Month: July 2022

Twitter sued Tesla CEO Elon Musk on Tuesday to force him to complete the $44 billion acquisition of the social media company. 

Musk and Twitter have been bracing for a legal fight since the billionaire said on Friday he was backing off of his April agreement to buy the company. 

Twitter’s lawsuit opens with a sharply worded accusation: “Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.” 

“Having mounted a public spectacle to put Twitter in play and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” the suit says. 

Twitter filed its lawsuit in the Delaware Court of Chancery, which frequently handles business disputes among the many corporations, including Twitter, that are incorporated there. 

As part of the April deal, Musk and Twitter had agreed to pay each other a $1 billion breakup fee if either was responsible for the deal falling through. The company could have pushed Musk to pay the hefty fee but is going further than that, trying to force him to complete the full $44 billion purchase approved by the company’s board. 

“Oh the irony lol,” Musk tweeted after Twitter filed the lawsuit, without explanation. 

‘Strong and compelling’ case

The arguments and evidence laid out by Twitter are “very strong and compelling” and likely to get a receptive ear in the Delaware court, which doesn’t look kindly on sophisticated buyers backing off of deals, said Brian Quinn, a law professor at Boston College. 

“They make a very strong argument that this is just buyer’s remorse,” Quinn said. “You have to eat your mistakes in the Delaware Chancery Court. That’s going to work very favorably for Twitter.” 

Musk alleged Friday that Twitter has failed to provide enough information about the number of fake accounts on its service. Twitter said last month that it was making available to Musk a “fire hose” of raw data on hundreds of millions of daily tweets. 

The company has said for years in regulatory filings that it believes about 5% of the accounts on the platform are fake. Musk is also alleging that Twitter broke the acquisition agreement when it fired two top managers and laid off a third of its talent-acquisition team. 

Twitter’s suit repeatedly emphasizes Musk’s contemplation of starting a Twitter competitor, an alternative option he sometimes aired publicly and sometimes privately to Twitter’s executives and board members. While the company has said it cooperated in providing the spam bot data he requested, the lawsuit suggests there was concern that disclosing too much “highly sensitive information” could expose Twitter to competitive harm if shared. 

The biggest surprise for Quinn was how much evidence Twitter has — for instance, communications with Musk about whether to retain or lay off employees, as well as the billionaire’s own public tweets — to reject his arguments for backing out. 

“They are marshaling many of Musk’s own tweets to hoist him on his own petard,” he said. 

Tesla stock drops

When Musk offered to buy the company and take it private in mid-April, the board initially tried to block him by deploying a financial maneuver that would have made the acquisition prohibitively expensive. 

By April 25, though, Twitter had reconsidered the offer, concluding that selling the company to Musk for $54.20 a share was in the best interest of shareholders. In a joint press release, Musk pledged to “unlock” the social media company’s potential by loosening restrictions on speech and rooting out fake accounts. 

But his confidence didn’t last long. Tesla’s stock — Musk’s primary source of wealth — plummeted amid a broader stock market selloff in May, and Musk soon seemed less enthusiastic about owning Twitter. 

Twitter’s suit calls Musk’s tactics “a model of hypocrisy,” noting that he had emphasized plans to take Twitter private in order to rid it of spam accounts. Once the market declined, however, Twitter noted that “Musk shifted his narrative, suddenly demanding ‘verification’ that spam was not a serious problem on Twitter’s platform and claiming a burning need to conduct ‘diligence’ he had expressly forsworn.” 

Similarly, the company charges that Musk operated in bad faith, accusing him of requesting company information in order to accuse Twitter of providing “misrepresentations” about its business to regulators and investors. 

Twitter’s lawsuit alleges that the company “has suffered and will continue to suffer irreparable harm” as a result of Musk’s contractual breaches that “cast a pall over Twitter and its business.” 

 
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The U.S. space agency is set to release the full set of the first full-color images from the James Webb Space Telescope on Tuesday, a day after sharing a full-color picture showing stars and galaxies from deeper into the cosmos than ever seen before.

During a news briefing at the White House Monday to unveil the first NASA image, U.S. President Joe Biden said the telescope was “a new window into the history of our universe.”

The $10 billion telescope, the largest and most powerful telescope ever launched into space, peers farther into the cosmos than any before it.

A peek into the past

Scientists describe the telescope as looking back in time. That is because it can see galaxies that are so far away that it takes light from those galaxies billions of years to reach the telescope.

“Light travels at 186,000 miles per second. And that light that you are seeing on one of those little specs (in the picture) has been traveling for over 13 billion years,” said NASA Administrator Bill Nelson, who attended Monday’s news briefing along with Biden and Vice President Kamala Harris.

The Webb telescope can see light that was created just after the Big Bang, the farthest humanity has peered into the past.

A successor to the Hubble Space Telescope, Webb is about 100 times more sensitive than its 30-year-old predecessor. It is also able to use the infrared spectrum, while the Hubble used mainly optical and ultraviolet wavelengths.

The telescope is so precise, Nelson said, that scientists will be able to see the chemical composition of planets deep in space and determine if they are habitable or not.

“We are going to be able to answer questions that we don’t even know what the questions are yet,” he said.

Harris said the telescope would “enhance what we know about the origins of our universe, our solar system and possibly life itself.”

Into the cosmos

The telescope was launched December 25 from French Guiana in South America and traveled 1.6 million kilometers from Earth before beginning to capture images.

Biden said the telescope took a “journey 1 million miles into the cosmos … along the way unfolding itself, deploying a mirror 21 feet wide, a sunshield the size of a tennis court, and 250,000 tiny shutters, each one smaller than a grain of sand.”

Nelson said future images would peer even farther back into the origin of the cosmos, looking about 13.5 billion years into the past.

Scientists will use the Webb telescope to study stars, galaxies and planets as far as the edges of the cosmos, as well as look at objects closer to us with a sharper view, including our own solar system.

Some information in this report came from The Associated Press and Reuters.
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Shares of Twitter slid more than 6% in the first day of trading after billionaire Elon Musk said that he was abandoning his $44 billion bid for the company and the social media platform vowed to challenge Musk in court to uphold the agreement. 

Twitter is now preparing to sue Musk in Delaware where the company is incorporated. While the outcome is uncertain, both sides are preparing for long court battle. 

Musk alleged Friday that Twitter has failed to provide enough information about the number of fake accounts it has. However, Twitter said last month that it was making available to Musk a ” fire hose” of raw data on hundreds of millions of daily tweets when he raised the issue again after announcing that he would buy the social media platform. 

Twitter has said for years in regulatory filings that it believes about 5% of the accounts on the platform are fake but on Monday Musk continued to taunt the company, using Twitter, over what he has described as a lack of data. In addition, Musk is also alleging that Twitter broke the agreement when it fired two top managers and laid off a third of its talent-acquisition team. 

Musk agreed to a $1 billion breakup fee as part of the buyout agreement, though it appears Twitter CEO Parag Agrawal and the company are settling in for a legal fight to force the sale. 

“For Twitter this fiasco is a nightmare scenario and will result in an Everest-like uphill climb for Parag & Co. to navigate the myriad challenges ahead around employee turnover/morale, advertising headwinds, investor credibility around the fake account/bot issues, and host of other issues abound,” Wedbush analyst Dan Ives, who follows the company, wrote Monday. 

The sell-off in Twitter shares pushed prices close to $34 each, far from the $54.20 that Musk agreed to pay for the company. That suggests, strongly, that Wall Street has serious doubts that the deal will go forward. 

While the outcome of any protracted legal battle cannot be known, experts in the legal and business sectors believe Twitter likely has a stronger case. 

Morningstar analyst Ali Mogharabi noted that, regarding the spam user count Musk is so focused on, Twitter has “for years explicitly stated in regulatory filings that the ‘below 5%’ spam count may not be accurate given that it is based on a sample and requires a lot of judgment.” 

Given current market conditions, Mogharabi said, Twitter may also have a solid argument that the layoffs and firings of the past weeks represent “an ordinary course of business.” 

“Many technology firms have begun to control costs by reducing headcount and/or delaying adding employees,” he said. “The resignations of Twitter employees cannot with certainty be attributed to any change in how Twitter has operated since Musk’s offer was accepted by the board and shareholders. 

Tech industry analysts say Musk’s interlude leaves behind a more vulnerable company with demoralized employees. 

“With Musk officially walking away from the deal, we think business prospects and stock valuation are in a precarious situation,” wrote CFRA Analyst Angelo Zino. “(Twitter) will now need to go at it as a standalone company and contend with an uncertain advertising market, a damaged employee base, and concerns about the status of fake accounts/strategic direction.” 

The uncertainty surrounding Twitter could also lead advertisers to curtail their spending on the platform, Mogharabi said. 

But “the drama” surrounding the deal, he added, “will also likely attract new users to the platform and increase engagement, especially given the upcoming midterm elections, which could convince advertisers to cut a bit less. In the long run, we think Twitter will remain one of the top five social media platforms for advertisers.” 

 
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As the U.S. reels from a surge of recent mass shootings, some technologists are focusing on how to prevent casualties. VOA’s Julie Taboh spoke with a couple of entrepreneurs who have developed gun-detecting technologies.
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