Why judges might balk at forcing Musk to buy Twitter

The risk opens up a brand new set of questions relating to the way forward for Twitter’s moderation insurance policies and its influence on elections.

Even earlier than former President Donald Trump remodeled it right into a digital bully pulpit, the platform possessed a political footprint a lot bigger than its comparatively modest consumer base would recommend. Turning Twitter over to a mercurial billionaire pressured to pay by the nostril for an organization he doesn’t need could not bode nicely for the way forward for the platform. And whereas the advantageous print seems to permit Twitter to pressure itself on Musk, the Delaware Court of Chancery could hesitate to compel an possession switch that undermines a key channel of political communication.

“Forcing Musk to buy something he doesn’t want? He’s the richest guy in the world, he might just shut it off,” mentioned Adam Sieff, a lawyer specializing in tech points at Davis Wright Tremaine. “And that’s not necessarily in the public interest.”

Back when the deal was finalized in April, many authorized observers highlighted a $1 billion walkaway price included within the merger agreement between Musk and Twitter. But earlier than Friday, much less consideration was paid to a clause permitting the events to search “specific performance” if both tries to again out. The authorized time period means Twitter can sue to implement the contract in its entirety — and Ann Lipton, a professor of enterprise regulation at Tulane University, mentioned a decide might require Musk to take possession of the platform as promised.

“Delaware courts have ordered reluctant buyers to go through with mergers before,” Lipton mentioned.

There are some ways a miffed Musk might sabotage Twitter, from pulling the plug outright to loosening its moderation insurance policies till it turns into unusable. Lipton mentioned judges could weigh these prospects — and their potential political penalties — earlier than they stick Musk with the complete invoice.

“While Twitter is legally correct and Delaware courts have ordered specific performance before, they’ve never done so in a case this high-profile,” Lipton mentioned.

Musk’s attorneys say it’s Twitter that violated the deal. They level to Musk’s declare that the corporate continues to be understating its spambot downside, and say Twitter failed to present Musk with sufficient data and improperly fired two of its executives after the deal was signed.

But outdoors attorneys say there’s little benefit to these claims. Sieff famous Musk’s attorneys have been “very careful not to make factual representations” when discussing Twitter spambots, as an alternative emphasizing their consumer’s “beliefs” on the matter. “That’s a lawyerly way of saying, ‘I don’t have proof,’” Sieff mentioned. He additionally mentioned Twitter will probably have the option to present that Musk’s repeated requests for extra data have been made with the specific intent of sinking the deal. And he referred to as Musk’s argument on the firing of Twitter executives “kind of lame.”

“Elon Musk had been tweeting he was going to fire everyone anyway,” Sieff mentioned.

Lipton agreed that Musk’s arguments “are really not that convincing,” and mentioned Twitter “has a strong case.” And one person with knowledge of the situation said Friday that Twitter was not stunned by Musk’s transfer, and is assured its facet of the contract is hermetic.

It’s potential the 2 sides will settle their dispute earlier than it hits a courtroom (although probably for greater than $1 billion, which most attorneys see as the ground for Musk’s potential losses). But in the event that they don’t, Musk runs an actual threat of being ordered by a decide to pay Twitter’s sticker worth.

Even Trump thinks Musk might be caught with Twitter. “Who the hell knows what’s gonna happen, he’s got a pretty rotten contract,” the previous president said at a rally on Saturday. A Twitter spokesperson declined to remark past the corporate’s Friday press launch.

A model of this story beforehand appeared in Morning Tech, a subscriber-only e-newsletter by POLITICOPro.