Government

Is TX Attorney General Ken Paxton Working For Elon Musk Now?

Are you there, Elon, it's me, Ken.

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Ken Paxton

Two weeks ago, a teenager massacred 19 children and two teachers at an elementary school in Texas. So naturally, Ken Paxton, the state’s embattled attorney general, is addressing the most important issue facing his constituents: spam bots on Twitter.

On the same day that Elon Musk told the SEC that the company’s refusal to let him examine its bot evaluation methodology represented a “clear material breach of Twitter’s obligations under the merger agreement,” the Texas AG launched an “investigation” of the issue. You know, for the citizens of Texas.

“Twitter has received intense scrutiny in recent weeks over claiming in its financial regulatory filings that fewer than 5% of all users are bots, when they may in fact comprise as much as 20% or more,” he crowed in the press release announcing the investigation. “The difference could dramatically affect the cost to Texas consumers and businesses who transact with Twitter.”

Well, sort of.

Here’s what Twitter actually said in its mandatory end-of-year public disclosure:

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We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the fourth quarter of 2021 represented fewer than 5% of our [monetizable daily active users] during the quarter. The false or spam accounts for a period represents the average of false or spam accounts in the samples during each monthly analysis period during the quarter. 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.

As Bloomberg columnist Matt Levine points out, this anodyne estimate has been part of Twitter’s public disclosures for years. And anyway, Musk appears to have essentially waived due diligence, so the presence of spam bots on the platform can’t be a basis for him to withdraw from the deal or renegotiate the price. If Musk wants out, he has find some breach of covenant by Twitter, and it appears that he’s trying to manufacture one by asking Twitter for proprietary information that it will be loath to hand over to an erratic billionaire who runs his mouth online and seems unbothered by laws or contractual obligations.

Levine writes:

And one of the covenants is that Twitter “shall … furnish promptly to [Musk] all information concerning the business, properties and personnel of [Twitter] as may reasonably be requested in writing, in each case, for any reasonable business purpose related to the consummation of the transactions contemplated by this Agreement.”[5] Another one is that Twitter will “provide any reasonable cooperation reasonably requested” in connection with Musk’s debt financing.[6]

Musk, as a non-lawyer, came up with a pretext that is like “Twitter told me something untrue about its bot problem, so I can walk away.” That sounds like it might work, but doesn’t work. But Musk’s lawyers have a better pretext. It’s something like “keep asking them for more information about their bot problem; eventually you’ll ask questions they won’t answer, and then you can walk away.”

Musk appears to be demanding internal Twitter user data so that he can conduct his own analysis to determine the prevalence of bots on the site. Twitter has already said NFW, but then, like a bolt from the view, Ken Paxton swans in with a demand for the exact same proprietary data:

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1. Documents sufficient to show the number of monthly active users of Twitter for each month from 2017 to the present.

2. Documents sufficient to show the highest number of daily active users of Twitter for each month from 2017 to the present.

3. Documents sufficient to show Twitter’s “average monetizable daily active users” for each month from 2017 to the present.

4. Documents sufficient to show the highest number of monetizable daily active users of Twitter for each month from 2017 to the present.

5. Documents sufficient to show the number of monthly active users of Twitter in Texas for each month from 2017 to the present.

6. Documents sufficient to show the highest number of daily active users of Twitter in Texas for each month from 2017 to the present.

7. Documents sufficient to show Twitter’s “monetizable daily active users” in Texas for each month from 2017 to the present.

8. Documents defining, describing, or otherwise explaining the metric “monetizable daily active users.”

WOW, WHAT AN AMAZING COINCIDENCE.

Almost like the Texas Attorney General is freelancing for a billionaire with deep pockets and an ability to buy and sell political candidates at will.

Elon Has a New Bot Excuse [Bloomberg]

Liz Dye lives in Baltimore where she writes about law and politics.

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