Please ensure Javascript is enabled for purposes of website accessibility
EXPLAINER: Musk Twitter Turnaround Reflects Legal Challenges
gvw_ap_news
By Associated Press
Published 3 years ago on
October 5, 2022

Share

 

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.

RELATED TOPICS:

DON'T MISS

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

Gov. Newsom Offers $50K Reward in 2022 Kings County Homicide

DON'T MISS

Trump’s White House Launches COVID Website That Criticizes WHO, Fauci and Biden

DON'T MISS

Fresno ‘Powers Up’ the Nation’s Largest Combined Solar and Battery Storage Project

DON'T MISS

Trump Admin Asserts COVID-19 Originated in Chinese Lab, Targets Fauci

DON'T MISS

Vendors Back at Fresno’s Art Hop? Survey Wants to Know What You Think

DON'T MISS

Russian Missile Attack Kills One, Wounds 112 in Ukraine’s Kharkiv, Officials Say

DON'T MISS

Iran Says Nuclear Deal Is Possible if Washington Is Realistic

DON'T MISS

49ers Look to Strengthen Depleted Defense in NFL Draft

DON'T MISS

Habit Burger & Grill Quietly Drops Impossible Burger From Menu

DON'T MISS

What Happens After a Homeless Person Is Arrested for Camping? Often, Not Much

UP NEXT

Al Sharpton Calls Meeting With Target’s CEO Amid DEI Backlash ‘Very Constructive and Candid’

UP NEXT

Average US Rate on a 30-Year Mortgage Climbs to 6.83%, Highest Level Since Late February

UP NEXT

Google Holds Illegal Monopolies in Ad Tech, US Judge Finds, Allowing US to Seek Breakup

UP NEXT

Sean ‘Diddy’ Combs Seeks Two-Month Delay of May 5 Trial

UP NEXT

Temu and Shein Say They’re Raising Prices Due to Tariffs

UP NEXT

Former US Labor Officials Urge Contractors to Stand Firm on DEI

UP NEXT

Judge Orders Bank of America to Pay $540 Million in FDIC Lawsuit

UP NEXT

Jamie Dimon Sells About $31.5 Million Worth of JPMorgan Shares

UP NEXT

Drop in Job-Finding Rate, Rise in Time out of Work Could Signal Recession Ahead

UP NEXT

Lucid Motors to Acquire Nikola’s Arizona Facilities in $30M Deal

Trump Admin Asserts COVID-19 Originated in Chinese Lab, Targets Fauci

2 hours ago

Vendors Back at Fresno’s Art Hop? Survey Wants to Know What You Think

2 hours ago

Russian Missile Attack Kills One, Wounds 112 in Ukraine’s Kharkiv, Officials Say

2 hours ago

Iran Says Nuclear Deal Is Possible if Washington Is Realistic

2 hours ago

49ers Look to Strengthen Depleted Defense in NFL Draft

3 hours ago

Habit Burger & Grill Quietly Drops Impossible Burger From Menu

3 hours ago

What Happens After a Homeless Person Is Arrested for Camping? Often, Not Much

3 hours ago

Thousands of Pilgrims Trek Through New Mexico Desert to Historic Adobe Church for Good Friday

4 hours ago

Rams’ Draft Headquarters to Be at LAFD Air Base to Honor First Responders to Wildfires

4 hours ago

The US Has a Single Rare Earths Mine. Chinese Export Limits Are Energizing a Push for More

4 hours ago

Gov. Newsom Offers $50K Reward in 2022 Kings County Homicide

Gov. Gavin Newsom is offering a $50,000 reward for information leading to an arrest and conviction in the 2022 killing of a man on tribal la...

13 minutes ago

California Gov. Gavin Newsom speaks during a press conference in Los Angeles, Wednesday, Sept. 25, 2024. Newsom vetoed a landmark bill aimed at establishing first-in-the-nation safety measures for large artificial intelligence models Sunday, Sept. 29. (AP Photo/Eric Thayer, File)
13 minutes ago

Gov. Newsom Offers $50K Reward in 2022 Kings County Homicide

The logo of the World Health Organization is seen at the WHO headquarters in Geneva, Switzerland, January 28, 2025. (REUTERS/Denis Balibouse/File Photo)
53 minutes ago

Trump’s White House Launches COVID Website That Criticizes WHO, Fauci and Biden

1 hour ago

Fresno ‘Powers Up’ the Nation’s Largest Combined Solar and Battery Storage Project

2 hours ago

Trump Admin Asserts COVID-19 Originated in Chinese Lab, Targets Fauci

2 hours ago

Vendors Back at Fresno’s Art Hop? Survey Wants to Know What You Think

Firefighters work at the site of a garment production factory hit by a Russian missile strike, amid Russia's attack on Ukraine, in Kharkiv, Ukraine April 18, 2025. (REUTERS/Stringer)
2 hours ago

Russian Missile Attack Kills One, Wounds 112 in Ukraine’s Kharkiv, Officials Say

Iran's Foreign Minister Abbas Araqchi attends a press conference following a meeting with Russia's Foreign Minister Sergei Lavrov in Moscow, Russia, April 18, 2025. (Tatyana Makeyeva/Pool via REUTERS)
2 hours ago

Iran Says Nuclear Deal Is Possible if Washington Is Realistic

3 hours ago

49ers Look to Strengthen Depleted Defense in NFL Draft

Help continue the work that gets you the news that matters most.

Search

Send this to a friend