The Power to Walk Away

That’s the ultimate bargaining power, as Elon Musk demonstrates.

Elon Musk responded to the latest major development in his ongoing feud with Twitter early Monday morning – tweeting out a meme of him laughing after Twitter reportedly lawyered up to sue him for moving to drop his $44 billion takeover of the company.

The post has a series of four photos of the Telsa founder laughing with captions that read: “They said I couldn’t buy Twitter; Then they wouldn’t disclose bot info; Now they want to force me to buy Twitter in court; Now they have to disclose bot info in court.”

Donald Trump won renown – and the White House – as the world’s greatest Twitter troll. Now, in the post-Trump era, the troll crown has been claimed by Elon Musk.

Hell, the above tweet alone would qualify him for the post.

Musk had been absent from Twitter for several days. Monday morning’s post is the first statement from Musk since Twitter reportedly hired heavyweight merger law firm Wachtell, Lipton, Rosen & Katz LLP to represent it in a forthcoming suit, Bloomberg reported Sunday.

Zoomers take note: Sometimes it’s not what you say that matters, it’s what you don’t say, and when.

A law firm representing the Tesla CEO sent a letter to Twitter on Friday, alleging Twitter “made false and misleading representations” when Musk agreed to buy the company on April 25 and has “breached” multiple provisions of the initial agreement.

Musk’s team has raised concerns over “spam bots” on the platform, and Musk wants Twitter to prove that less than 5% of its daily active users are automated spam accounts. Musk has argued that Twitter significantly underestimated the number of these “spam bots” on its service.

Twitter has claimed that spam accounts represent well below 5% of its active user base each quarter.

The online buzz over Musk’s latest move is divided between smug “I told you so’s” invoking Musk’s perceived flakiness and breathless claims of “4D chess!”

But Musk’s behavior isn’t what we’d expect to see if he was set on walking away. Nor is it 2000 IQ galaxy brain chess. It’s a high-level version of the same negotiation tactic smart buyers apply to used car shopping. You whet the seller’s appetite, then signal your willingness to walk away. After that, you’ve got them by the nose.

The meme says it all. Twitter went from refusing to sell to suing in order to force the sale.

All because Musk played hard to get.

But the real beauty of Musk’s bargaining tactic is that not only does he have Twitter eager to sell, he’s trapped them in a Xanatos gambit.

Here’s how:

1. Be Elon Musk.
2. Want own social media network.
3. Offer to buy Twitter, knowing they’ll turn you down at first.
4. Jerk them around with mixed signals, taking a step back every time they step forward. This creates urgency.
5. When the board comes around, demand user data, hinting you’ll pull out if there are too many bots.
6. Twitter gives you the data.
7. Claim that Twitter didn’t give you the data. Say you’re walking away. This guarantees that …
8. Twitter sues you to force the sale.
9. Full bot data comes out in discovery.
10. Twitter’s stock tanks.

At that point, Elon can come back with a new buyout offer reflecting the lower stock price. Or he can take the $44 billion and use it to start his own social network, which will be positioned to dominate the weakened Twitter.

Point 7 above is the tell that reveals Musk’s hand. Recall that under the current agreement, finding bot accounts in excess of 5% is not grounds for backing out of the deal. Only failing to hand over the data would constitute a breach on Twitter’s part, so that’s what Musk has accused them of.

The secret to reading the signs of the times is looking past words to the deeds behind them.

If Musk just wanted out of the deal, he’d have said, “My team and I have gone through Twitter’s data, and we’re not satisfied it backs up their ‘less than 5% bots’ claim. So after consulting my legal counsel, I’m withdrawing my bid.”

Then he’d pay the billion-dollar cancellation penalty, and that would be that.

Instead, he de facto accused Twitter of breach of contract, which is the one claim that would guarantee a lawsuit.

Once again, not much has changed here in regard to the overall deal. The second Musk offered $44 billion for the company, Twitter was forced into a no-win situation. That’s because everybody has known for years that they maintain a vast bot army which they use to manipulate what’s trending and prop up blue check accounts. Musk herded them into a box canyon where not only are they compelled by law to sell to him; they now must disclose their unethical use of bots in court.

Want to know what really would be 4D chess? If Musk and the board drew up the contracts to force this exact situation. A social network’s market value depends on its userbase. But everybody knew that 20%+ of Twitter accounts are fake. Which is why everybody knew Musk was overpaying. If what we’re seeing unfold really is a hyperdimensional posthuman move, it’s designed to get Musk a better price while letting Twitter’s board save face.

Think about it.

• Musk had to make a grossly inflated offer to force the sale.
• But he and everyone else knew he was ripping himself off.
• Because everybody knew that Twitter is at least 20% bots.
• But neither party could alter the agreement.
• Unless some dramatic development occurred which would give both sides plausible deniability.

Neither side wants a court battle that will drag on for five years.

Is Musk’s Twitter deal a real instance of 4D chess? Unlikely.

What is likely is that we’ll see an out-of-court settlement under terms that let Musk buy Twitter at a discount and let the board save face.

Regardless of the final outcome, this wild ride will only get wilder, ensuring us tons of fun for months to come.

There’s a reason why Elon Musk played a major influence on the space-colonizing, system-wide hyperpower in my hit mech adventure series.

Read now and find out!