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Don’t Expect The US Government To Actually Stop Elon From Buying Twitter
from the textbooks-to-be-written dept
Honestly, the only thing one can say about the whole Elon Musk buying Twitter situation is that you should expect the unexpected to happen. Nothing about this deal has been normal, even though some moves (like Musk coming up with laughably ridiculous pretextual excuses to try to get out of the deal) were telegraphed way in advance. The Delaware Court of Chancery has said that the deal needs to be completed by Friday October 28th or there will be hell to pay (if you’re Elon Musk), and in all likelihood that’s exactly what’s going to happen. I know a lot of people insist he doesn’t intend to close the deal, or that he doesn’t have the money, or that something else will happen to stop it, and I find all of those claims to be unlikely at best. The most likely scenario is that in a week, Twitter will be owned by Elon Musk.
Of course, last night a new wrinkle entered the chat, when Bloomberg reported that the US government was considering a security review for Musk’s companies, including reviewing his Twitter buyout. The details here are a bit sketchy:
Officials in the US government and intelligence community are weighing what tools, if any, are available that would allow the federal government to review Musk’s ventures.
One possibility is through the law governing the Committee on Foreign Investment in the United States to review Musk’s deals and operations for national security risks, they said.
The interagency panel, known as CFIUS and overseen by the Treasury Department, reviews acquisitions of US businesses by foreign buyers. It is not clear if a CFIUS review — which would involve assessments by the Departments of State, Defense, and Homeland Security, among others — would offer the government a legal way to conduct a review, the people said.
So, first off, this seems like wishful thinking on the part of someone, rather than a serious issue. Honestly, it feels little different from Donald Trump’s random freakout about TikTok (though he did take that further than seemed likely at the time).
As the Bloomberg piece notes, it’s not clear that CFIUS has authority here. Musk is not a foreign buyer. He’s been a US citizen for two decades.
The strange part (or, really, perhaps not that strange) is that Musk seems to be leaning into this as a possible exit (even though it’s not). When someone tweeted that “it would be hysterical if the government stopped Elon from over paying for Twitter,” Musk responded with the “100” emoji and the “crying laughing” emoji, showing agreement:
But, once again, that’s not how any of this works. As the excellent Chancery Daily notes, the merger agreement takes this possibility into account, and basically puts all of the liability on Musk to “get himself out of” these problems or face massive damages from the court. This is not a case where the US government can say “you can’t buy Twitter” and Musk gets to walk away.
Specifically, if I’m reading the merger agreement properly, it says that if there are any regulatory holdups to the deal, it’s on Elon and his companies to sort that shit out:
The Equity Investor, Parent and Acquisition Sub agree to take promptly any and all steps necessary to avoid or eliminate each and every impediment and obtain all Consents, actions, non-actions, approvals or waivers (or, as applicable, expiration or termination of the waiting periods with respect thereto) under any Antitrust Laws, Foreign Investment Laws (or, as applicable, expiration or termination of the waiting periods with respect thereto) or other Law that may be required by any foreign or U.S. federal, state or local Governmental Authority, in each case, with competent jurisdiction, so as to enable the parties to consummate the transactions contemplated by this Agreement, including the Merger, as promptly as practicable, but prior to the Termination Date…
So… if Musk is actually not trying to get past any of these regulatory hurdles (should they show up) then this is going back to court and the 💯🤣 might (I know, I know) become evidence that he’s violating that portion of the agreement.
And that’s not even getting into a bunch of Musk’s other activities, mainly with his recent pushing of Russian propaganda and even cozying up to Russian officials, which some conspiracy theorists are arguing is an attempt to pressure the US to go this route and block the deal. He’s been pushing pro-Russian propaganda for a few weeks now, and then initially tried to demand payment from the US government to keep Starlink running in Ukraine, before doing a reverse on that after it started reflecting negatively on him. But this exchange with former Russian Prime Minister (and Putin stand-in) Dmitry Medvedev is just… kinda weird?
Anyway, if Musk’s plan is to make himself a threat to US national security to get out of the Twitter deal, it’s not going to work. Because that’s not how this works, and if he actually was doing that (and I don’t think he is) it would end extremely badly for Musk, with him having to pay massive damages to Twitter and facing a bunch of other problems for being a national security threat. Musk has shown himself to be impulsive and not particularly bright, but even this seems beyond him.
So, yeah: this is almost certainly all a distraction combined with some wishful thinking. Chances are that Musk will own Twitter within a week, whether or not he is a security threat.
Filed Under: cfius, elon musk, merger agreement, national security
Companies: twitter
Comments on “Don’t Expect The US Government To Actually Stop Elon From Buying Twitter”
Musk has gone full D.D. Harriman, and is now at the point where his crazy tactics to achieve his goal (whatever that is) lead to his losing control of everything as the legal chickens come home to roost.
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I’m just waiting for the John McAfee stage of his mental deterioration.
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The crypto stage, the running for office stage or the murdering his neighbour stage?
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All 3.
Elon’s already got the crypto scams bit down.
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True, but I don’t think he’s got to the murder stage yet. Who knows, though…
At least he’s not eligible to be the next Trump unless the SCOTUS is that far bought off by the right wing.
Wait, so then does that mean I should expect the US government to stop him?
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I would be very cautious about that. After all, no one expects the Spani… US Government Inquisition!
Re: On the unexpected..
The surprises usually come from Mr Musk… but remember that he and twitter are back in delaware’s chancery court on the 28th, and @chancery_daily thinks that specific performance is very much in the cards.
She (@chancery_daily) also points out that there’s other action against Tesla in that court, where it seems Musk told insiders and the board one thing and shareholder’s another, and where it seems Musk may not have had a legally required minder to keep his stock-moving surprises and jokes to a minimum.
Finally, if Musk wants twitter to hold value for long, he’s going to need to figure out how to get more ads or get paid more for ads on twitter. I don’t see how he can grow users or get paid directly by users.
My naive suggestions: If your tweets get moderated, you see more ads, and, if you aren’t logged in, you see ads.
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You’re gonna see ads on Twitter regardless of whether you’re logged in. (Adblockers notwithstanding, of course.) And if you’re not using a frontend like Nitter, you don’t get to see much of a single person’s timeline unless you’re logged in. (At least, that’s how it works on my mobile browser.) You also don’t get to see any content that’s marked as sensitive or “age inappropriate” or whatever their wording is unless you log in (or use a Nitter instance based in a country where Twitter doesn’t outright block all such content).
Trust me when I say that Twitter tries very hard to make people get an account—and “seeing ads” is not part of the equation.
Re: Re: Re: Twitter without logging in
Yes, Twitter tries to force you to log in…but it’s not difficult to cheat the current algorithm, and I don’t see any ads when not logged in but I do see all of my favorite timelines.
To cheat, at least on the desktop using Firefox, you need to know that twitter pops up the annoying “log in, dammit” screen at certain fixed distances of scrolling from the top of the feed. If you jump over those, the popup doesn’t appear, and if it does, re-load the page and scroll past it.
The pop up also doesn’t appear within a thread being shown until you get to “more tweets” at the end.
I have no idea how many do that, I suspect its a tiny minority that have found this hack which incidentally avoids twitter’s ads.
Hey, maybe they could grow users by not being so insistent about logging in, hmm???
The thing is, although certain people whine about Twitter being some kind of monopoly, it’s not true. It’s one of several mainstream outlets where speech occurs, and people who haven’t been hateful morons still have accounts on multiple competing platforms.
If Musk manages to do the things he promises – promote the far right who had previously been kicked off, make the platform more profitable through various subscriptions, etc., then I ‘m not sure if most current users would follow. I don’t engage much there, but I’d imagine the accounts I generally follow, from entertainment news and podcast to actual IRL friends would easily find another platform. Similarly with Kanye buying Parler – I somehow doubt the audience he thinks he’ll get will be the one that’s lucrative.
All power to them if they do find their niche and hopefully without formenting problems in the physical world, but I dare say that at least in my experience, these move are going to remove a lot of people in favour of the competition the buyers pretended they didn’t have.
I hope that Musk’s Russian connections and West’s delusions don’t lead to too many real life problems outside of those platforms, but I think they’re kidding themselves if they think there’s a widespread mainstream customer base waiting to pay them money. I suspect that instead we’ll have a situation where the people who agree with Kanye’s manic anti-semitic episodes and Musk’s tantrums are a diminishing pool, and decent human beings will go elsewhere. After all, despite their claims, people who aren’t hateful bags of crap have way more choice.
Re: I agree
I totally agree with this. Twitter is one of those platforms that can easily lose its network effect by going south, and I fully expect that to happen when Musk takes over.
On the other hand, at least one person I follow on Fediverse is talking about an “eternal October” being imminent. For better or for worse, I agree.
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What does an ‘eternal October’ look like, exactly?
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Every store carry Halloween-decorations all year round…
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Like Eternal September but netiquette and cluelessness levels are marginally better.
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Eh, I don’t think the Fediverse has much to worry about. A significant number of people who leave Twitter will probably drop off social media for good if their only realistic alternatives are Facebook, the right-wing Twitter-likes, or Masto instances. One is Facebook, one is a bunch of shitpits full of bigots, and one requires a bit more working knowledge than the “fire and forget” nature of Twitter.
Fedi also has less bullshit to worry about—not a lot of celebrities and brands on the Fediverse—but that also means a significant number of people who might make the jump probably won’t for that exact reason. Some people are on social media to follow their favorite celebrities; unless they all move to the Fediverse (and I don’t see that happening), a good number of their followers will stay where the celebrities keep posting.
If the Musk deal goes through, I can imagine a large amount of people abandoning ship for a Masto instance. But it won’t be an amount that “breaks the Fediverse” or some shit.
Shouldn’t that read Ukraine?
As far as I know, it is the supposedly “free” service that he is providing to the Ukrainian solders is costing too much and somebody (US gov’t) should be paying for it.
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Yes. Ukraine… Fixed now.
Government gets what government wants. If Government bans Twitter sale or delay it by an year under the pretext of security review or SEC control, the transaction will be blocked, period. No chancellor can rattle a pen.
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I’m no expert but it seems like the block would be for specific reasons, and Musk would be responsible for remedying those reasons. The government is not going to just say “you, Elon Musk, are permanently barred from purchasing Twitter, Inc.” It will be about details of the deal, or who is financing it, or something. Unless maybe he’s found to be an agent of a foreign power? Seems far-fetched.
Re: government cant do whatever it wants
The US government cant do anything it wants. They are looking into what legal powers they do have and whether they can, but it looks like they cant.
Musk deserves to overpay for Twitter and kill it off through bad management and Twitter deserves to die off for entertaining Musk’s offer in the first place.
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The thing is: the part of ‘twitter’ that enterained the deal with Musk will most likely take their money and run after the deal (they likely wont be a part of twitter afterwards).
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True, perhaps, but what else is on the horizon?
Twitter’s misuse (and yes, there are positive uses for it, as with any tool) is symptom of a larger problem. From the far right demanding they and other social media platforms be forced to tolerate them (instead of working out why most people don’t wish to associate with them) to the attempts to write laws that only affect such sites and don’t actually destroy free speech, there’s a lot of activity right now. I suspect that Twitter will fail badly if Musk’s proposed changes go through after he buys it, and Kanye’s Parler purchase is almost certainly hilariously doomed.
But, how this changes the overall landscape remains to be seen. Twitter dying doesn’t remove the instincts that led to its success, and it’s only a blip in the media landscape overall. What will replace it?
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Entertaining, just like that? So, the board had no “fiduciary duty” towards the shareholders to accept an overpaid offer?
Pleas, please, please, destroy it!
I, for one, hope to see Musk take down Twitter in burning flames. All the easier to pop the popcorn with!
Twitter doesn’t care where the money comes from. Twitter doesn’t have a sales contract with these questionable Saudi Arabian and Qatari investors, it has a contract with Musk and the acquisition company. If the US government bans certain Saudi Arabian and Qatari investors from investing in the aquisition company, that’s a financing hole Musk has to fill, not a reason to back out of the acquisition..
Re: clarification
Technically, the saudis arent even gaining part of twitter. They already own shares, and told Musk they didnt want to sell. So they will continue to own part of Twitter afterward. Its not like they are buying in. Theyre already in.
Best outcome is Elon has to pay the full agreed-upon price, but then immediately sell it for whatever a more-stable buyer is willing to pay for it.
I don’t think that Twitter exchange shows what you think it shows. As recently as about 8 hours ago(1) Russia seems to be getting slapped pretty hard in Bakhmut. That’s not some friendly collusion with his Russian counterpart, it’s a taunt from someone [nominally] backing Ukraine.
Also, it is always within the realm of possibility for the USG to throw a monkeywrench into the works. These leaks sound like they’re testing the water to see what they can get away with pulling on Elon. Considering Twitter’s past use to facilitate US geopolitical goals, I could see the government being concerned at such a loose cannon at the helm… they might just find a way to blow the deal with an FTC case or some other mechanism.
(1) https://www.forbes.com/sites/davidaxe/2022/10/21/russia-is-wasting-its-last-good-troops-in-a-pointless-attack-on-a-worthless-town/
“The interagency panel, known as CFIUS and overseen by the Treasury Department, reviews acquisitions of US businesses by foreign buyers. It is not clear if a CFIUS review — which would involve assessments by the Departments of State, Defense, and Homeland Security, among others — would offer the government a legal way to conduct a review, the people said.”
Funny thing that the CFIUS hasn’t shown any interest in Chinese-owned or controlled companies buying up farm land around US military bases, at least I haven’t seen any news reports of such investigations…
Missing the point again?
This looks and smells like “We don’t like the guy, so let’s get in there and fuck things up”. Like a racist cop inventing a minor traffic infraction, this is a sort of pretextual stop.
if he is a security risk
If he is a security risk for twitter, then he is even more of a security risk for owning SpaceX and Starlink. Ban him
It is highly likely the government will intervene, they will delay it.
So, there is this theory that the NEOCons of the 60’s held, that if one country falls, the others will, hence Vietnam (and suppression of the Pentagon Papers).
Today, if Twitter falls, Facebook will follow. Twitter, Facebook are censoring conservative views, and not censoring liberal ones. Democrats snicker about this in private, and publicly say, well Twitter/Facebook are private companies.
Well yes, they are. And as such one of those private companies is now going to a conservative businessman. And Democrats can’t stand it. They have to use everything in their arsenal, short of declaring Twitter a part of the public square, to stop the deal. If they do, Twitter’s stock falls by half, and Musk buys Twitter for a bargain.
The only hope is to delay the sale, until such time as Twitter is irrelevant, of if Biden sells his soul to pump up the stock market (IE – do oil leases).
Silicon Valley didn’t like Trump, Zuckerberg/Chan spent 100 million promoting Democratic candidates.
The U.S. government never held talks about a media merger, until now. Because Biden knows, Twitter and Facebook are hugely important to getting your election messages out. They want Trump to stay, censored.
The only way to do that now, is to come up with a complete bologna, that a Saudi Businessman (who we are supposedly great friends with) is one of the investors, and therefore a national security threat. That same Saudi Businessman, already owns a huge part of Twitter. Why are we talking about this now? Elon says Trump (and all the other conservatives previously banned) will be welcomed back to Twitter.
Maybe
I still don’t see any problem with him buying the service.
Re: Not that it matters
As the company moves forward with a new private head