EXPLAINER: Musk Twitter turnaround reflects legal challenges

Oct 4, 2022, 9:02 AM | Updated: Oct 5, 2022, 10:06 am
Shown is the Leonard L. Williams Justice Center housing the Court of Chancery in Wilmington, Del., ...

Shown is the Leonard L. Williams Justice Center housing the Court of Chancery in Wilmington, Del., Tuesday, Oct. 4, 2022. Elon Musk is abandoning his legal battle to back out of buying Twitter by offering to go through with his original $44 billion bid for the social media platform. The offer comes just two weeks before Twitter's lawsuit seeking to force Musk to go through with the deal goes to trial in Delaware Chancery Court. (AP Photo/Matt Rourke)

(AP Photo/Matt Rourke)

              The symbol for Twitter appears above a trading posts on the floor of the New York Stock Exchange, Tuesday, Oct. 4, 2022. Trading in shares of Twitter was halted after the stock spiked on reports that Elon Musk would proceed with his $44 billion deal to buy the company after months of legal battles.(AP Photo/Seth Wenig)
            
              Shown is the Leonard L. Williams Justice Center housing the Court of Chancery in Wilmington, Del., Tuesday, Oct. 4, 2022. Elon Musk is abandoning his legal battle to back out of buying Twitter by offering to go through with his original $44 billion bid for the social media platform. The offer comes just two weeks before Twitter's lawsuit seeking to force Musk to go through with the deal goes to trial in Delaware Chancery Court. (AP Photo/Matt Rourke)
            
              FILE - Elon Musk speaks at the SATELLITE Conference and Exhibition March 9, 2020, in Washington. Trading in shares of Twitter were halted after the stock spiked, Tuesday, Oct. 4, 2022 on reports that Musk would proceed with his $44 billion deal to buy the company after months of legal battles. (AP Photo/Susan Walsh, File)

WASHINGTON (AP) — Elon Musk’s sudden about face on a $44 billion agreement to acquire Twitter, reversing an earlier attempt to rescind that offer, came as a surprise even from the mercurial billionaire who loves to shock.

It sent shares of the social media platform soaring Tuesday and stoked alarm among some media watchdogs and civil rights groups about what kind of free speech will flourish on Twitter under Musk.

Yet the legal challenges faced by Musk in the three months since he announced that he intended to back out of the deal continued to mount, increasingly closing off avenues of escape for the Tesla CEO.

Gambles, missteps, and potential reprieves that failed to pan out, weakened an already dicey case for withdrawal. And then there is the potentially embarrassing deposition scheduled for Thursday and what most considered a long-shot chance for reprieve before a Chancery Court in Delaware in less than two weeks.

Musk said he’ll only agree to continue willingly with the acquisition if that trial is put on hold.

Here’s a look at how the legal battle unfolded:

What was Musk’s main argument for backing out of buying Twitter?

Musk grounded his argument largely on the allegation that Twitter vastly misrepresented how it measures the magnitude of “spam bot” accounts, a discrepancy that could diminish the money advertisers are willing to pay to appear on the platform.

But he faced a difficult challenge in making that case to Chancellor Kathaleen St. Jude McCormick, the court’s head judge. The judge was widely expected to focus narrowly in line with the court’s mandate: on the merger agreement between Musk and Twitter, and whether anything had changed since it was signed in April that would justify terminating the deal. She also made clear she wanted to proceed with the case swiftly, and several times denied Musk’s attempts to delay it and keep bringing in new evidence.

A former Twitter head of security, fired early this year and turned whistleblower, appeared to bolster Musk’s argument. Peiter “Mudge” Zatko, a respected cybersecurity expert, filed complaints in July with federal regulators and the Justice Department alleging that Twitter misled regulators about its efforts to control millions of spam accounts as well as its cyber defenses.

Yet any hope that Musk’s case would be bolstered by Zatko’s disclosures was a “longshot,” said Brian Quinn, a professor at Boston College Law School, and in the end, “it didn’t really change the (legal) landscape in any significant way.”

Did Musk’s approach to buying Twitter hurt or help his case?

“He was fairly cavalier,” Quinn said. Recently released text messages between Musk and others appear jubilant over Musk’s large stake in Twitter and the potential for taking a board seat. It wasn’t until after Musk signed the merger agreement in late April that he undertook what’s called due diligence, or a close inspection, of the company’s health. It is only then that he started lodging complaints about bots, Quinn said. That may not have impressed the judge as the right approach for someone buying a major company.

Why did Musk change his mind now?

In addition to the trial and Thursday deposition, the cost of borrowing money is ticking steadily higher as the Federal Reserve and central banks worldwide attempt to constrain soaring inflation. If Musk lost at trial, the judge could not only force him to close the deal but also impose interest payments that would make Twitter even more expensive for Musk than the current $44 billion price tag. Experts say the interest costs likely started piling up mid-September.

But of course the deal isn’t done yet, and there are legal hoops yet to be jumped through. Given Musk’s track record and volatility, it would be a mistake to assume that it’s tied up in a bow.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

concede...
Associated Press

GOP’s Joe Kent contests results of Washington state race

Republican Joe Kent's campaign said Friday it intends to request a machine ballot recount of the counties within southwest Washington state's 3rd Congressional District.
18 hours ago
Gavel...
Associated Press

Case against man arrested in 1994 death of woman dismissed

Criminal charges against a man suspected in the 1994 murder of a Vancouver, Washington, woman have been dismissed.
18 hours ago
Associated Press

Amnesty International Canada says it was hacked by Beijing

TORONTO (AP) — The Canadian branch of Amnesty International said Monday it was the target of a cyber attack sponsored by China. The human rights organization said it first detected the breach on Oct. 5, and hired forensic investigators and cybersecurity experts to investigate. Ketty Nivyabandi, Secretary General of Amnesty International Canada, said the searches […]
18 hours ago
FILE - In this courtroom drawing, from left, Brandon Caserta with his attorney Michael Darragh Hill...
Associated Press

Prosecutors in Whitmer kidnap plot say life sentence fits

Federal prosecutors told a judge Monday that a life prison sentence would be justified for the leader of a plot to kidnap Michigan Gov. Gretchen Whitmer, saying his goal to turn the country upside down in 2020 was a forerunner of rampant anti-government extremism. “If our elected leaders must live in fear, our representative government […]
18 hours ago
FILE - Norfolk Southern locomotives are moved in the in the Conway Terminal in Conway, Pa., Sept. 1...
Associated Press

Investors press railroads to add sick time for workers

OMAHA, Neb. (AP) — Major freight railroads are facing pressure to add sick days for their workers from a new front: An influential investment group says some of its members are now pushing the measure that Congress declined to as part of the contracts they imposed last week to avert a potentially devastating nationwide rail […]
18 hours ago
FILE - A bulldozer clears an area of forest that will be the line of the Mayan Train in Puerto More...
Associated Press

Mexico pledges to complete huge elevated train in one year

MEXICO CITY (AP) — Mexico’s troubled Maya Train tourist project will now include a 45-mile (72 kilometer) stretch of elevated trackway through the jungle, President Andrés Manuel López Obrador said Monday. López Obrador has changed his mind a number of times on his pet project, which is intended to ferry tourists around the Yucatan peninsula. […]
18 hours ago

Sponsored Articles

Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.
SHIBA WA...

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Work at Zum Services...

Seattle Public Schools announces three-year contract with Zum

Seattle Public Schools just announced a three-year contract with a brand-new company to the Pacific Northwest to assist with their student transportation: Zum.
EXPLAINER: Musk Twitter turnaround reflects legal challenges