ELON MUSK, TWITTER AND MAN U ACQUISITION
The richest man’s moves are dogged by controversies, writes Sonny Aragba-Akpore
Three very important events are ongoing now for Tesla Chief Executive and the World’s richest man, Elon Musk. These are the events on the public space and strangely all of them are dogged by controversies. Early in April 2022, Musk announced an ambitious acquisition of Twitter for a whopping $44b.
This announcement jolted the tech industry as many saw it as a major breakthrough while others saw it from anti-competition angle tilted in favour of the electric car manufacturer.
Musk further fuelled the controversy when he announced that Twitter will adopt subscription business model instead of advertising which is a common place for other tech platforms like Google, Facebook, WhatsApp and others.
Musk also twitted last week that he will be investing in Sports and particularly said he was eyeing English premier football club, Manchester United (MAN U) only to announce a few days later that it was all a joke.
He is also reported to be wanting to buy lithium from Nigeria or possibly set up electric car plant in the country.
While industry players were ruminating on Musk’s approach to run Twitter on subscription level, he announced his withdrawal from the Twitter acquisition deal.
Musk’s worries for the Twitter acquisition stem from what his managers perceived and fear that the Twitter deal may be a fluke after all. Although he had envisaged a monopoly status for him and the platform, his managers reasoned that there were bots on the Twitter platform. For the purposes of clarity “bots are autonomous programme on the internet or another Network whose independence could encroach into other networks and can also interact with systems or users.”
He did not want any of these. But Twitter has a very strong protection clause in the agreement it signed with Musk. He signed a binding agreement to go through with the acquisition.
Besides the $1b termination fee, the agreement includes a clause giving twitter the right to seek “specific performance” or relief that involves a court compelling Musk to carry out the deal.
In this regard, Twitter sued Musk early in July, 2022 to force him to go through with the $44 billion buyout he proposed, then backed away from.
He filed to back out of the acquisition immediately in a move suggesting signals for some more time. He claimed he had put the deal “on hold” in May as his team investigated the number of bots on the service.
A worried Twitter board chairman Bret Taylor explained that the company planned to pursue legal action to close the deal.
“Now, less than three months later, Musk refuses to abide by his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests,” Twitter said in its lawsuit.
Musk’s lawyers claimed Twitter had made “false and misleading representations” around the issue of fake or spam accounts, concluding that more than 5% of Twitter users were bots. They also complained that Twitter did not provide financial planning documents, including a 2022 budget, and that its “firehose” of data had limitations.
Now, a court must decide if Twitter resisted Musk’s requests to hand over information about spam and bots, the only real way Musk can wriggle out of the deal.
“Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” the lawsuit said.
Twitter is aiming to hold a four-day trial in September, and must complete it by October 24
Musk lawyers’ letter also details limitations Twitter placed on a “firehose” of data it provided to allow Musk’s team to make its own evaluation of the proportion of fake or spam accounts on the service. Despite those limitations, that team concluded that fake or spam accounts might exceed the 5% of monetizable daily active users Twitter has previously estimated are bots.
“Preliminary analysis by Musk’s advisers of documents provided by Twitter to date causes Musk to strongly believe that the proportion of false and spam accounts included in the reported monetized daily account usage count is wildly higher than 5%,” Musk’s lawyers wrote.
Musk’s reversal is not unexpected as he had said in May he was putting his acquisition “on hold” while his team investigated the bot question.
As he struggles to terminate the acquisition of social media company, Twitter, the world’s richest man, Musk, recently hinted he would buy Manchester United if he decided to invest in a sport club.
Musk said his love for Manchester United, an English Premier Football club, began at a very young age. He made this known after publicly disclosing on Twitter that he intends to acquire the club.
The billionaire had tweeted last week that “I’m buying Manchester United ur welcome”, but after the tweet generated huge reactions from his followers, and was asked if he was serious, Musk said it was a joke.
According to Musk, he has no intention of buying Manchester United, as it was a long-running Twitter joke, but the investor later disclosed that if he ever plans to acquire a club, it would be Manchester United.
The Tesla Chief Executive Officer wrote, “No, this is a long-running joke on Twitter. I’m not buying any sports teams.” Musk posted, adding, “Although, if it were any team, it would be Man U. They were my fav team as a kid.”
Manchester United is worth $2.17 billion, according to its current market capitalisation as of the time of filing this report, while Musk’s total net worth is estimated at $270.1 billion.
Besides, Nigerian government received offer from Musk’s vehicle manufacturing company, Tesla, to import raw materials from the country, amid plans of his network provider, Star link, setting up operation locally.
Minister of Mines and Steel Development, Olamilekan Adegbite, said a representative of Tesla had approached him at an event in Saudi Arabia to discuss lithium trade with the Nigerian government.
Lithium is a component of Tesla’s electric car battery. The World Bank projected that Lithium will triple by 2040, rising 10 to 30 times. And half of lithium global demand is expected to come from electric car manufacturers and battery producers over the next two decades. This put Nigeria on the map for lithium trade.
However, the Nigerian government rejected the offer to import lithium from Nigeria, and instead, suggested that Musk should establish Tesla battery factory within the country.
This is expected to create jobs in Nigeria, and also improve efficiency of Nigerians in the electric vehicle market. But the minister of mines didn’t state if discussion is still ongoing or have fallen through.
Explaining the position of Nigeria in the lithium market, Adegbite said, “Nigeria is richly endowed with critical minerals. Lithium and tantalum are found in parts of the extensive pegmatite belts of Nigeria.”
He further stated that, “The World Bank has estimated the demand for these minerals to triple by 2040. Undoubtedly, the deployment of critical minerals for a clean energy transition will remain significantly intensive for a long time.”
Musk may be riding on controversy, this does not in any way detach him from being the richest man on earth.
The 51- year old Musk was born in Pretoria, South Africa to a South African father and a Canadian mother and he is a father of many children.
Aragba-Akpore is a member of THISDAY Editorial Board