Why Musk is Stalling

Elon Musk seems to have accepted that he will have to do what he promised and acquire Twitter, but now he is delaying the close of the deal. He has a good reason, but it's not the one you think.

Before we get to today's main topic, some miscellaneous goodies…

• The oddest things stir up a lot of attention on social media. When I re-shared a post about the 40th anniversary of the show Remington Steele (a childhood favorite), an extraordinary number of people commented. Many of us agonized that it’s not streaming anywhere, which is also the case for Moonlighting, a parallel show from the same era. Why aren’t these shows streaming??

• Speaking of older shows, I found myself thinking fondly about Studio 60 on the Sunset Strip, only to find that it too isn’t streaming anywhere. (Argh!) This was a brilliant drama from Aaron Sorkin set behind the scenes of a Saturday Night Live-like sketch comedy show. It only lasted a season. I think if it were to premiere today on a streaming service it would be a hit (like The Morning Show on AppleTV+). Back in 2006, Studio 60 had the dual challenge of being a serious drama about sketch comedy (like how Oscar Wilde described The Importance of Being Earnest as “A Trivial Comedy for Serious People”) and premiering the same year as 30 Rock, which was a sit-com about sketch comedy. I am delighted to report that I found DVDs at my local library (libraries are cool: have you been to yours lately?). I binged the first four episodes. The show holds up!

• Here’s a depressing video about what happens when a white guy holds up a “Black Lives Matter” sign in what he calls the most racist town in the U.S.

• After watching that you can cheer yourself up with this “Infinite Story” surfaced by Vala Afshar on Twitter.

• Then check out this joyful video clip from the USC majorette team. Don’t miss this interesting Washington Post article about them.

• The Supreme Court is likely to weigh in on Section 230: this is a developing story and worth tracking. Nobody is happy with 230, but nobody can agree on why.

• Some new research from Horizon Media argues that Gen Z folks “believe mainstream pop culture is a thing of the past.” I haven’t dug into the data yet. Often, what we think of as generational differences are just life-stage differences. In this case, Gen Z is one of the first generations to grow up after massive media fragmentation, so what cause do they have to believe in mainstream pop culture if they haven’t really experienced it?

• Please follow me on Twitter for between-issue insights and updates.

On to our top story...

Why Musk is Stalling

The late Steve Jobs was so persuasive that people said he had a “reality distortion effect” while you were in his presence. But Jobs couldn’t charm his way out of cancer, and it killed him.

Over the last few weeks, we’ve seen other persuasive people’s reality distortion effects falter and fail, albeit with less fatal consequences. Alex Jones has learned that while you can get away with lying about the Sandy Hook massacre for years and make millions of dollars doing so, you cannot simply ignore the demands of the U.S. court system. He is now facing huge legal penalties. While my persistent fantasy of seeing Donald Trump’s favorite color on a jumpsuit he’s forced to wear may never happen, he has learned that ignoring the law when you’re a former president and holding onto classified documents will at the very least cost you millions in legal fees and be a big pain in the neck.

Which brings us to Elon Musk and his endless, on-again-off-again acquisition of Twitter. I’ve argued before that Musk never wanted to own Twitter. Instead, he wants to sell more Teslas.

The only question that matters around Musk buying Twitter is “what’s best for Tesla?” Tesla is the main source of Musk’s wealth, and he’s the richest individual on the planet.

Pretending to acquire Twitter earned Musk billions of dollars of earned media, which made him more salient in the minds of car buyers, which in turn made Tesla more salient, which sold more cars… and he didn’t have to spend $2.2 billion on ads like General Motors did in 2021.

Musk thought he could buy Twitter, change his mind later, and still have the benefit of all that free salience. But he signed the contract too quickly and didn’t give himself enough wiggle room. His miscalculation was that he thought his reality distortion effect could get him out of the deal, but that ran against the financial incentives of the Delaware Chancery Court.

Delaware makes an enormous amount of money out of being the place where all American businesses incorporate: it is corporation friendly. Delaware doesn’t care how charming or persuasive or mischievous Elon Musk is: if they let him off the hook, then that will hurt the state’s revenues. The case was going to trial in Delaware.

By October 4, Musk and his lawyers must have concluded that the deal would close, so he went public that the deal was back on (like it was his idea).

Then, last week, Musk’s lawyers started working hard to delay the acquisition and prevent the trial. Twitter balked at abandoning the trial, arguing that Musk wasn’t serious about the acquisition, and this was just another game. The judge split the difference: she gave Musk until October 28 to close the deal, or a trial would begin in November.

Some pundits have speculated that Musk was stalling because his funding was in jeopardy. Since Tesla’s stock has fallen—because of lower than expected auto delivery numbers as well as evidence that Tesla’s vaunted snazzy new batteries are pretty much the same—Musk's wealth has also fallen. Other pundits have speculated that Musk does not want to be deposed because he has too many secrets.

Again, the only question that matters around Musk buying Twitter is “what’s best for Tesla?”

This is all about the midterms on Tuesday, November 8, 2022.

After my first piece about Musk and Twitter, my friend Shawn Riegsecker suggested that Musk was trying to cozy up to the MAGA crowd because Tesla is launching an electric pickup truck, the CyberTruck, and a lot of people in red states buy pickup trucks.

If Electric Vehicles are too associated with liberal politics and fighting climate change, that’s bad for Tesla. The same logic applies for the electric semi-truck with a 500 mile range that Tesla just announced it would deliver in December: there are a lot of truck drivers who didn’t vote for Biden.

Musk has been studied in how he has distanced himself from being perceived as liberal: he even blamed liberal educators on his estrangement from his oldest child, which will soon be a primo example of failing to take accountability in psych textbooks everywhere.

The problem is that a lot of liberals buy EVs. While Musk wants to attract conservatives, he doesn’t want to alienate the liberals who have historically been his customer base.

After the January 6th uprising, Twitter’s then-CEO Jack Dorsey permanently banned Donald Trump from Twitter, but Dorsey is no longer the CEO. Elon Musk has described himself as a free-speech absolutist (whatever that means), and publicly disagreed with Dorsey’s decision at the time.

If Musk takes the keys to Twitter before the midterms of 11/8, then he has an immediate problem: does he let Trump back on the platform? Back in May, he said that he would.

This is a no-win situation for Musk.

If the Twitter acquisition closes before the midterms, then Musk either lets Trump back on or doesn’t.

If Musk lets Trump back on, then we know that Trump will resume tweeting. Whether or not this has any effect on the mid-terms, if the Democrats lose either the House or the Senate the perception will be that Trump had something to do with it and that Musk enabled it. This will send a lot of liberals off to buy Cadillac Lyriqs instead of Teslas.

On the other hand, if Musk doesn’t let Trump back on, then regardless of the mid-term outcome it will confirm to conservatives that Musk was really a liberal all along.

So, Musk is stalling to buy time so that the Twitter acquisition closes on 11/9 or later. At that point, Musk has two long years before the 2024 general election. He can take his time deciding whether or not to let Trump back on the platform. Neither conservatives nor liberals will be able to heap all that much blame onto him for the 2024 outcome, whatever it is.

And he’ll keep selling cars.

Thanks for reading. See you next Sunday.