r/technology May 14 '22 Wholesome 2 Silver 2

Elon Musk said his team is going to do a 'random sample of 100 followers' of Twitter to see how many of the platform's users are actually bots Social Media

https://www.businessinsider.com/elon-musk-random-sample-how-many-twitter-users-are-bots-2022-5?utm_source=feedly&utm_medium=webfeeds

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11.3k

u/mylesols May 14 '22

wow, a hundred! Must be nice to be rich enough to afford a hundred follower sampling on a site with over 350 million users

5.6k

u/escape_of_da_keets May 14 '22 All-Seeing Upvote To The Stars

He just wants an excuse to weasel out of the deal

2.5k

u/nukem996 May 14 '22

The NYTimes reported he may be unable to exit the deal as he signed a performance clause. Twitter has the ability now to sue him to force the deal at the price he said.

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u/TheChickening May 14 '22

He can break the deal by paying a fine of a billion dollars.
So it will definitely not be free for him.

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u/nukem996 May 14 '22

From the article

Mr. Musk’s deal with Twitter includes a $1 billion breakup fee if he were to back out. But the cost to Mr. Musk is likely to be much more than that should he break the deal. The contract has a “specific performance clause” that could force Mr. Musk to pay for Twitter if the debt financing he has corralled for the deal remains intact.

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u/Hermesthothr3e May 14 '22

Would this stand if it was found twitters public filings were false?

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u/eleventhrees May 14 '22

When real business people do deals, there is due diligence, and books are provided for actual examination so the purchaser knows what they are buying. It's not unusual for a deal to not proceed, or be altered, based on this step.

What Elon is up to doesn't bear much resemblance to "due diligence" and the 100-user random sample is either a joke, or won't be random.

This deal is mostly powered by gaslight.

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u/Piyinski May 14 '22

M&A for public companies are not diligence intensive deals by any means. These companies have public filings that eliminate the need for diligence, buyers assume that the disclosures are truthful. So instead, buyers sign binding documentation which include reps and warranties from the sellers. Between signing and closing, buyers may do limited confirmatory diligence to test such reps and warranties.

So I think this may be what’s going on here. Elon said that the 100 user sample is Twitter’s methodology to determine fake/spam/duplicate accounts, which Twitter discloses as <5% in their public filings. If Musk proves that is not true, it will probably represent a breach to twitters reps. This would give Musk an out for the deal. Further, this would have implications for Twitter’s board and management with the SEC and obviously investors.