't matter if Musk is serious or not and Twitter did release the data to Musk (Musk just says he doesn't believe it).

It's Musk who has to prove that the data isn't real in court. That's where we will see if it was misreported intentionally or not... and if the numbers are ok, Musk will be forced to buy.
 

brucek

Posts: 1,209   +1,761
Alright, I've made my case as best I can. I appreciate the recent explanations of the opposing view as well even if I'm not personally convinced. Now we'll see what the judge says...
 

waclark

Posts: 568   +356
What I said still holds true. Everything else is just fluff. It doesn't matter if Musk is serious or not and Twitter did release the data to Musk (Musk just says he doesn't believe it).

It's Musk who has to prove that the data isn't real in court. That's where we will see if it was misreported intentionally or not... and if the numbers are ok, Musk will be forced to buy.
It's kind of hard to prove the numbers are real when Twitter won't explain how they got them. There are other companies that analyze the number of bot accounts on Twitter and their numbers are higher. If Twitter won't explain how they get to the 5% number, it's going to be impossible to have a meaningful dialog on whether the number is accurate.

Twitter gave Musk a number. Musk doesn't believe it and neither do most of the companies/services that estimate those numbers. Why is Twitter not being transparent?
 

m3tavision

Posts: 850   +618
What I said still holds true. Everything else is just fluff. It doesn't matter if Musk is serious or not and Twitter did release the data to Musk (Musk just says he doesn't believe it).

It's Musk who has to prove that the data isn't real in court. That's where we will see if it was misreported intentionally or not... and if the numbers are ok, Musk will be forced to buy.

Stop lying to yourself!

No... they did not release any number. That is why Musk challenged the current CEO to do so... or at least release their algorithms in which they parse.

We already know the actual numbers... because an outside research already did the meta data...


Twitter is over the fire and needs to be transparent. They are not even sharing their own metrics w/Musk's lawyers. That is why a Judge is allowing him more discovery.

So many people here showing bias against Elon, because you do not want transparency.. or to learn actual numbers. You want the fog..

The law is on Elon Musk's favor... he needs to know what he is buying. That include all the accounts.
 

brucek

Posts: 1,209   +1,761
Internet Attorney and M&A guru... awesome combination /s
If you'd like to hear quotes from actual experts on these issues, I'm providing a free link to a recent Wall Street Journal article. Warning, some readers here will not like what they learn:

“This isn’t even in the ballpark,” Mr. Goshen said of the argument, adding that the impact on a company’s value needs to be so dramatic that its value would be halved, for example. He recalls only one instance of a buyer successfully backing out of a deal on the basis of a material adverse effect: In 2018, healthcare company Fresenius SE got out of a deal to buy Akorn Inc. over alleged data breaches.

 

m3tavision

Posts: 850   +618
Internet Attorney and M&A guru... awesome combination /s

Twitter can't lie to Elon.... that is why they are purposely being obtuse, because of this Elon has challenged them for facts. If you don't believe the as high as 20%+.. it means you have not done your own due diligence and just reading headlines...

We already know it's higher than 5%... & as high as 34% of accounts are dbl, or bots. (Just look at the few million fake Joe Biden followers... 90k of them all joined twitter on the same day another 150k 2 months later... lol)

That is why Elon has challenged the CEO to an open debate.
 

waclark

Posts: 568   +356
If you'd like to hear quotes from actual experts on these issues, I'm providing a free link to a recent Wall Street Journal article. Warning, some readers here will not like what they learn:



Good article. I found these quotes interesting

...said Zohar Goshen, professor of transactional law at Columbia Law School. “They don’t really have tools to force him to go through with it.

He isn’t aware of a case in which a deal fell apart over information access, though such arguments have resulted in price cuts.

Mr. Musk’s lawyer also argued that Twitter should have sought his consent before firing two executives and laying off a third of its talent- acquisition team, under a part of the contract that requires the company to not unreasonably interfere with the business before the deal closes. Of all the arguments, this might be the strongest, Mr. Goshen said. Still, it isn’t clear that the company’s actions were drastic enough to be considered unreasonable.

So I think there is still a question of bots and suppose that number isn't 5% but 25%, as some have suggested. Maybe that does lower Twitter's value significantly.
 

mctommy

Posts: 430   +155
Twitter can't lie to Elon.... that is why they are purposely being obtuse, because of this. If you don't believe the as high as 20%+.. it means you have done your own due diligence and just reading headlines...

We already know it's higher than 5%... & as high as 34% of accounts are dbl, or bots. (Just look at the few million fake Joe Biden followers... 90k of them all joined twitter on the same day another 150k 2 months later... lol)

That is why Elon has challenged the CEO to an open debate.
I haven't done any due diligence on this and I don't care for it... just enjoying the internet attorney and M&A guru and other pro-Musk in this deal dashing it out.

Valuation is based on income/profit. If the bots number were so egregious and marketing departments were not getting ROIs on their Twitter advertising spend due to bots, would they not pay the Billions of dollars in advertising revenue that Twitter is getting?

BruceK link to WSJ article is pretty on point on what the possible outcomes are and it may not be to your liking.
 

brucek

Posts: 1,209   +1,761
So I think there is still a question of bots and suppose that number isn't 5% but 25%, as some have suggested. Maybe that does lower Twitter's value significantly

For this scenario to be a material adverse impact, the *market's* understanding of Twitter's bot ratio has to change. The challenge for Musk here is that, as many postings have made clear, it was already commonly believed to be much higher than 5%.

For those who just want Twitter to have to admit that there at least some methodologies that put it's bot ratio at far higher than 5%, I think you may eventually be in luck.

For those who want Musk to be able to back out over this, I think he's not going to be able to show that the market's prior understanding of bots, advertising rates, and total revenues were that far off the mark. I don't even think this is his real motivation. He's neither that dumb nor that uninformed. He knew about bots all along, I'm sure he's got far more sophisticated estimates using various methodologies than any of us do, and he's not going to be able to convince a savvy judge that he's shocked -- shocked -- to recently learn that some of Twitter's users may not be real bona fide humans.
 

m3tavision

Posts: 850   +618
I haven't done any due diligence on this and I don't care for it... just enjoying the internet attorney and M&A guru and other pro-Musk in this deal dashing it out.

Valuation is based on income/profit. If the bots number were so egregious and marketing departments were not getting ROIs on their Twitter advertising spend due to bots, would they not pay the Billions of dollars in advertising revenue that Twitter is getting?

BruceK link to WSJ article is pretty on point on what the possible outcomes are and it may not be to your liking.

You don't care for the truth... so you come here and spew and defend twitter for no reason.


The truth is, that Elon is not debating the PRICE of the stock, or the VALUE of the stock...! They deal is being held up because Twitter will not release the actual user base and of how big Twitter actually is.

Elon doesn't care about the current revenue model, he is taking the platform private and might charge a subscription. So active users is VERY important to HIS business model....

You are in favor of secrecy and fog... If Twitter doesn't release their numbers Elon can walk away free of charge. If they do and He doesn't buy, then he has to pay the $1b fine.

Twitter is over the fire.... and all the lemmings are complaining.
 

mctommy

Posts: 430   +155
You don't care for the truth... so you come here and spew and defend twitter for no reason.


The truth is, that Elon is not debating the PRICE of the stock, or the VALUE of the stock...! They deal is being held up because Twitter will not release the actual user base and of how big Twitter actually is.

Elon doesn't care about the current revenue model, he is taking the platform private and might charge a subscription. So active users is VERY important to HIS business model....


You are in favor of secrecy and fog... If Twitter doesn't release their numbers Elon can walk away free of charge. If they do and He doesn't buy, then he has to pay the $1b fine.

Twitter is over the fire.... and all the lemmings are complaining.
Speak the truth Elon Musk mind and body projection aka m3tavision!
Be the presiding judge over this case and render decision now!

I'm not in favor of anything, the judge hasn't really rendered verdict. I lean on the side that as long as Twitter provides reasonable information, Elon will end up paying $1B breakup fee or more. He still has his other billions.

 

waclark

Posts: 568   +356
For this scenario to be a material adverse impact, the *market's* understanding of Twitter's bot ratio has to change. The challenge for Musk here is that, as many postings have made clear, it was already commonly believed to be much higher than 5%.

For those who just want Twitter to have to admit that there at least some methodologies that put it's bot ratio at far higher than 5%, I think you may eventually be in luck.

For those who want Musk to be able to back out over this, I think he's not going to be able to show that the market's prior understanding of bots, advertising rates, and total revenues were that far off the mark. I don't even think this is his real motivation. He's neither that dumb nor that uninformed. He knew about bots all along, I'm sure he's got far more sophisticated estimates using various methodologies than any of us do, and he's not going to be able to convince a savvy judge that he's shocked -- shocked -- to recently learn that some of Twitter's users may not be real bona fide humans.
I don't think it's about backing out, I think it's about negotiating a lower price for the sale. If Musk can prove that everyone, including Twitter Mgmt, knew that the bots were more than 5% he might be able to show a reasonable justification for backing out of the deal with no penalties. Given that, Twitter would likely renegotiate the sale price.
 

Puiu

Posts: 5,747   +4,683
TechSpot Elite
Stop lying to yourself!

No... they did not release any number. That is why Musk challenged the current CEO to do so... or at least release their algorithms in which they parse.

We already know the actual numbers... because an outside research already did the meta data...


Twitter is over the fire and needs to be transparent. They are not even sharing their own metrics w/Musk's lawyers. That is why a Judge is allowing him more discovery.

So many people here showing bias against Elon, because you do not want transparency.. or to learn actual numbers. You want the fog..

The law is on Elon Musk's favor... he needs to know what he is buying. That include all the accounts.
He was given an bot estimate by Twitter. You seem to be out of the loop as to what Musk is asking for.
 

Puiu

Posts: 5,747   +4,683
TechSpot Elite
It's kind of hard to prove the numbers are real when Twitter won't explain how they got them. There are other companies that analyze the number of bot accounts on Twitter and their numbers are higher. If Twitter won't explain how they get to the 5% number, it's going to be impossible to have a meaningful dialog on whether the number is accurate.

Twitter gave Musk a number. Musk doesn't believe it and neither do most of the companies/services that estimate those numbers. Why is Twitter not being transparent?
To be fair, one of the ways to count bots Musk was quoiting was making his account seem to be a bot :)

 

m3tavision

Posts: 850   +618
The joke is on you... if u believe all the fake accounts following Joe Biden are real...

Twitter's CEO can't either, that is why he is hiding and lying.

sadge
 

m3tavision

Posts: 850   +618
Speak the truth Elon Musk mind and body projection aka m3tavision!
Be the presiding judge over this case and render decision now!

I'm not in favor of anything, the judge hasn't really rendered verdict. I lean on the side that as long as Twitter provides reasonable information, Elon will end up paying $1B breakup fee or more. He still has his other billions.

lol.... "reasonable information"

Do you mean like... telling the perspective buyer how many actual Users you have?
 

Endymio

Posts: 1,828   +1,893
For this scenario to be a material adverse impact, the *market's* understanding of Twitter's bot ratio has to change. The challenge for Musk here is that, as many postings have made clear, it was already commonly believed to be much higher than 5%.
I'm sorry, but your statement couldn't possibly be more wrong. First of all, MAEs are defined around effects on a company's finances -- and there is no direct relationship between a public corporation's market cap and its revenue stream. A radical change to the company's mDAU count would indisputably be a Material Adverse Effect -- it would not only affect all future earnings, but may well result in customer suits against Twitter for past revenues.

But much more importantly, the entire MAE argument is a red herring. MAE's revolve around unforeseen changes AFTER the deal is signed but before it closed. But if Twitter's public statements and SEC filings about its user base are largely inaccurate, that's a much more serious deficiency. If Twitter knew the numbers were wrong, then it's fraudulent misrepresentation, and no judge in the nation would hold the contract valid.
 

Endymio

Posts: 1,828   +1,893
To be fair, one of the ways to count bots Musk was quoiting was making his account seem to be a bot :)
You're one of the more intellectually-honest individuals here; I'm sure you see the fallacy in that argument. The issue isn't the tool Musk is using; it's the methodology Twitter is using. Is it accurate or not?

Twitter provided Musk an estimate -- but not the internals on exactly how that estimate was reached. It did, though, reveal that their sample size for reaching this estimate was a mere 100 accounts.
 

Puiu

Posts: 5,747   +4,683
TechSpot Elite
You're one of the more intellectually-honest individuals here; I'm sure you see the fallacy in that argument. The issue isn't the tool Musk is using; it's the methodology Twitter is using. Is it accurate or not?

Twitter provided Musk an estimate -- but not the internals on exactly how that estimate was reached. It did, though, reveal that their sample size for reaching this estimate was a mere 100 accounts.
The reason I'm nonchalant about this is because I don't think Musk has any chance of getting out of buying Twitter unless he proves gross negligence where Twitter's methodology is 100% wrong or if Twitter lied.

If twitter is in a grey area then Musk will most likely be forced to buy. A different methodology doesn't make it a wrong methodology and a judge will rule that Twitter did its job.
 

waclark

Posts: 568   +356
The reason I'm nonchalant about this is because I don't think Musk has any chance of getting out of buying Twitter unless he proves gross negligence where Twitter's methodology is 100% wrong or if Twitter lied.

If twitter is in a grey area then Musk will most likely be forced to buy. A different methodology doesn't make it a wrong methodology and a judge will rule that Twitter did its job.
You're probably right, although, it may be enough to force Twitter to renegotiate the price. I mean, there is a difference in 5% and 25% and that would impact potential valuation of the company.

To me the question is whether Twitter is purposefully misrepresenting the numbers. If so, Musk may have a lot more leverage. If not, Musk still might get a reduction in price. I guess all we can do now is sit back and wait for this thing to get to a court room.
 

m3tavision

Posts: 850   +618
The reason I'm nonchalant about this is because I don't think Musk has any chance of getting out of buying Twitter unless he proves gross negligence where Twitter's methodology is 100% wrong or if Twitter lied.

If twitter is in a grey area then Musk will most likely be forced to buy. A different methodology doesn't make it a wrong methodology and a judge will rule that Twitter did its job.

lol^

Elon doesn't want to back out of the deal... he wants to buy Twitter! He just doesn't want to be hosed...

AND as it stands right now Twitter CEO can't define the User Base. So how can u buy a Company that can't disclose how many actual users they have.

Whi is Twitter so obtuse and secret?
 

brucek

Posts: 1,209   +1,761
I'm sorry, but your statement couldn't possibly be more wrong. First of all, MAEs are defined around effects on a company's finances -- and there is no direct relationship between a public corporation's market cap and its revenue stream. A radical change to the company's mDAU count would indisputably be a Material Adverse Effect -- it would not only affect all future earnings, but may well result in customer suits against Twitter for past revenues.

But much more importantly, the entire MAE argument is a red herring. MAE's revolve around unforeseen changes AFTER the deal is signed but before it closed. But if Twitter's public statements and SEC filings about its user base are largely inaccurate, that's a much more serious deficiency. If Twitter knew the numbers were wrong, then it's fraudulent misrepresentation, and no judge in the nation would hold the contract valid.

My statement is based on the WSJ report which is in part based on Musk's team own filing:

Mr. Musk’s team says Twitter’s longtime estimate that fewer than 5% of its monetizable daily active users are spam accounts appears inaccurate, and therefore could represent a “material adverse effect.”

Under this concept, a buyer must show that a company’s actual business differs dramatically from what it agreed to buy. It is a high bar that very few buyers who have gotten cold feet have ever successfully invoked.
I agree that the bottom line here is finances. The problem is Musk's team is trying to argue that potential ambiguity around an ultimately subjective number that is an input to finances but not a bottom line financial result itself, should trump actual bottom line finances that are not ambiguous. Unless his new information about bots severely changes market cap, or forces a restating of revenues, or otherwise makes a difference to objective metrics, he's not going to have any argument at all. And if the market (I mean both for its ads, and for its stock) has already always baked in that there are non-trivial numbers of bots, which I believe it has because none of this new information, than none of those objective finances are going to change and there will be no material adverse impact.
 
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