Elon Musk Has Thrown Twitter Into Turmoil
Twitter files a legal complaint against Elon Musk in an attempt to get him to agree to a deal for takeover. Employees say that the fight will result in a social media platform which is very different from what he initially rejected.
Twitter filed a lawsuit against Musk on Tuesday in an attempt to force the billionaire to complete his $44 billion acquisition of the company, and accusing him of “hypocrisy” after he said he wanted to back out of the deal.
“Now this whole deal is tanking, no option looks good,” says a Twitter employee who was not authorized to speak publicly. “We’re either running into a brick wall or off a cliff.”
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Musk, the CEO of Tesla and the world’s richest man, committed to buy Twitter in April at $54.20 per share. He has repeatedly attacked the social media firm, accusing it of misleading him, his financial advisors, and the public regarding the large number fake accounts that are on Twitter. Twitter says fake accounts, or “bots,” make up roughly 5% of the total number of accounts on the platform, whereas Musk has alleged, without sharing evidence publicly, that the percentage is much higher.
Musk’s criticisms began after a rout in tech stocks sent Twitter’s market valuation tumbling far below what he offered for the company. Around the same time, the value of Musk’s company Tesla, which underpins the majority of his wealth, also fell after Musk announced he planned to sell some of his shares to fund the Twitter deal, meaning he now is significantly less wealthy than when he put the deal in place.
Twitter is currently trading at around $34 per share, valuing the company at $26 billion—little more than half of what Musk offered for it. Tesla’s shares were trading at more than $1,000 per share in April when Musk announced his intention to buy Twitter, valuing the company at more than $1 trillion. Since then, that valuation has dropped by 25%.
“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 … is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” Twitter’s lawsuit said. It argued that the fall in the value of Tesla and Twitter stock was behind Musk’s desire to back out of the deal.
On Monday, before the lawsuit was filed, Musk’s Twitter account posted a meme depicting the billionaire laughing, with the caption: “They said I couldn’t buy Twitter. Then they wouldn’t disclose bot info. They want me to purchase Twitter in court. Now they have to disclose bot info in court.”
Twitter: Twitter’s shifting culture
The confrontation between Twitter and the world’s richest man has left many employees at the company demoralized. “Lots of people are looking for jobs. Almost everybody has put feelers out to test the market,” the Twitter employee who was not authorized to speak publicly tells TIME. “People are demoralized.”
While Twitter’s legal position is that it wants to force Musk to acquire the company at the agreed $44 billion, there are still several possible outcomes other than the acquisition happening.
The two sides could end up renegotiating the deal at a lower price—an outcome more advantageous to Musk than Twitter. Musk could be forced to pay a $1 billion fee, stipulated in the agreement, to back out of his commitments—an outcome more beneficial to Twitter. The two parties could also reach a custom settlement.
Twitter was already affected by this ordeal, regardless of what the outcome. Twitter has put a stop to hiring and laid off one-third of its staff. It has stopped publishing new information on the company’s health and transparency programs, which were once a signature area of the company. And Twitter’s CEO Parag Agrawal has fired two senior executives, including the one responsible for building new features. A spokesperson for Twitter declined to comment.
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Similar cost-cutting initiatives are taking place in other companies as a result of the drop in tech stocks. But the Twitter situation is particularly difficult due to uncertainty surrounding the Musk deal and the culture changes. Some employees predict another round of resignations by early August as the next round for Twitter stock vests. Shareholders will then be eligible to claim their payouts.
Twitter once was a popular platform for employees to criticize and challenge the leaders and management of companies. TIME spoke to several employees who said that this culture was now dominated by fear and suspicion. “Our circles of trust have gotten much smaller,” said one employee.
Also, Twitter was known for its in-jokes. While that culture exists today, employees say it is losing its levity. The latest trend is for employees to share examples of their attempts to message people on Slack, only to find the account they are trying to message has vanished—either because they have quit the company or been fired.
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