Why Elon Musk Wouldn’t Go to Court Against Twitter

Elon Musk now claims he plans to go through with the acquisition of Twitter despite months of attempting to back out of the contract he signed. Elon Musk stated that he will uphold his agreement to purchase Twitter for the previously agreed-upon price of $54.20 per share in a letter to the business that was submitted to the SEC today. Today, Twitter declared its intention to finalise the purchase.

Legal experts were unsurprised by the U-turn even though Musk has implied in public pronouncements that he could simply walk away from his $44 billion commitment since he first questioned the transaction in May.

Musk’s attempt to get out of the contract he signed was always “an uphill climb,” according to Robert Miller, chair of corporate finance and law at the University of Iowa College of Law. He makes this claim by pointing out how the businessman changed the subject from the contract to accusing Twitter of fraud. He asserts that the corporation would have had to engage in “a huge, like Enron sort of deception” for which there is no supporting documentation.

In May, Musk declared that his purchase of Twitter was “temporarily on hold,” claiming that the firm had understated the prevalence of spam and phoney accounts on the service.

Musk said there were more bots on Twitter’s network than the firm had declared in a legal complaint from August accusing the company of fraud. Musk added those claims to his own lawsuit in September following Peiter “Mudge” Zatko, a whistleblower, testifying before the US Senate that Twitter’s cybersecurity was “a decade below industry security standards.”

Asserting that the company had overstated the incidence of spam and fake accounts on the service, Musk announced in May that his purchase of Twitter was “temporarily on pause.” In an August lawsuit charging Twitter of fraud, Musk said there were more bots on the network than the company had disclosed.

Following Peiter “Mudge” Zatko, a whistleblower, testified before the US Senate that Twitter’s cybersecurity was “a decade behind industry security standards,” Musk added similar allegations to his own complaint in September.

It’s also possible that Musk’s choice to give up was motivated by the trial’s potential to harm him personally. An excerpt of the entrepreneur’s private text chats from last week with influential Silicon Valley executives went viral on the internet. He had a deposition this week that, according to Miller, would have been “extremely humiliating.”

With such little possibilities of success, continuing the case in court may have resulted in Musk doing more harm to the business it became more likely he would eventually possess. According to Ann Lipton, associate professor of corporate law and entrepreneurship at Tulane University,

It might have damaged his connection with co-investors who had agreed to assist finance his purchase agreement, relieving the entrepreneur of some financial burden. The longer this went on, Musk ran the possibility of not only purchasing a business that was in worse shape than when he started this process, but but doing so with less equity backing.