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Explainer: Can Elon Musk Renegotiate a Lower Price for Twitter Deal as Company’s Shares Plunge?

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Twitter shares have plunged to their lowest level since the social media company agreed to sell itself to Elon Musk for $44 billion(roughly Rs. 3,37,465 crore) on April 25, raising questions over whether the world’s richest person will try to renegotiate the deal.

On Tuesday, the implied probability of the deal closing at the agreed price fell below 50 percent for the first time, when Twitter shares dropped below $46.75 (roughly Rs. 3,600). That is halfway between the deal price and the price of the shares before Musk revealed he had amassed a stake in the social media company on April 4.

The shares closed at $47.26 (roughly Rs. 3,600), giving the company a market value of $36 billion (roughly Rs. 2,781,14 crore).

News that Musk would lift a ban on former President Donald Trump’s Twitter account, while significant politically, did not move the stock.

Twitter shares have plunged along with the wider collapse in technology stocks, as investors fretted over inflation and a possible economic slowdown. Some investors, such as short seller Hindenburg Research, have speculated about whether Musk would try to negotiate a lower deal price before closing.

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Musk has not indicated he is planning to re-open negotiations and his representatives have declined to comment on the issue.

Here are answers to some key questions.

Why would musk want to renegotiate the deal?

Musk has an estimated net worth of almost $240 billion (roughly Rs. 18,57,204 crore) according to Forbes, yet most of his wealth is tied up in shares of Tesla, the electric car maker he leads.

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Musk has already moved to raise some cash to fund the acquisition of Twitter. He sold $8.5 billion (roughly Rs. 6,5671 crore) worth of Tesla shares and took out a $12.5 billion (roughly Rs. 96,575) margin loan secured against his Tesla stock. Last week he reduced that margin loan to $6.25 billion (roughly Rs. 48,287 crore) after bringing in co-investors. Musk said in a regulatory filing he may seek more funding for the deal.

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While Musk has said he does not care about the economics of buying Twitter, some investors think the 27 percent drop in Tesla shares since he revealed his stake is driven partly by concerns he may have to sell more shares. Therefore Tesla’s stock would be under less pressure if Musk can negotiate a lower acquisition price. Some co-investors may egg him on if they become concerned about overpaying.

How could musk negotiate a lower price?

Musk can threaten to walk away from the deal unless Twitter’s board agrees to reopen negotiations. He is contractually obligated to pay a $1 billion (roughly Rs. 7,723 crore) break-up fee, but Twitter would have to sue to get more than that in damages or try to force Musk to complete the deal.

There is plenty of precedent for a renegotiation. Several companies repriced agreed acquisitions when the COVID-19 pandemic broke out in 2020 and delivered a global economic shock.

In one instance, French retailer LVMH threatened to walk away from a deal with Tiffany & Co. The US jewellery retailer agreed to lower the acquisition price by $425 million (roughly Rs. 3,282 crore) to $15.8 billion (roughly Rs. 1,220,49 crore).

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Simon Property Group, the biggest US mall operator, managed to cut its purchase price of a controlling stake in rival Taubman Centers by 18 percent to $2.65 billion.

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Are there risks to trying to renegotiate?

There is no certainty that the strategy would work, and it could end up costing Musk more money.

First, Musk would have to convince Twitter he would really walk away. Then there are legal hurdles, including a “specific performance” clause that the social media company can cite for a judge to force Musk to complete the deal.

Acquirers who lose such a case are almost never forced to complete an acquisition, but target companies can seek monetary relief for the price of the abandoned deal.

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Companies that have fought acquirers in court include medical technology firm Channel Medsystems, which sued Boston Scientific for trying to walk away from their $275 million (roughly Rs. 2,124 crore) deal. In 2019, a judge ruled the deal should be completed and Boston Scientific paid Channel Medsystems an undisclosed settlement.

Acquirers seeking an out sometimes turn to “material adverse effect” clauses in their merger agreement, arguing the target company has been significantly damaged. But the language in the Twitter deal agreement, as in many recent mergers, does not allow Musk to walk away because of a deteriorating business environment, such as a drop in demand for advertising or because Twitter’s shares have plunged.

Musk also waived his right to carry out due diligence when he negotiated the Twitter deal, trying to get the company to accept his “best and final” offer. This makes it harder for him to argue in court that Twitter misled him.

© Thomson Reuters 2022


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Twitter Under Elon Musk Leaning on Automation to Moderate Content Against Hate Speech

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Elon Musk’s Twitter is leaning heavily on automation to moderate content, doing away with certain manual reviews and favoring restrictions on distribution rather than removing certain speech outright, its new head of trust and safety told Reuters.

Twitter is also more aggressively restricting abuse-prone hashtags and search results in areas including child exploitation, regardless of potential impacts on “benign uses” of those terms, said Twitter Vice President of Trust and Safety Product Ella Irwin.

“The biggest thing that’s changed is the team is fully empowered to move fast and be as aggressive as possible,” Irwin said on Thursday, in the first interview a Twitter executive has given since Musk’s acquisition of the social media company in late October.

Her comments come as researchers are reporting a surge in hate speech on the social media service, after Musk announced an amnesty for accounts suspended under the company’s previous leadership that had not broken the law or engaged in “egregious spam.”

The company has faced pointed questions about its ability and willingness to moderate harmful and illegal content since Musk slashed half of Twitter’s staff and issued an ultimatum to work long hours that resulted in the loss of hundreds more employees.

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And advertisers, Twitter’s main revenue source, have fled the platform over concerns about brand safety.

On Friday, Musk vowed “significant reinforcement of content moderation and protection of freedom of speech” in a meeting with France President Emmanuel Macron.

Irwin said Musk encouraged the team to worry less about how their actions would affect user growth or revenue, saying safety was the company’s top priority. “He emphasizes that every single day, multiple times a day,” she said.

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The approach to safety Irwin described at least in part reflects an acceleration of changes that were already being planned since last year around Twitter’s handling of hateful conduct and other policy violations, according to former employees familiar with that work.

One approach, captured in the industry mantra “freedom of speech, not freedom of reach,” entails leaving up certain tweets that violate the company’s policies but barring them from appearing in places like the home timeline and search.

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Twitter has long deployed such “visibility filtering” tools around misinformation and had already incorporated them into its official hateful conduct policy before the Musk acquisition. The approach allows for more freewheeling speech while cutting down on the potential harms associated with viral abusive content.

The number of tweets containing hateful content on Twitter rose sharply in the week before Musk tweeted on November 23 that impressions, or views, of hateful speech were declining, according to the Center for Countering Digital Hate – in one example of researchers pointing to the prevalence of such content, while Musk touts a reduction in visibility.

Tweets containing words that were anti-Black that week were triple the number seen in the month before Musk took over, while tweets containing a gay slur were up 31%, the researchers said.

‘More risks, move fast’

Irwin, who joined the company in June and previously held safety roles at other companies including Amazon.com and Google, pushed back on suggestions that Twitter did not have the resources or willingness to protect the platform.

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She said layoffs did not significantly impact full-time employees or contractors working on what the company referred to as its “Health” divisions, including in “critical areas” like child safety and content moderation.

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Two sources familiar with the cuts said that more than 50 percent of the Health engineering unit was laid off. Irwin did not immediately respond to a request for comment on the assertion, but previously denied that the Health team was severely impacted by layoffs.

She added that the number of people working on child safety had not changed since the acquisition, and that the product manager for the team was still there. Irwin said Twitter backfilled some positions for people who left the company, though she declined to provide specific figures for the extent of the turnover.

She said Musk was focused on using automation more, arguing that the company had in the past erred on the side of using time- and labor-intensive human reviews of harmful content.

“He’s encouraged the team to take more risks, move fast, get the platform safe,” she said.

On child safety, for instance, Irwin said Twitter had shifted toward automatically taking down tweets reported by trusted figures with a track record of accurately flagging harmful posts.

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Carolina Christofoletti, a threat intelligence researcher at TRM Labs who specializes in child sexual abuse material, said she has noticed Twitter recently taking down some content as fast as 30 seconds after she reports it, without acknowledging receipt of her report or confirmation of its decision.

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In the interview on Thursday, Irwin said Twitter took down about 44,000 accounts involved in child safety violations, in collaboration with cybersecurity group Ghost Data.

Twitter is also restricting hashtags and search results frequently associated with abuse, like those aimed at looking up “teen” pornography. Past concerns about the impact of such restrictions on permitted uses of the terms were gone, she said.

The use of “trusted reporters” was “something we’ve discussed in the past at Twitter, but there was some hesitancy and frankly just some delay,” said Irwin.

“I think we now have the ability to actually move forward with things like that,” she said.

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© Thomson Reuters 2022


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Elon Musk Introduces ‘Live Tweeting’ Feature Amid Ongoing Plans for Twitter

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Twitter CEO Elon Musk, on Saturday, added a new feature ‘live tweeting’ and now it is currently active on the platform.

Author Matt Taibbi becomes the first user to use this new feature with his cryptic tweet “Thread: THE TWITTER FILES”

Taking to Twitter, Musk wrote, “Here we go!!” with popcorn emoticons.

Earlier, he tweeted, “We’re double-checking some facts, so probably start live tweeting in about 40 mins.”

We’re double-checking some facts, so probably start live tweeting in about 40 mins

— Elon Musk (@elonmusk) December 2, 2022

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Griftopia writer followed his first tweet which reads, “Thread: THE TWITTER FILES”, “What you’re about to read is the first installment in a series, based upon thousands of internal documents obtained by sources at Twitter.”

He added, “The “Twitter Files” tell an incredible story from inside one of the world’s largest and most influential social media platforms. It is a Frankensteinian tale of a human-built mechanism grown out the control of its designer.”

Twitter’s new boss is also working on “purging a lot” of spam/scam accounts.

On Thursday, Musk took to his Twitter account and shared the word limit update with everyone. He tweeted, “Twitter is purging a lot of spam/scam accounts right now, so you may see your follower count drop.”

Twitter is purging a lot of spam/scam accounts right now, so you may see your follower count drop

— Elon Musk (@elonmusk) December 1, 2022

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Musk is also planning to up Twitter’s character limit from 280 to 1000.

A few days ago, a social media user tagged Musk and tweeted, ” Idea on explanding character limit to 1000.”

In response, Musk wrote, “It’s on the todo list.”

The character limit has been one of the prime differences between Twitter and other social media services.Musk has shown interest in the idea of increasing the character limit on a number of occasions since his takeover of the platform, as per a report by Mashable. On November 27, a Twitter user suggested to Musk to increase the platform’s word limit from 280 to 420.

“Good idea” Musk wrote in response. Prior to that, another user had suggested “get rid of character limits.”

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“Absolutely”, the multi-billionaire responded.

Now it remains to be seen when Musk finally makes the changes regarding character limit.


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WhatsApp Begins Beta Testing Android Tablet Support, iOS Testers Get ‘Search by Date’ Feature

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WhatsApp is rolling out an update for its beta testers on Android that introduces support for WhatsApp for tablets. Select Android beta testers can now link their existing WhatsApp account on their phones with the tablet version of the app. Until now, a WhatsApp account on an Android phone could not be accessed on a secondary Android device. Meanwhile, some beta testers on WhatsApp for iOS are reportedly getting access to a new feature that will allow them to quickly jump to messages based on the date they were sent or received.

Spotted by WhatsApp feature tracker WABetaInfo, users who have signed up for WhatsApp’s beta programme will begin to see an in-app banner announcing the feature. A screengrab on the website shows a banner on top of chats which reads “Have an Android tablet? WhatsApp for tablet is available for beta testers.’ The banner will be visible as part of WhatsApp beta 2.22.25.8 update for Android, which makes the popular messaging app compatible on tablets. Gadgets 360 staff members who are part of the beta programme also received the banner on their smartphones.

However, the feature tracker states that the new tablet version of the app might not be feature-complete. “Note that some features may still not be available when installing WhatsApp on your tablet, for example, the ability to share a new status update, live locations, and broadcast lists,” the report said.

Notably, WhatsApp users can access their primary account on computer and WhatsApp for Web. The feature is finally coming to Android tablets, allowing beta testers to access their messages on both their smartphone and their tablet.

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Meanwhile, WABetaInfo also reports that beta testers on iOS are getting a new update that adds the ability to search for messages by date. WhatsApp version 22.24.0.77, via the TestFlight beta programme, will make it easier for users to jump to specific dates in a chat window. To check if the feature is available, users can look for a calendar icon inside the search option for a chat. The icon lets you use the ‘Jump to Date’ feature to look for specific messages sent on the day.

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WhatsApp has been busy in the past few weeks, rolling out multiple features on both Android and iOS. The app recently rolled out a ‘Message Yourself’ feature on both platforms that lets users text themselves, in case they need to note down important information, reminders, or store files. Additionally, iOS users also received an update that adds the ability to include captions for forwarded media.


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