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Twitter’s Legal Team Unleashes on Elon Musk, as it Moves to Force Musk to Complete Takeover Deal

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Elon Musk Launches Hostile Takeover Bid for Twitter

Well, this is certainly a pointed opening to Twitter’s legal case against Elon Musk, and his attempt to cancel his $44 billion acquisition of the app:

In April 2022, Elon Musk entered into a binding merger agreement with Twitter, promising to use his best efforts to get the deal done. Now, less than three months later, 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.”

Nothing being hidden behind legal jargon there, Twitter is pissed, and they’re now looking to make Elon pay for what he’s done to their stock, their company, their future prospects, etc.

In the latest development in the ongoing Twitter/Musk saga, Twitter has officially launched legal action to counter Musk’s effort to terminate the deal, due to, according to Musk, Twitter’s unwillingness to provide him and his team with adequate data to prove its usage claims, and other elements.

But Twitter says that Musk can’t exit the deal now, and it has a range of examples of bad faith actions and public disclosures on Musk’s part which it says are in violation of the original agreement.

Specifically:

  • Twitter says that Musk has been acting against the proposed deal since the market started its recent downturn, and has breached the merger agreement repeatedly in the process
  • Twitter says that Musk has claimed to put the deal ‘on hold’ pending the satisfaction of ‘imaginary conditions’, and has breached his financing efforts obligations in the process
  • Musk has boasted publicly about violating his non-disclosure obligations under the original contract, both in relation to Twitter’s mDAU metric calculations and other internal data points
  • Musk has also repeatedly violated his non-disparagement obligation in the contract through public criticism of the company, and has misused confidential information in his public statements about fake accounts and Twitter’s processes.
  • Twitter says that one of the main reasons Musk cited for buying Twitter was to rid the platform of bots, which Musk is now using as a reason not to buy it. The two stances seem to conflict

In summary, Twitter says that Musk has leveled serious charges, both publicly and through lawyer letters, that Twitter has misled its investors and customers, which has materially damaged the company’s prospects, in violation of the agreed terms of the acquisition. Additionally, Twitter has outlined, in detail, how it’s worked to meet all of Musk’s information requests, beyond what it’s under obligation to do.

Yet, despite, this, Musk is now looking to exit the deal anyway – which, Twitter says, is actually the ultimate plan:

“From the outset, [the] defendants’ information requests were designed to try to tank the deal. Musk’s increasingly outlandish requests reflect not a genuine examination of Twitter’s processes but a litigation-driven campaign to try to create a record of non-cooperation on Twitter’s part. When Twitter nonetheless bent over backwards to address the increasingly burdensome requests, Musk resorted to false assertions that it had not.”

Twitter’s overview is a thorough and scathing assessment of Musk’s actions, which shows that Twitter has been taking notes, and has measured its legal case carefully. In some ways, the submission reads like a list of grievances that Twitter’s been just waiting to air out, and now, with Musk challenging the deal, it has an opportunity to do so.

Which is likely not good – either for Musk or ultimately Twitter itself.

Twitter also makes some interesting revelations about how the Musk push has impacted the company, including this note about employee retention.

“Musk has unreasonably withheld consent to two employee retention programs designed to keep selected top talent during a period of intense uncertainty generated in large part by Musk’s erratic conduct and public disparagement of the company and its personnel […] Employee attrition, meanwhile, has been on the upswing since the signing of the merger agreement.”

Another reason stated by Musk’s team for seeking to exit the deal has been the loss of key executive staff at the company, which materially alters the make-up of the organization. Twitter not only says that this is not part of the original agreement – as it specifically ensured any such provision was left out – but also, as pointed out here, that it has tried to work with Musk to address exactly this either way.

Twitter has also included this description of Musk’s efforts to use its data API to scan for fake accounts:

“Twitter also explained that it had placed “no artificial throttling of rate limits” [on Musk’s access]. In follow-up correspondence, it became clear that the “limit” Musk had bumped up against was not the result of throttling but a default 100,000-per-month limit on the number of queries that could be conducted. With his undisclosed team of data reviewers working behind the scenes, Musk had hit that limit within about two weeks.”

What the heck are Musk and Co. doing there? 10k queries against the data, in two weeks? No idea how they’re trying to find fake and spam accounts, but that seems excessive (Twitter notes that it removed the query cap to enable Musk’s team to continue their analysis).

Overall, what Twitter’s saying here is that it believes Musk has acted in bad faith, and that he’s only seeking to get out of the deal now due to the market downturn, which has impacted his personal wealth, along with overall market performance.

But letting Musk exit now would leave the company in a much worse state:

“Because of defendants’ breaches and the uncertainty they have generated, Twitter faces irreparable harm. Defendants stipulated in the merger agreement that “irreparable damage for which monetary damages, even if available, would not be an adequate remedy would occur in the event that the parties hereto do not perform the provisions of this Agreement (including failing to take such actions as are required of it hereunder to consummate this Agreement) in accordance with its specified terms or otherwise breach such provisions.”

There’s also this:

“For Musk, it would seem, Twitter, the interests of its stockholders, the transaction Musk agreed to, and the court process to enforce it all constitute an elaborate joke.”

Richest man in the world or not, Twitter’s sick of Musk’s antics, and it clearly has no intention of letting him off the $44 b hook.

Twitter also reiterates that there is no financing contingency and no diligence condition.

“The deal is backed by airtight debt and equity commitments.”

‘Airtight’, which Twitter will be looking to enforce as it seeks to consummate the Musk deal, whether Elon likes it or not.

And again, the ultimate loser here will be Twitter, the company, which continues to lose staff due to uncertainty, and will eventually end up in the hands of someone who really doesn’t want to own it.

That doesn’t seem like the ideal foundation for future success, but that’s where we’re at.

Musk hasn’t provided any detailed response to Twitter’s counter claims as yet, though he did once again post a cryptic tweet following the release.

Whether Musk will actually be laughing at the end of this seems increasingly doubtful.

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Twitter’s Cancelling Free Access to its API, Which Will Shut Down Hundreds of Apps

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Twitter’s Cancelling Free Access to its API, Which Will Shut Down Hundreds of Apps

Well, this is certainly problematic.

Twitter has announced that, as of February 9th, it’s cutting off free access to its API, which is the access point that many, many apps, bot accounts, and other tools use to function.

That means that a heap of Twitter analytics apps, management tools, schedulers, automated updates – a range of key info and insight options will soon cease to function. Which seems like the sort of thing that, if you were Twitter, you’d want to keep on your app.

But that’s not really how Twitter 2.0 is looking to operate – in a bid to rake in as much revenue as absolutely possible, in any way that it can, Twitter will now look to charge all of these apps and tools. But most, I’d hazard a guess, will simply cease to function.

The bigger business apps already pay for full API access – your Hootsuite’s and your Sprout Social’s – so they’ll likely be unaffected. But it could stop them from offering free plans, which would have a big impact on their business models.

The announcement follows Twitter’s recent API change which cut off a heap of Twitter posting tools, in order, seemingly, to stop users accessing the platform through a third-party UI. 

Now, even more Twitter tools will go extinct, a broad spread of apps and functions that contribute to the real-time ecosystem that Twitter has become. Their loss, if that’s what happens, will have big impacts on overall Twitter activity.

On the other hand, some will see this as another element in Twitter’s crackdown on bots, which Twitter chief Elon Musk has made a personal mission to eradicate. Musk has taken some drastic measures to kill off bots, some of which are having an impact, but Musk himself has also admitted that such efforts are reducing overall platform engagement

This, too, could be a killer in this respect

It’ll also open the door to Twitter competitors, as many automated update apps will switch to other platforms. This relates to things like updates on downtime from video games, weather apps, and more. There are also tools like GIF generators and auto responders – there’s a range of tools that could now look for a new home on Mastodon, or some other Twitter replicant. 

In this respect, it seems like a flawed move, which is also largely ignorant of how the developer community has facilitated Twitter’s growth. 

But Elon and Co. are going to do things their own way, whether outside commentators agree or not – and maybe this is actually a path to gaining new Twitter data customers, and boosting the company’s income. 

But I doubt it.

If there are any third-party Twitter apps that you use, it’ll be worth checking in to see if they’re impacted before next week.



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Meta ‘Year of Efficiency’ call from Zuckerberg was what Street needed

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Meta 'Year of Efficiency' call from Zuckerberg was what Street needed

Mark Zuckerberg, chief executive officer of Meta Platforms Inc., center, departs from federal court in San Jose, Calif., on Dec. 20, 2022.

David Paul Morris | Bloomberg | Getty Images

With one simple slogan, Meta CEO Mark Zuckerberg temporarily quelled investor discontent with his company’s multibillion-dollar investment into the futuristic metaverse.

“Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization,” Zuckerberg said as part of the release of Meta’s fourth-quarter earnings report.

Following a 64% plunge in Meta’s share price in 2022, Wall Street cheered the report, sending the stock up almost 20%, extending a rally that began late last year. Based on after-hours pricing, Meta is trading at its highest since July.

Growth is not what’s getting investors excited. Meta reported better-than-expected revenue in the fourth quarter, but sales still sank 4% from a year earlier, marking the third straight quarterly decline. And the forecast range for the first quarter suggests that year-over-year revenue could increase, but it could also fall again.

Rather, Zuckerberg’s commitment to cost cuts and efficiency is a sign that increasing profitability is important to Meta, which was known as a growth machine prior to last year’s slump.

“The first 18 years I think we grew it 20%, 30% compound or a lot more every year,” Zuckerberg said on the earnings call. “And then obviously that changed very dramatically in 2022, where our revenue was negative for growth, for the first time in the company’s history.”

In looking to the future, Zuckerberg struck a realistic tone.

“We don’t anticipate that that’s going to continue,” he said, regarding the recent drop in revenue. “But I also don’t think it’s going to go back to the way it was before.”

Meta lowered its estimates for total expenses in 2023 to be in the range of $89 billion to $95 billion, down from its prior outlook of $94 billion to $100 billion. In November, the company announced it would lay off over 11,000 workers, or 13% of its staff.

Zuckerberg said Meta will be more “proactive on cutting projects that aren’t performing or may no longer be crucial” and that it will emphasize “removing layers of middle management to make decisions faster.”

Meta is also reducing spending as it builds new data centers that are intended to be more efficient while still able to power the company’s various artificial intelligence technologies. Capital expenditures are now expected to be in the range of $30 billion to $33 billion for 2023 instead of $34 billion to $37 billion.

Zuckerberg is selling investors on a story they want to hear, acknowledging that the company got bloated and needed more financial discipline. One of Zuckerberg’s top deputies, technology chief Andrew “Boz” Bosworth, wrote a personal essay just a few days ago echoing that sentiment.

Still, Meta has plenty of challenges ahead, in terms of both costs and reviving its core ad business.

Meta’s Reality Labs unit, which is responsible for developing the nascent metaverse, lost $13.7 billion in 2022. Finance chief Susan Li told analysts that the company isn’t planning for any reduction in that unit anytime soon. Zuckerberg still sees it as the company’s future.

Digital advertising, meanwhile, is suffering from a struggling economy, and Li gave no indication that companies are planning to dramatically increase their spending in 2023.

Meta has also yet to recover from Apple’s 2021 iOS privacy update that made it harder to target users with ads. Li said the company has been improving its online advertising system, but Apple’s update is “still certainly an absolute headwind to our revenue number.”

During the question and answer part of the call, Zuckerberg was asked about Meta’s progress in generative artificial intelligence, which has become the latest hot thing in Silicon Valley. His answer indicated that Meta is pursuing opportunities there, but will be cautious in how quickly it proceeds. Running these programs is expensive, and Meta needs to ensure it can develop them affordably, he said.

Zuckerberg said that while Meta is researching how best to incorporate the new technology, he wants “to be careful not to get too ahead of the development of it.”

Correction: Meta’s earnings report and CEO Mark Zuckerberg’s comments occurred after the market close on Wednesday. An earlier version misstated the day.

WATCH: Meta grows in daily active users, shares pop on revenue beat

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Pinterest Focuses on Travel Inspiration and Education for Black History Month

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Pinterest Focuses on Travel Inspiration and Education for Black History Month

Pinterest is taking a unique approach to Black History Month, with a new ‘Find Your Routes’ Black Travel Hub initiative, which aims to highlight places that have strong connections to Black history, while also showcasing Black-owned businesses.

As explained by Pinterest:

“Find Your Routes” is inspired by The Negro Motorist Green Book aka “The Green Book”. The Green Book was a guidebook for Black travelers during the Jim Crow era that provided a list of accessible hotels, boarding houses, taverns, restaurants, service stations and other establishments throughout the country that served Black Americans patrons.”

The Black Travel Hub, which you can find here, will present a range of travel options, along with their history, with creators from the US, Colombia, Jamaica, Brazil and more, all taking part in presenting their city.

It could be a good way to provide education alongside inspiration in the app, while also helping people to connect, and support highlighted communities.

Pinterest will also be showcasing Black-owned businesses on Pinterest TV, while internally, it’s also hosting a company-wide event ‘to help employees gain knowledge about the history, present, and future of Black travel through the lens of Black Pinployees’.

As noted, it could be a good way to both spark important conversations, and inspire new travel journeys, which include an extra level of cultural understanding and education, along with a leisure break.

It’s an interesting take on the celebration either way, and it’ll be worth noting what sort of reaction the initiative gets, and whether it inspires more travel as a result.

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