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Elon Musk Looks to Exit his Twitter Takeover Deal – So What Now?

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Musk Discusses His Views on Content Moderation as Twitter Deal Inches Closer to Completion

Elon Musk’s out, so what comes next for Twitter?

That’s the question that everyone’s asking following Musk’s letter to the SEC late Friday, in which Musk’s team advised that they’re moving to terminate his $44 billion takeover offer for the app.

The core issue, according to Musk and Co., is that Twitter’s claim that only 5% of its active users are fake or spam accounts cannot be definitively proven, and without such evidence, Musk’s team is concerned that the material value of the app is far lower, because you can’t derive expanded value from bots.

If Musk were to, say, make eCommerce a bigger focus in the app, the potential of such a shift is relative to how many real users, spending real money, you can actually reach. In this sense, Musk is right to question Twitter’s data – but the problem is that there’s no perfect way to measure fake accounts, so while Twitter is standing by its figures, there’s not really a means for Musk to counter such, other than via anecdotal examples.

Which Musk has tried, while Twitter has also given Musk all of the internal data access that it can, to enable Musk’s team to make their own assessment.

Evidently, that hasn’t helped to clarify the situation, so now Musk is looking to walk away from the deal entirely, which could see things go one of three directions.

  1. Musk walks away from the deal, and pays Twitter a $1 billion break fee. Within the original terms of the deal, Musk agreed to a $1 billion charge if he opted out of the deal at any stage. That’s the minimum that it would cost Musk to exit the proposal – though many have also noted that it could be difficult for Musk to abandon the deal entirely, because he waived several due diligence measures within his original proposal, in order to hasten the Twitter deal. That could see Musk held to his original $44b offer regardless of any change of heart that he might have, while there are also some legal scenarios in which Musk would be forced to pay billions in costs to Twitter if he were to end the arrangement – though the specific amount of such would have to be determined by a court. Either way, Musk pays up, then leaves Twitter behind.
  2. Musk is forced to buy Twitter due to waivers in the original contract. As noted, some market watchers maintain that Musk will be forced to buy Twitter either way, due to the aforementioned waivers in the deal, though Musk’s team maintains that they negotiated access and information rights within the original Merger Agreement so that they could review key data and information before financing and completing the transaction. The legalities of this aspect could become the key element of a legal push by Twitter’s board, which has vowed to hold Musk to his original offer.
  3. Musk agrees to buy Twitter at a lower price. Another possibility is that Musk still buys Twitter, but at a lower price point, with this latest push being a tactic to bring down the offered price. Musk’s original $44b offer values Twitter at $54.20 per share (Musk, if you haven’t heard, loves references to ‘420’), which is significantly higher than the current $37 per share that TWTR stock is trading at. Maybe, by threatening to abandon the deal, that could prompt a renegotiation, which may still see Musk become the Tweeter in chief.

These are the three potential outcomes right now, all of which will cost Musk money – and none of which is particularly good for Twitter, which has already begun readying for the Musk era, by switching up growth strategies, slimming down its executive ranks and pumping out in-progress feature updates ahead of any shift.

Those decisions have also formed part of Musk’s pushback, with Musk and Co. noting that Twitter has made significant operational changes since the deal was offered, which alters the make-up of the company, and what Musk is paying for.
Twitter would argue that these changes are within normal business operations, but Musk’s team has flagged these as another element that it could use to extricate Musk from the deal.

And while abandoning the deal will ultimately cost Musk, from a financial perspective, this element has also been questioned, with a more technical market theory also floating around that Musk never intended to buy Twitter at all, and that he was simply using his Twitter bid as a means to sell off his Tesla options that were set to expire.

Musk sold $8.5b of Tesla stock to fund his Twitter takeover bid, which he would have had trouble doing without a plausible reason for such a sell-off. Now, Musk could exit the Twitter bid, pay the break fee, and pocket $7.5b. That seems like a big gamble, and a very public one at that, but if anyone had the audacity to pull it off…

So what comes next?

We either see a renegotiation, a legal battle of unknown outcome, or Twitter accepts the $1b break fee and moves on.

The latter could be very difficult, with the value of the company now significantly impacted by the Musk push, and the subsequent questions raised by him abandoning the deal. But it may also be the safest route for Twitter to take – unless it can swallow shaving billions off the original sell-off amount.

Because Musk’s team may well have solid legal footing, and Elon can afford the protracted legal battle that may result, especially given his Tesla options sell-off.

I mean, the prospect of a protracted legal battle doesn’t seem to be very daunting to Elon right now.

Can Twitter prove, definitively, that bots and spam make up only 5% of its active accounts? Does it have to?

It could take many months to establish the answers here, which will make things increasingly uneasy at Twitter HQ.



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Paris mayor to stop using ‘global sewer’ X

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Hidalgo called Twitter a 'vast global sewer'

Hidalgo called Twitter a ‘vast global sewer’ – Copyright POOL/AFP Leon Neal

Paris Mayor Anne Hidalgo said on Monday she was quitting Elon Musk’s social media platform X, formerly known as Twitter, which she described as a “global sewer” and a tool to disrupt democracy.

“I’ve made the decision to leave X,” Hidalgo said in an op-ed in French newspaper Le Monde. “X has in recent years become a weapon of mass destruction of our democracies”, she wrote.

The 64-year-old Socialist, who unsuccessfully stood for the presidency in 2022, joined Twitter as it was then known in 2009 and has been a frequent user of the platform.

She accused X of promoting “misinformation”, “anti-Semitism and racism.”

“The list of abuses is endless”, she added. “This media has become a vast global sewer.”

Since Musk took over Twitter in 2022, a number of high-profile figures said they were leaving the popular social platform, but there has been no mass exodus.

Several politicians including EU industry chief Thierry Breton have announced that they are opening accounts on competing networks in addition to maintaining their presence on X.

The City of Paris account will remain on X, the mayor’s office told AFP.

By contrast, some organisations have taken the plunge, including the US public radio network NPR, or the German anti-discrimination agency.

Hidalgo has regularly faced personal attacks on social media including Twitter, as well as sometimes criticism over the lack of cleanliness and security in Paris.

In the latest furore, she has faced stinging attacks over an October trip to the French Pacific territories of New Caledonia and French Polynesia that was not publicised at the time and that she extended with a two-week personal vacation.

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Meta Highlights Key Platform Manipulation Trends in Latest ‘Adversarial Threat Report’

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Meta Highlights Key Platform Manipulation Trends in Latest ‘Adversarial Threat Report’

While talk of a possible U.S.  ban of TikTok has been tempered of late, concerns still linger around the app, and the way that it could theoretically be used by the Chinese Government to implement varying forms of data tracking and messaging manipulation in Western regions.

The latter was highlighted again this week, when Meta released its latest “Adversarial Threat Report,” which includes an overview of Meta’s latest detections, as well as a broader summary of its efforts throughout the year.

And while the data shows that Russia and Iran remain the most common source regions for coordinated manipulation programs, China is third on that list, with Meta shutting down almost 5,000 Facebook profiles linked to a Chinese-based manipulation program in Q3 alone.

As explained by Meta:

“We removed 4,789 Facebook accounts for violating our policy against coordinated inauthentic behavior. This network originated in China and targeted the United States. The individuals behind this activity used basic fake accounts with profile pictures and names copied from elsewhere on the internet to post and befriend people from around the world. They posed as Americans to post the same content across different platforms. Some of these accounts used the same name and profile picture on Facebook and X (formerly Twitter). We removed this network before it was able to gain engagement from authentic communities on our apps.”

Meta says that this group aimed to sway discussion around both U.S. and China policy by both sharing news stories, and engaging with posts related to specific issues.

“They also posted links to news articles from mainstream US media and reshared Facebook posts by real people, likely in an attempt to appear more authentic. Some of the reshared content was political, while other covered topics like gaming, history, fashion models, and pets. Unusually, in mid-2023 a small portion of this network’s accounts changed names and profile pictures from posing as Americans to posing as being based in India when they suddenly began liking and commenting on posts by another China-origin network focused on India and Tibet.”

Meta further notes that it took down more Coordinated Inauthentic Behavior (CIB) groups from China than any other region in 2023, reflecting the rising trend of Chinese operators looking to infiltrate Western networks.  

“The latest operations typically posted content related to China’s interests in different regions worldwide. For example, many of them praised China, some of them defended its record on human rights in Tibet and Xinjiang, others attacked critics of the Chinese government around the world, and posted about China’s strategic rivalry with the U.S. in Africa and Central Asia.”

Google, too, has repeatedly removed large clusters of YouTube accounts of Chinese origin that had been seeking to build audiences in the app, in order to then seed pro-China sentiment.

The largest coordinated group identified by Google is an operation known as “Dragonbridge” which has long been the biggest originator of manipulative efforts across its apps.

As you can see in this chart, Google removed more than 50,000 instances of Dragonbridge activity across YouTube, Blogger and AdSense in 2022 alone, underlining the persistent efforts of Chinese groups to sway Western audiences.

So these groups, whether they’re associated with the CCP or not, are already looking to infiltrate Western-based networks. Which underlines the potential threat of TikTok in the same respect, given that it’s controlled by a Chinese owner, and therefore likely more directly accessible to these operators.

That’s partly why TikTok is already banned on government-owned devices in most regions, and why cybersecurity experts continue to sound the alarm about the app, because if the above figures reflect the level of activity that non-Chinese platforms are already seeing, you can only imagine that, as TikTok’s influence grows, it too will be high on the list of distribution for the same material.

And we don’t have the same level of transparency into TikTok’s enforcement efforts, nor do we have a clear understanding of parent company ByteDance’s links to the CCP.

Which is why the threat of a possible TikTok ban remains, and will linger for some time yet, and could still spill over if there’s a shift in U.S./China relations.

One other point of note from Meta’s Adversarial Threat Report is its summary of AI usage for such activity, and how it’s changing over time.

X owner Elon Musk has repeatedly pointed to the rise of generative AI as a key vector for increased bot activity, because spammers will be able to create more complex, harder to detect bot accounts through such tools. That’s why X is pushing towards payment models as a means to counter bot profile mass production.

And while Meta does agree that AI tools will enable threat actors to create larger volumes of convincing content, it also says that it hasn’t seen evidence “that it will upend our industry’s efforts to counter covert influence operations” at this stage.

Meta also makes this interesting point:

“For sophisticated threat actors, content generation hasn’t been a primary challenge. They rather struggle with building and engaging authentic audiences they seek to influence. This is why we have focused on identifying adversarial behaviors and tactics used to drive engagement among real people. Disrupting these behaviors early helps to ensure that misleading AI content does not play a role in covert influence operations. Generative AI is also unlikely to change this dynamic.”

So it’s not just content that they need, but interesting, engaging material, and because generative AI is based on everything that’s come before, it’s not necessarily built to establish new trends, which would then help these bot accounts build an audience.

These are some interesting notes on the current threat landscape, and how coordinated groups are still looking to use digital platforms to spread their messaging. Which will likely never stop, but it is worth noting where these groups originate from, and what that means for related discussion.

You can read Meta’s Q3 “Adversarial Threat Report” here.



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US judge halts pending TikTok ban in Montana

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TikTok use has continued to grow apace despite a growing number of countries banning the app from government devices

TikTok use has continued to grow apace despite a growing number of countries banning the app from government devices. — © POOL/AFP Liam McBurney

A federal judge on Thursday temporarily blocked a ban on TikTok set to come into effect next year in Montana, saying the popular video sharing app was likely to win its pending legal challenge.

US District Court Judge Donald Molloy placed the injunction on the ban until the case, originally filed by TikTok in May, has been ruled on its merits.

Molloy deemed it likely TikTok and its users will win, since it appeared the Montana law not only violates free speech rights but runs counter to the fact that foreign policy matters are the exclusive domain of the federal government.

“The current record leaves little doubt that Montana’s legislature and attorney general were more interested in targeting China’s ostensible role in TikTok than they with protecting Montana consumers,” Molloy said in the ruling.

The app is owned by Chinese firm ByteDance and has been accused by a wide swathe of US politicians of being under Beijing’s tutelage, something the company furiously denies.

Montana’s law says the TikTok ban will become void if the app is acquired by a company incorporated in a country not designated by the United States as a foreign adversary.

TikTok had argued that the unprecedented ban violates constitutionally protected right to free speech.

The prohibition signed into law by Republican Governor Greg Gianforte is seen as a legal test for a national ban of the Chinese-owned platform, something lawmakers in Washington are increasingly calling for.

Montana’s ban would be the first to come into effect in the United States – Copyright AFP Kirill KUDRYAVTSEV

The ban would make it a violation each time “a user accesses TikTok, is offered the ability to access TikTok, or is offered the ability to download TikTok.”

Each violation is punishable by a $10,000 fine every day it takes place.

Under the law, Apple and Google will have to remove TikTok from their app stores.

State political leaders have “trampled on the free speech of hundreds of thousands of Montanans who use the app to express themselves, gather information, and run their small business in the name of anti-Chinese sentiment,” ACLU Montana policy director Keegan Medrano said after the bill was signed.

The law is yet another skirmish in duels between TikTok and many western governments, with the app already banned on government devices in the United States, Canada and several countries in Europe.

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