Elon Musk made his bid, and now he might actually have to lie in it

Well, Twitter shareholders have approved Elon Musk’s Twitter dot com acquisition, so that’s nice. Musk has, at this point, sent several letters trying to terminate the deal, and who knows, maybe he’ll send more. His pretext for backing out of the deal — I am not going to try to pretend that he really believes this stuff — isn’t looking so good, partly because his whistleblower deus ex machina seems to be a bust. 

The pretext Musk is leaning on is that Twitter is knowingly lying about its user numbers, overcounting bots, and so on. A whistleblower complaint filed by Peiter “Mudge” Zatko maybe bolsters his case slightly, but not much.

I’ve been trying to take Zatko seriously. But Robert Graham really put into words the thing I was thinking: Zatko doesn’t know how to get things done in a corporate culture:

Underlings expect that their bosses will help defend them in their work disputes. But executives don’t have that luxury. They are at the top of the food chain and are themselves responsible for resolving conflicts. There is nobody to go to in order to complain, not the board who only wants results, and not HR, because you are above HR. Not anybody — you have to resolve your own disputes.

Zatko’s complaint seems to be about looking for dispute resolution in the court of public opinion, because he was unable to resolve his dispute with [Twitter CEO Parag] Agrawal himself.

Zatko also did a lot of whining about Jack Dorsey, the former CEO of Twitter, in his complaint. I’m no executive, but if you give me an absentee boss, I am simply going to do whatever the fuck I want. I am surprised this did not occur to Zatko because one way to implement the changes Zatko wanted was to run Dorsey over! He could have done that by plotting with other mutinous execs or just through rogue implementation. Given how Zatko describes Dorsey as a “disengaged CEO” who didn’t speak to him for “days or weeks,” steamrollering Dorsey should have been child’s play. 

In fact, the more I hear, the more I think current Twitter CEO Parag Agrawal had a point about Zatko’s “poor leadership,” which was one of the reasons Agrawal cited for Zatko’s firing. I’m not alone, either — Twitter shares closed up 2 percent after Zatko’s testimony on Tuesday, which doesn’t sound like much until you realize the rest of the stock market fell. Seems like investors didn’t think much of Zatko’s complaints, either.

Plus, as Techdirt’s Mike Masnick has noted, Zatko’s thoughts on Twitter’s measurement of monetizable users don’t square with Musk’s arguments about bots and fake accounts. 

There is one bright side for Musk here, though. (Well, besides the Zatko-related shareholder lawsuit.) He tweeted out a link to the Tesla merch store where one could order a “Cyberwhistle” for 1,000 Dogecoin. The “Cyberwhistle” is now out of stock, and presumably, Tesla is many Dogecoin richer.

What are Musk’s lawyers doing during all this? Well, according to Twitter, they are not complying with the discovery (discovery, discovery, discovery, discovery, discovery!) process.

In a filing, Twitter claimed that Musk didn’t produce texts he and the guy who runs his family office, Jared Birchall, sent each other. You may remember Birchall, aka “James Brickhouse,” from Musk’s 2019 defamation trial: he entered into a non-disclosure agreement with a con man promising to dig up dirt on the caver that Musk had called a “pedo guy” and also acquired the URL justballs.com for Musk. 

Twitter says it knows these messages between Musk and Birchall exist because third parties have supplied them. “Defendants have refused to explain this discovery failure,” Twitter’s lawyers wrote. “The documents have either been improperly destroyed or improperly withheld.”

Twitter cites some messages Morgan Stanley produced between Musk and his banker Michael Grimes (no relation), where Musk tells Grimes to “slow down just a few days” for a speech from Russian leader Vladimir Putin. “It won’t make sense to buy Twitter if we’re heading into WW3,” Musk texted Grimes. These messages were sent on May 8th, after Musk had signed his merger agreement for $44 billion on April 25th, and they do suggest that Bloomberg’s Matt Levine is right: Elon Musk has no idea how a merger works.

A second set of texts between Grimes and Musk has Musk saying that they need to do due diligence, which Musk had already waived. “An extremely fundamental due diligence item is understanding exactly how Twitter confirms that 95% of their daily active users are both real people and not double-counted,” Musk texted on May 8th. (On May 17th, Musk would publicly announce the deal “could not move forward” because of the bots, so I assume he already had cold feet in the texts.) “If that number is more like 50% or lower, which is what I would guess based on my feed, then they have been fundamentally misrepresenting the value of Twitter to advertisers and investors.” 

Look, it sounds basically right to me that Musk based his bot estimates on his own personal Twitter experience. But that’s a terrible way to adjudicate how many real users are on Twitter. 

In response, Musk’s lawyers said that not handing all the texts over was just a wee accident, then complained about Twitter’s tone. (There’s even a sanctimonious footnote about how being too mean to other lawyers is unethical.) The lawyers cite some problems with Twitter’s production of other documents, then whine that Twitter’s “premature motion and overheated rhetoric” are meant to distract from Twitter’s own failures. Plus, those messages were produced eventually, Musk’s team complains. See, the real problem was the timeline, which is far too fast, and Twitter’s lawyers, who are just too mean.

I do not find this convincing, but I’m not a judge.

Anyway, Musk’s lawyers say that the omission of the texts with the Morgan Stanley banker was an oversight, and they’d supplied other texts between Grimes (the banker, not Musk’s ex) and Musk. They’ve produced these messages, they say.

One other fun sideline occurs in a footnote of the Twitter filing. Apparently, Marc Andreessen of a16z had been discussing co-investing with Musk in Signal, a text messaging platform where messages can be set to auto-delete. Musk’s lawyers say he does not ordinarily use this for business. I think Twitter’s lawyers are right to be skeptical of Musk’s claims that he doesn’t ordinarily use Signal for business transactions, but as Musk’s lawyers point out, this exchange happened before Musk decided to renege. Messy, though.

I dunno, man. I don’t blame the hedge fund managers who are betting Musk will be forced to acquire Twitter. I’m not that impressed by Musk here! It kind of seems like he’s a goofus who doesn’t really have a case! I do love the drama, though: one of the hedge fund managers betting against Musk is David Einhorn, who was once mailed a set of short-shorts after he declared he was shorting Tesla. (This was brand promotion from a company selling shorts with a 5.5-inch inseam, not Musk’s doing.)

On the other hand, Musk has managed to avoid having his emails enter discovery, a significant win for him and a significant loss for me, a person who loves reading other people’s email. 

Maybe he’ll be forced to buy Twitter, and I’ll finally log off from the hell site. But it’s like Musk’s money has coated him in Teflon — consequences for his action slide right off him. The SEC hasn’t been able to hold him to account. NASA hasn’t, either. Nor has the National Labor Relations Board, which ordered him to delete a tweet that’s still up. Why would the Delaware Court of Chancery be any different?