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What would happen if Twitter and Elon Musk reach a settlement?

One may anticipate that when Elon Musk’s Twitter saga advances from the boardroom to the courts, things will proceed in a more predictable manner than they have so far under the careful eye of Delaware’s Court of Chancery. The lawsuit that the social media platform filed Tuesday to compel Musk to carry out his acquisition offer offers a constrained range of potential outcomes: Musk could be forced to close at the $44 billion price agreed upon; pay a $1 billion termination fee to get out of the deal; pay some intermediary price that the court determines, or walk away completely unharmed.

However, if there is one thing to take away from all that has happened so far, it is that there are no guarantees when it comes to the wealthiest man in the world, not even in the face of legally binding contracts, and governmental rules, or even historical precedents. A settlement would give rise to a whole new set of choices and is still a possibility; in fact, some analysts believe it is probable. Here are a few examples.

Despite being one of the most avid users of Twitter, Musk has never been one to hold back when criticizing the social media network. He has denounced the company’s content filtering practices as being undemocratic, pushed for significant changes to the company’s product and economic model, and consistently criticized the site’s management of automated spam bots (which he previously called Twitter’s “single most frustrating issue”).

Signing a contract to have him purchase the platform didn’t stop those jabs. He only used the “poop” emoji to respond to a comment made by Twitter CEO Parag Agrawal in one of the tweets that Twitter referenced in its complaint.

The firm argued in the filing that “Since signing the merger agreement, Musk has regularly criticized Twitter and the acquisition, generating business risk for Twitter and downward pressure on its share price.” Despite a clause in the agreement that said Musk’s tweets “do not denigrate the Company or any of its Representatives,” this has happened.

According to Charles Elson, founding director of the Weinberg Center for Corporate Governance, it wouldn’t be unprecedented for that kind of arrangement to be included in a longer-term settlement. In these kinds of situations, he noted, “you may have a nondisparagement agreement.” I wouldn’t be surprised, Elson said, “He would not trash Twitter, and they would not disparage him.” A reciprocal nondisparagement would result. Of course, the real issue is whether Musk would genuinely adhere to those conditions.

Non-disclosure contracts

Also on the table is the possibility of a nondisclosure agreement, or NDA, which would restrict what either party may say publicly about their on-again, off-again romance since early April. “I could easily see an NDA occurring,” said Alex Bruno, the founder of the Glendale-based business legal firm Bruno Group, in an email. “It would keep some conditions hidden and enable a party to “save face.”

Given that Twitter is publicly listed, certain information may still need to be disclosed, Bruno said. The complaint claims that Twitter granted Musk considerable access to corporate information throughout their business interactions, including around 49 tebibytes worth of raw historical site data. This possibility may be especially alluring to Twitter.

But Musk doesn’t seem very bothered by the fact that he is now subject to some form of NDA. He made reference to his attempts to duplicate Twitter’s bot prevalence estimates in a tweet from May that read, “Twitter legal just phoned to protest that I breached their NDA by exposing the bot check sample size is 100!”

A non-compete pact?

If Musk doesn’t put a stop to this situation as the platform’s owner, he may revisit an idea he’s already played with: competing with the firm on his own terms. He described Twitter’s content filtering standards as being undemocratic in a tweet he sent out in March, and he questioned what could be done about it. He outlined one potential course of action in a follow-up by asking, “Is a new platform needed?”

Later on that day, he added, “Am really considering this.”

Now that he has had the opportunity to see some of Twitter’s internal operations up close and personal and has had months of free publicity discussing how he would operate a social network if he were in charge, Musk may want to revisit that strategy provided he is not prohibited from doing so.

Although competitors to Twitter have traditionally had difficulty gaining traction, Twitter does not take this danger lightly. The business said in its complaint that Musk had stated he would “do one of three things with Twitter: sit on its board, acquire it, or develop a competitor”—the first of which he had declined to do and the second of which he seemed to be actively attempting to avoid.

The largest wildcard possibility, according to Wedbush analyst Dan Ives, who often weighs in on the Musk-Twitter drama, is that Musk must pay Twitter a hefty settlement amount in the $5 billion to $10 billion range and is prohibited from launching his own social media platform. That would be a bizarre conclusion to this circus performance.

Twitter rule modifications

Musk may even take advantage of a settlement to press for specific policy changes, from highly contentious ones like how Twitter moderates users’ speech to those that matter to super-users like him, like the installation of an “Edit Tweet” button. Such concessions may provide the public figure an opportunity to salvage face, even if they came together with a monetary settlement he had to pay.

Bruno noted that the result is doubtful. The lawyer added, “I do not envision a change in site policy until a lot of money comes Twitter’s way. He went on to say that, despite Musk’s criticism, Twitter may still decide to make improvements “to openly demonstrate their users that they are engaged in eradicating bots.”

Elson concurred. I don’t believe he would be able to convince them to modify their business methods. In the end, this is a transaction between two businesses; it’s [about] “How much is this product worth?” That’s it. Ives, though, seems more receptive to the idea. There could be certain content areas agreed upon as part of a compromise if Musk is finally compelled to assume control of Twitter by the court, he added.

Source: LA Times

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Written by Alex Bruno

Freelance space writer Alex Bruno specializes in covering China's quickly expanding space industry. In 2021, he started writing for SpaceXMania. He also contributes to publications including SpaceNews, IEEE Spectrum, National Geographic, Sky & Telescope, and New Scientist. When Alex was a small child, he first experienced the space bug after seeing Voyager photographs of alien planets in our solar system. When not in space, Alex likes to go trail jogging in the Finnish countryside.

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