Reactions to Elon Musk’s attempt to back out of a deal to buy Twitter have been wide-ranging. On Wall Street, Twitter’s stock price fell by 11 percent on Monday. Twitter employees have expressed feeling confused and pointed to a lack of leadership at the company. And on Tuesday, Twitter sued Musk, asking the court to force Musk to buy it.
Twitter calls Musk’s exit “a model of hypocrisy” in its lawsuit. The company argues that Musk not only breached the agreement to buy it based on a “contrived narrative” about spam bots, but that he also violated an obligation in the agreement not to disparage the company. The complaint cites many of Musk’s own tweets to back up these claims.
Yet to his followers, Musk is trying to spin all this as his latest move in a long game to demand better business practices from Twitter. Musk told the world that he wanted to buy the company in order to ensure that free speech is protected on the platform, framing the whole debacle as a kind of moral crusade. Some might argue that the billionaire is now trying to back out of the deal for financial reasons, but Musk’s fans are rallying behind him and his narrative.
This reaction shows how billionaires can use their celebrity to control their image in a way that shrouds them in a halo effect. Casting himself as a figure pushing the progress of humanity forward has been central to Musk’s popularity, his power, and even his business success. He has also capitalized on the idea that a billionaire’s intelligence is seen as commensurate with their extreme financial success: Musk must be able to see and know things the rest of us couldn’t because he’s run several companies that have made him the richest man in the world. And so, even now that Twitter is suing Musk for failing to complete a deal he agreed to, his proponents are claiming victory.
This is premature, of course, since the court battle has barely gotten started. Musk made the first move last Friday when he said in a regulatory filing that he would be terminating the acquisition deal. Twitter is now suing him for wrongfully breaching the deal, and has asked the case to be heard in the Delaware Chancery Court in September. In the meantime, Musk must face the court of public opinion.
“It’s our job to kind of see through the presentation,” Anand Giridharadas, author of Winners Take All: The Elite Charade of Changing the World, told Recode. “You can’t be speaking truth to power if you don’t speak truth and you are the powerful.”
There’s reason to believe that Musk’s almost uncanny ability to get his way might not work out this time around. Even before Twitter sued him, some legal experts predicted that the billionaire wouldn’t be able to simply walk away from the deal, and the new lawsuit only strengthens that case. Twitter alleges that Musk’s accusations about misleading bot data are being made in bad faith, saying that it provided him a summary of the methodology used to estimate bots and spam accounts (Musk admitted to Twitter that he hadn’t read the summary). By contrast, Twitter says it has worked in good faith to address Musk’s bot concerns, providing over 49 tebibytes of data upon request. The company also provides evidence that Musk violated the nondisclosure agreement of the contract by tweeting apparently incorrect information about Twitter’s bot sampling process.
All that said, Musk has a history of getting his way in court. Just this year, the Delaware Chancery Court that will hear the Twitter lawsuit ruled against Tesla shareholders who accused Musk of pressuring them to accept an overpriced buyout of SolarCity, a solar energy company Musk co-founded. Musk also prevailed in a 2014 lawsuit against the US Air Force, arguing that the government had unfairly awarded a valuable defense contract to United Launch Alliance, a joint venture of Boeing and Lockheed Martin, without opening it up to a competitive bidding process. As part of the settlement, the Air Force agreed that it would open up more competition for national security space launches. Since then, SpaceX has gone on to become the most valuable private space company.
We don’t yet know what will happen in court, which will decide what happens to the deal, but there are several possible outcomes. The court could force Musk to complete the deal as agreed. It’s also possible he might be able to pay a maximum of $1 billion as a breakup fee stipulated in the contract. Or, Musk could buy Twitter, but at a renegotiated, lower price than $44 billion. The court could also agree with Musk and rule that Twitter had substantially misled him on matters that would have a “material adverse effect” on the long-term earning potential of Twitter. Then, Musk could just walk away.
But whatever the court decides, Musk’s most dedicated fans are bound to believe his version of the saga — that Twitter has lied about bots, and that Musk is within his rights to walk away from this unfair deal.
Musk’s changing story
Even for the richest person on Earth, buying Twitter was never a cheap venture. Musk had to put up a significant amount of his Tesla shares as collateral to secure financing for the $44 billion Twitter buy.
Tesla’s stock price has plummeted since Musk proposed the Twitter deal. In early April, it reached a peak of $1,145 per share, and currently sits at around $719. The price drop signaled that either Musk would have to put up more Tesla stock as collateral, or sell even more of his own Tesla shares to finance the Twitter deal. And then, with Twitter stock also falling significantly since Musk entered an agreement to buy it, the acquisition likely made even less financial sense. Twitter’s lawsuit says as much, pointing out that Musk’s change of tune came right as the market declined.
But in his own tweets, Musk has said it’s not just about the money: It’s about truth, and it’s a matter of principle. And he’s taken to using memes to illustrate Twitter’s supposed dishonesty and push the narrative that he has the upper hand.
July 11, 2022
Since signing the deal, Musk has been particularly insistent on pushing the idea that Twitter has underplayed the problem of fake accounts, bots, and spam, even indicating that the deal couldn’t continue unless Twitter was more transparent about how it had arrived at its estimation that fewer than 5 percent of its daily active users were bots. This narrative is obviously useful for laying the groundwork for a possible exit from the deal, but many of his followers seem to believe that Musk is actually taking a stand.
— Elon Musk (@elonmusk) July 12, 2022
And for months, Musk has cultivated this belief by framing any missteps as moves in a larger strategy, one with purpose and intention. The billionaire is convincing his followers that he’s simply playing “4D chess,” a term used with varying degrees of sincerity to describe someone who always out-strategizes his opponent. Fans across Twitter and Reddit have reposted Musk’s memes on the deal’s termination, and prominent figures of the right-wing media have rallied behind Musk, claiming he has the upper hand against Twitter because the truth of the company’s deception would now have to come to light in court.
When it seemed like he was intent on owning the company, Musk wove a stirring rhetoric emphasizing Twitter’s importance as a trusted platform where free speech and democratic ideals are respected. It was a line of thinking that many fans found credible and important. During an interview at the 2022 TED Conference in April, Musk spoke about how crucial free speech was to Twitter and democracy as a whole; he was met with cheers and applause. And yet now that Musk wants to back out of the agreement to buy Twitter, his admirers seem ready to abandon that mission and repeat the billionaire’s claims that Twitter lied about the bots.
The dangerous allure of the billionaire genius
It’s easy to see why some think Elon Musk is a world-changing genius. With Tesla and SpaceX, he’s made promises to leverage technology to save civilization, and has actually delivered on some of them. He has also become the world’s richest person in doing so, convincing even more fans and investors to back his projects.
“A lot of that comes from his ability to create this image as this man on the leading edge of whatever the future is going to be,” Tim Higgins, author of Power Play: Tesla, Elon Musk, and the Bet of the Century, told Recode. “For a lot of people, the future is Elon Musk.”
It’s easy to see the allure in Musk’s high-minded goals. But sometimes his stated dedication to the good of humanity is also a convenient way to deflect criticism, whether it’s the recent sexual harassment allegation against him, labor issues at SpaceX, or racism at Tesla. His admirers tend to perceive attempts to hold him accountable for his actions, like those mounted by the SEC, as resistance to the noble, life-altering causes Musk is fighting for.
Even among the elite circle of billionaires, Musk is remarkable for having such a large, vocal, and loyal fan base that others, like Jeff Bezos or Bill Gates, simply don’t have. Comparisons are often drawn between Musk and Jobs, but Musk is still singular in that he is a billionaire made for the social media age, whose off-the-cuff thoughts are constantly accessible.
“One of the things that I think appeals to a lot of people is this feeling of authenticity, when he’s talking or when he’s communicating on Twitter,” said Higgins. “He can be crass on Twitter, he can be funny, he can be vulnerable, in ways that you just don’t see with modern CEOs, or historically, with captains of industry.”
As an avid Twitter user, Musk often interacts with random people on the platform who might otherwise never have access to him. Fans might like to believe that Musk tweets so often solely because he enjoys interacting with people without a PR buffer, but his Twitter presence has a tangible impact on the performance of his businesses. Merely by tweeting, Musk has influenced stock prices to rise or fall. It’s due to his capacity for influence on the public platform that, in 2018, the SEC imposed restrictions on what Musk can or can’t disclose on the site.
But while many of his fans seem to admire Musk for his edgy or irreverent tweets, some of these tweets — namely the ones about knocking Twitter down a peg — could now come back to haunt Musk in court. To build its case, Twitter’s lawsuit includes screenshots of at least 13 tweets showing that Musk disparaged the company over the past few months, as well as instances where he’d made false statements about the company and the state of the deal.
Again, it’s unclear how this Twitter situation will play out for Musk. It’s becoming clear that Musk’s considerable influence — and the readiness with which his fans take what he says at face value — can have negative, real-world consequences. Musk’s behavior over the past few months has already caused some damage, particularly to the employees at Twitter, who have expressed anxiety over job security. Several Twitter employees have quit due to Musk’s impending takeover of the company.
These negative effects could intensify as Musk increasingly weighs in on politics and promotes the idea that the left wing has become the “party of division & hate” in a time when right-wing extremism and terrorism is on the rise.
“It’s really hard to say what the long-term effect will be,” said Higgins. “We’ve seen over the past few years during Covid, and some of his stances on Covid, some of his strongest supporters push back. But in some ways, his voice found a new fan base out there, and it has broadened his appeal. He’s now seen, in some conservative circles, as a hero.”
There’s a significant cost to uncritically accepting what the powerful say — not because they are always untrustworthy, but because it plays a key role in how the wealthy consolidate even more power. A kind of circular reasoning can keep empowering the already-powerful: They must be so rich because they’re so brilliant, and since they’re so brilliant, they should be listened to and trusted. Musk has banked on people’s tendency to believe in the genius of billionaires to advance the idea that he’s been one step ahead of Twitter throughout this ordeal.
“Every ruling class in history has had to invent certain stories to uphold their own power,” said Giridharadas. “The story they’ve invented in this era, with resonances but also differences from stories from past eras, is that yes, we may be on top of problematic distribution of wealth and power — but we are the only ones who can fix it.”
As Musk would tell the tale, he’s not at a disadvantage now that he’s reneged on the deal: Twitter is the one that’s humiliated, and he’s the hero. And that might be the story his fans believe, no matter what happens in court.