Twitter-Elon Musk litigation on hold until $44 billion deal closes

Yahoo Finance's Alexis Keenan and Dan Howley discuss the next steps for the Twitter and Elon Musk trial after Musk agreed to move forward with the deal and what it means for the social media platform

Video transcript

AKIKO FUJITA: --about 2% almost here after surging on news yesterday that Elon Musk plans to buy the company after all. The $44 billion offer follows months of fighting between the Tesla CEO and the social media giant. And it comes just weeks before the two sides were set to meet in court. The legal fight, though, far from over yet.

To break it all down, we've got Yahoo Finance's Alexis Keenan and Dan Howley, our Twitter/Elon Musk experts. Let's start with the legal side of things. Alexis, we saw the news yesterday. Everybody said, OK, he wants it after all. What does this mean for the legal side of things? Because the thinking was that he potentially saw that he maybe couldn't win in court. And so he went for the original plan instead.

ALEXIS KEENAN: So we think-- and the steps of the litigation is that it's on hold. What Musk's attorneys are asking for is that a stay be put in place to put that litigation on the back burner until this deal is closed.

It's also contingent on Musk getting his debt financing. And as we know, he has $33 billion committed in equity. Some analysts think that he might be about $6 billion short there and needs to raise some more money. But $12.5 billion in debt financing already committed largely by Morgan Stanley. And so he does have to figure out that part. So this looks like where he will get a chance to close this deal, and then, officially, the litigation can be dropped.

AKIKO FUJITA: Yeah, and I guess the argument on the Twitter side is, what, until we get that check cleared, we're not going to say this is the end of it yet.

ALEXIS KEENAN: That's right.

AKIKO FUJITA: Dan, a lot of questions here about what this means for the platform moving forward. A lot of these discussions that happened when that initial offer was made. CEO Parag Agrawal, we have seen over the last several months, not quite lock and step with Elon Musk. Is he going to be the first one to go?

DAN HOWLEY: Yeah, I think he's either heading for the door, or he's going to be shown the door. My thinking is he'd probably just jump out a window or something once it's finalized. I mean, not in a bad way, by the way. Just, like, leaving is what I meant-- any exit he can take.

But, you know, I think the big thing that we'll see is how Elon will put his stamp on Twitter, either for better or for worse. He's talked about how he wants to limit moderation on the platform. We've discussed how that's not necessarily a good thing. That, you know, moderation exists so that users can enjoy a service that isn't overrun with horrible content that they otherwise would like to avoid. So that could impact the number of people that actually use Twitter.

There's also the idea of how that could impact advertisers, although we don't know if it will be an advertising platform still because Musk has said he wanted to get away from the advertising model. So there's so many things up in the air here. I think the big thing that he's talked about, obviously, are the bots, which, I mean, clearly, he knows now that he talked about it a bit too much in his text messages.

But how exactly they're going to tackle that really remains to be seen because it's a problem on sites that put even more money than Twitter makes into security, right? Facebook, they-- the app itself has problems with bots still. There's things that scrape people's accounts and make phony versions of them, right? It just happened to one of our editors at Yahoo Finance. So, you know, I think it's something that they say they want to do away with. And sure, maybe they can tamp down on it a little more. But I don't think there's any way that you can get away from having bots on a platform like Twitter.

AKIKO FUJITA: Well, and Alexis, you pointed out the fact that we can sort of glean some ideas from these texts that have come out in this back and forth fight between the two sides. What does that suggest in terms of the next move Elon Musk wants to make when the deal closes?

ALEXIS KEENAN: Yeah, so we got to see actually a lot of what Elon Musk thinks about what the future of Twitter should be in those texts that came out in this litigation. And for one, he said that he would like to unwind those permanent bans, the one that impacted President Trump and others.

Also, there was some discussion with his brother, Kimbal Musk, saying that there was this blockchain idea and that there would be a pay to tweet so that it would be recorded. Musk later then goes back, walks that back, and say no, that's not going to really be possible because of latency issues, that the platform has to chug along much quicker than that from a programming standpoint.

Also, for those concerned that, to Dan's point, that there would be not enough speech moderation, Musk, on April 28, said this to an investor, Michael [INAUDIBLE]. He said Twitter is obviously not going to be turned into some right-wing nut house, aiming to be as broadly inclusive as possible, do the right thing for the vast majority of Americans. So he is saying that he does realize that content moderation has to happen to some extent there.

AKIKO FUJITA: Really quickly, Dan, the timing of this, obviously, weeks before that court case was set to begin, but also just about a month out from the midterms. A lot of people saw this yesterday and said, well, are we going to start seeing people come back, i.e. former president Trump, back to the platform? How quickly are things likely to move?

DAN HOWLEY: I mean, I think they still have to-- check has to be in hand, right? And I think it'll take a while for Musk to actually finally take over when he does. And then it'll probably take a little bit longer than that to unwind those bans, unless he really wants to make a splashy entrance, which I mean, that's basically what he does for a living so that could be the case. But I don't think it's going to happen today or tomorrow or even maybe ahead of the midterms.

AKIKO FUJITA: OK, you'll let us know when it does happen. Dan and Alexis, on top of all the developments in this Elon Musk, Twitter-- what looks to be an acquisition. We'll be following. Thanks so much for that.