Like Elon Musk’s Twitter mess moves from the meeting room to the courtroomunder the watchful eye of the Delaware office, events might be expected to take a more predictable course than hitherto.
In theory lawsuit that the social media platform launched on Tuesday to force Musk to honor his acquisition offer represents a limited range of possible outcomes: Musk could be forced to close the deal at the agreed-upon price of $44 billion; pay a $1 billion termination fee; cough a little intermediary price what the court decides; or walk away completely unscathed.
However, if one lesson can be learned from everything that has happened so far, it is that there are no guarantees, even in the face of binding contracts, federal regulations and historical precedents, when it comes to the richest man in the world. A settlement is still possible – some experts even say it’s likely – and will open up a whole new menu of options. Here is some of them.
Agreements on the inadmissibility of humiliation
Musk has never refrained from criticizing Twitter despite being one of the platform’s biggest users.
He has pan its content moderation policy as undemocratic, has lobbied for major changes to both the company’s product and its business model, and has been vocal in its criticism of the site’s handling of automated spambots (“Twitter’s most annoying problem,” he once wrote).
Signing a deal for him to buy the platform didn’t dull those barbs. In one tweet, which Twitter included in its lawsuit, he responded to CEO Parag Agrawal’s remark with nothing but emoji “poop”.
“Since the signing of the merger agreement, Musk has repeatedly disparaged Twitter and the deal, creating business risks for Twitter and putting downward pressure on its stock price,” the company said in a statement. This is despite a clause in the deal that Musk’s tweets “did not demean the Company or any of its representatives.”
According to Charles Elson, founding director of the Weinberg Center for Corporate Governance, it’s not unusual for these sorts of agreements to be part of a long-term settlement. “You could make a non-humiliation agreement” under those circumstances, he said. “I wouldn’t be shocked.”
“He wouldn’t humiliate Twitter, they wouldn’t humiliate him,” Elson added. “That would be mutual disrespect.”
Of course, whether Musk will comply with these conditions is another matter entirely.
There may also be some sort of non-disclosure agreement, or NDA, on the table that will limit what one or both parties can say publicly about the relationship they’ve been in again and again since early April.
“I could definitely see an NDA going on that would keep certain terms confidential and allow the party to ‘save face,'” Alex Bruno, founder of Glendale-based corporate law firm Bruno Group, said in an email.
However, Twitter may still have to disclose some information given that it is in the public domain, Bruno added.
The case could prove particularly attractive to Twitter because, according to the lawsuit, the company gave Musk significant access to corporate intelligence during their deals, including about 49 terabytes of the site’s raw historical data.
On the other hand, Musk appears to be currently bound by some kind of non-disclosure agreement and doesn’t seem to be too bothered by it. “Twitter’s legal department just called to complain that I violated their non-disclosure agreement by reporting that the sample size for bot validation is 100!” have wrote in one May tweet, referring to his efforts to replicate bot prevalence estimates on Twitter.
One looming threat to Twitter is that if Musk doesn’t end this saga as owner of the platform, he could revert to an idea he’s played with in the past: compete with the company on his own terms.
In one tweet in March of this year, he asked what to do about Twitter’s content moderation policy, which he called undemocratic. Subsequently, he suggested one of the possible options for action: “Do we need a new platform?”
Later that day he added“I’m seriously thinking about it.”
Now, having seen Twitter’s inner workings first hand and enjoying months of free press on how he would run the social network if he were in charge, Musk may very well go back to that option if he’s not banned from doing so.
Although Alternatives to Twitter have historically fought to enter the mainstream is a threat that Twitter does not take lightly. In its lawsuit, the company noted that Musk said he would “do one of three things with Twitter: sit on its board, buy it, or create a competitor” – the first of which he refused, and the second – he seems to be actively trying to avoid.
“The biggest random scenario is that Musk has to pay Twitter a large sum in the range of $5 billion to $10 billion and is banned from launching his own social media platform,” said Wedbush analyst Dan Ives, a frequent commentator on Musk. The Twitter saga in an email to The Times. “That would be the twilight zone ending this circus performance.”
Twitter Policy Changes
Musk could even use the settlement as an opportunity to push for certain policy changes — from the highly politicized ones, like changes to how Twitter moderates user comments, to the kind of hobby that superusers like him care about, including adding the “button” Edit Tweet.
Even if such concessions are accompanied by monetary compensation that he will have to pay, they may give the public figure a chance to save face.
But that’s an unlikely outcome, Bruno said.
“I don’t see a change in site policy unless Twitter gets a lot of money,” the lawyer wrote. However, he added, Twitter may still decide to make changes “to show its users publicly that they are active in taking down bots,” which is the subject of much of Musk’s criticism.
Elson agreed. “I don’t think he can get them to change their business practices. … Ultimately, this is a business deal; this is [about], ‘How much does this item cost?’ It’s all. “
But Ives is more open to that possibility.
“If the court ends up forcing Musk to become the owner of Twitter,” he said, “certain areas of content could be negotiated as part of the deal.”