Where a wounded Twitter goes from here
The architects and proponents of Elon Musk's bid to buy Twitter all describe the platform as a global public square whose health is essential for democracy.
Yes, but: Musk's efforts to exit the deal leave the company, and that public square, shakier than ever.
Driving the news: Musk said Friday he was calling off the deal, claiming he has been unable to verify Twitter's estimates surrounding fake accounts, among other grievances. Twitter's board said it would take Musk to court to force him to complete the purchase.
- Armies of lawyers on both sides will now descend on a Delaware court to fight it out, with legal experts saying Twitter has the edge, given the original deal terms and language.
- Twitter may well get some money out of Musk — the $44 billion deal came with a $1 billion breakup fee — but it's less likely the court will actually force him to buy the company. It all hinges on how the court rules on one key clause, as Felix Salmon reported.
The big picture: After three months of Musk's vacillations and tweets, Twitter as an organization and a service has been seriously injured.
- Employees at companies coping with this kind of takeover fight are at best highly distracted. At worst, the talent flees.
- The company's stock has also taken a battering, on top of the general market slide.
- The prospect of a titanic court battle won't help Twitter's leaders get more done.
What they said: In public statements back in April, Former Twitter CEO Jack Dorsey, current CEO Parag Agrawal and Musk himself all talked up the importance of preserving Twitter as an essential public resource, and Dorsey boldly praised the deal as the only clear path forward.
- Dorsey: "Twitter is the closest thing we have to a global consciousness. ... In principle, I don’t believe anyone should own or run Twitter. It wants to be a public good at a protocol level, not a company. Solving for the problem of it being a company however, Elon is the singular solution I trust."
- Agrawal: "Twitter has a purpose and relevance that impacts the entire world," he said in the press release announcing the deal.
- Musk: "Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated," he said as the deal was announced. Speaking about Twitter earlier in the month, he said his investment in Twitter wasn't about making money, but rather that "having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization. I don't care about the economics at all."
Our thought bubble: None of the parties seems to care much about any of this rhetoric now.
What's next: Twitter faces the daunting task of trying to fight Musk in court while restoring morale and plotting a new course.
- With the stock down considerably from Musk's original price, and no clear internal plan to reach that valuation, the company could also be on the lookout for another buyer.
- But regulators' newly aggressive anti-merger policies likely rule out many of the acquirers who might have the resources to get Twitter on track.
Between the lines: Musk has tried to make this dispute all about the number of fake accounts on Twitter, though conventional wisdom is he has cold feed over buying a company worth far less than when he made his bid.
- Musk was clearly aware of the spam issue before making his offer as he promised to make "Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans."