August 17, 2022
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As Elon Musk’s imbroglio with Twitter strikes from the boardroom to the courtroom, one may anticipate that, beneath the watchful eye of Delaware’s Court of Chancery, issues will tackle a extra predictable trajectory than they’ve thus far.

In concept, the lawsuit that the social media platform launched Tuesday to power Musk to comply with by on his acquisition provide presents a restricted spectrum of attainable outcomes: Musk might be compelled to shut on the agreed-upon $44-billion worth; pay a $1-billion termination price to get out of the deal; cough up some middleman worth that the court docket decides; or escape completely unscathed.

Yet if there’s one lesson to be discovered from all that’s transpired thus far, it’s that there are not any ensures, even within the face of binding contracts, federal rules and historic precedents, on the subject of the world’s richest man. Settlement continues to be an choice — some specialists even say it’s probably — and would open up an entire new menu of choices. Here are a few of them.

Nondisparagement agreements

Musk has by no means been one to carry off on criticizing Twitter, regardless of being among the many platform’s greatest customers.

He has panned its content material moderation insurance policies as undemocratic, lobbied for main adjustments to each the corporate’s product and its enterprise mannequin, and persistently criticized the location’s dealing with of automated spam bots (Twitter’s “single most annoying problem,” he as soon as wrote).

Signing a deal for him to purchase the platform didn’t uninteresting these barbs. In one tweet that Twitter included in its lawsuit, he responded to a comment by Chief Executive Parag Agrawal with nothing however the “poop” emoji.

“Since signing the merger agreement, Musk has repeatedly disparaged Twitter and the deal, creating business risk for Twitter and downward pressure on its share price,” the corporate complained within the submitting. This is regardless of a provision of the deal that required that Musk’s tweets “do not disparage the Company or any of its Representatives.”

It wouldn’t be uncommon for that type of settlement to change into a part of a longer-term settlement, mentioned Charles Elson, founding director of the Weinberg Center for Corporate Governance. “You could have a nondisparagement agreement” beneath these types of circumstances, he mentioned. “I wouldn’t be shocked.”

“He would not disparage Twitter, they wouldn’t disparage him,” Elson added. “It’d be a mutual nondisparagement.”

Whether Musk would really abide by these phrases is, after all, an altogether totally different query.

Nondisclosure agreements

Also on the desk might be some type of nondisclosure settlement, or NDA, which might restrict what one or each events might publicly share concerning the on-again, off-again relationship they’ve engaged in since early April.

“I could definitely see an NDA happening which would keep certain terms confidential and allow a side to ‘save face,’” mentioned Alex Bruno, founding father of the Glendale-based company regulation agency Bruno Group, in an e-mail.

Twitter should still need to disclose some info, nevertheless, on condition that it’s publicly traded, Bruno added.

This eventuality might show significantly interesting to Twitter as a result of, in accordance with the lawsuit, the corporate has given Musk vital entry to company intelligence throughout their dealings, together with about 49 tebibytes’ value of uncooked historic website information.

Then once more, Musk appears to presently be certain by some type of NDA, and doesn’t seem all that involved about it. “Twitter legal just called to complain that I violated their NDA by revealing the bot check sample size is 100!” he wrote in a single May tweet, referencing his efforts to duplicate Twitter’s bot prevalence estimates.

A noncompete settlement?

One looming risk for Twitter is that if Musk doesn’t finish this saga because the platform’s proprietor, he could decide again up an concept he’s toyed with prior to now: competing with the corporate on his personal phrases.

In one tweet this March, he requested what ought to be performed about Twitter’s content material moderation insurance policies, which he framed as undemocratic. In a follow-up, he pitched one attainable plan of action: “Is a new platform needed?”

Later that day he added, “Am giving serious thought to this.”

Now, with the advantage of having seen a few of Twitter’s interior workings firsthand — and loved months of free press about how he’d run a social community had been he in cost — Musk might effectively return to that choice if he’s not barred from doing so.

Though Twitter alternate options have traditionally struggled to enter the mainstream, it is a risk Twitter doesn’t take calmly. In its lawsuit, the corporate famous that Musk has mentioned he’ll “do one of three things with Twitter: sit on its board, buy it, or build a competitor” — the primary of which he’s opted out of, and the second of which he appears to be actively making an attempt to keep away from.

“The biggest wildcard scenario is that Musk needs to pay Twitter a massive settlement number in the $5 billion to $10 billion range and is restricted from starting his own social media platform,” mentioned Wedbush analyst Dan Ives, a frequent commentator on the Musk-Twitter saga, in an e-mail to The Times. “That would be a twilight zone ending to this circus show.”

Twitter coverage adjustments

Musk might even use a settlement as a chance to push for sure coverage adjustments — from extremely politicized ones resembling these round how Twitter moderates customers’ speech, to the type of hobbyhorses that super-users like him care about, together with the addition of an “Edit Tweet” button.

Even if such concessions got here alongside a money settlement he needed to pay out, they may provide the general public determine an opportunity to avoid wasting face.

But it’s an unlikely end result, Bruno mentioned.

“I do not see a change in site policies unless a lot of money comes Twitter’s way,” the lawyer wrote. However, he added, Twitter should still select to make adjustments “to publicly show their users that they are active in eliminating bots,” the main focus of a lot of Musk’s criticism.

Elson agreed. “I don’t think he would be able to get a change in business practices from them. … Ultimately this is a business transaction; it’s [about], ‘How much is this thing worth?’ That’s all.”

But Ives is extra open to the likelihood.

“If Musk ultimately is forced to take ownership of Twitter by the court,” he mentioned, “there may be some content areas agreed upon as part of a deal.”

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