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Comment by cwkoss | Hacker News Reader

didn't he waive due diligence, not due process? Or do those mean the same thing in this context?

He signed that he knows everything he needs to know about the company and wants to buy it. Now he wants to back out with the claim that he actually did not know everything, which is a pretty hard sell.

Though it's important to note that his lawyers are well aware that this will never fly and therefore the actual court case is them trying to find an edge case where Twitter actually broke the contract (that's the shoddy talk about Twitter apparently rate limiting the data analysis). Which is still a hard sell, but there's at least a chance they'll get away with it.

He’s not claiming that he actually didn’t know everything, he’s claiming that Twitter lied in public filings not related to the deal.

As Levine has pointed out repeatedly, the statements he's claiming are false are pretty hard to falsify, as they essentially include the string "this statement might be false".

> He’s not claiming that he actually didn’t know everything

Yes; he is.

> he’s claiming that Twitter lied in public filings not related to the deal.

He explicitly claims that they are deeply related to the deal.

And the "not related to the deal" part is the problem - even if he wins this claim, this does not necessarily constitute MAE and therefore does not get him out of the deal. Due diligence includes verifying those numbers or at least checking where they come from, especially if they are as important to the deal as they now appear to be.

It may or may not help.

But it would certainly be a major bargaining chip for Elon.

No execs want to go to jail for fraud. These execs are worth 50m+. Losing money is insignificant. Going to jail is a very huge deal

It would be quite funny if he got Twitter into SEC trouble, just to become it's owner a bit later; especially given their history.

Anyway, this is just my unprofessional opinion, but for him to be able to prove intentional deceit is already going to be quite hard. Conditional on him managing that, he'd need to use a number he - by his own statements - hardly believed to clear the incredibly high bar of MAE in Delaware. I think it's very unlikely that he will be able to exit the deal this way.

To address your edit: I don't see how he'd manage to prove fraud without already providing enough evidence to send execs to jail. Also, the SEC would be the one prosecuting people anyway - he has nothing to bargain with. Lastly, this does not change the fact that the bot number, no matter how made up, will very likely not be sufficient to get out of this deal.

One possible scenario:

He took over twitter. Fire the execs. Opening up all emails.

You can bet at least one person out of 6000 employees disagree with how twitter counts bot number.

Pick that email, point out that execs discarded a concern raised by employee.

Change the calculation of bot number to be higher. Report to SEC in public earning. Allude that the previous number was just plainly wrong.

Sue the execs for fraud... since SEC accepts the new number and approach which is materially different from the old number.

To be honest, just opening up all emails is already bad enough for execs.

"Due diligence" is the diligence (= carefulness) that you should exert before signing on the deal. Don't trust what the other side tells you. Instead, check.

"Due process" is the legal steps that have to be followed in a court case (especially a criminal one). You can waive due process - if you're not going to make the government work through all the steps, because you know that it's not going to get you any benefit in the end, say.

Musk waived due diligence, not due process.

They don’t mean the same thing, but the reason he’s giving for walking away (an estimate of the fraction of mDAUs that are bots) is not a valid reason under the contract. It would have to be a material statement (ie. affect the value by 25%, iirc), plus the phrasing in the filings was “In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated.” The filing basically says nothing, so it can’t be wrong in a material way.

It’s just not a valid reason under the contract.

It doesn’t even make sense as a reason to be upset, because

- he was buying the company in order to solve the bot problem, and it being worse just makes that more important.

- if Twitter is overreporting their real users then their revenue per user is actually higher and they’re a better business.

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