I’m Grateful to be featured in the Japanese media outlet Gendai, interviewed by their esteemed journalist, Makiko Iizuka. Our conversation focused on Quinn Emanuel’s relationship with the new Twitter CEO, Elon Musk, exploring the background investigation behind his takeover of the social media platform and whether its future is safe in his hands.
The English translation of this article is provided below.
“A man who is trusted by Elon Musk” revealed the untold backstage story of Musk’s Twitter acquisition and what will happen in the future
Representing Mr. Elon Musk
The acquisition made by Mr. Elon Musk, the CEO of the Tesla Motors, still causes wide repercussions. I interviewed John Quinn, the representative of the Quinn Emanuel Law Firm that has represented Mr. Musk for several years.
The Quinn Emanuel Law Firm is world famous as a firm specializing in litigation. It is known as one of the “four most feared kings”(meaning one of the four most feared litigation firms in the world) and has never merged with or been acquired in the legal world, where M&A amongst firms often happens.
Mr. Quinn, a trial lawyer who often comments on the U.S. mainstream media as “a top player in the legal world”, has grown his firm that has now 31 branch offices in the world, including its Tokyo Office.
The firm has won numerous lawsuits that the Japanese people would be familiar with, including winning a lawsuit for Ultraman, whose copyright was infringed in the United States, and a lawsuit brought against the professional tennis player Naomi Osaka（Naomi Osaka won! The lawsuit brought by her former coach, and which sought 20% of her lifetime winnings as damages, was dismissed). I interviewed Mr. Quinn on his visit to Japan at their Tokyo Office.
Meeting with Mr. Elon Musk
How did you start working for Mr. Musk in the first place?
Our office has represented Mr. Musk for several years. Do you remember the incident that the boys soccer team was lost in the cave in Thailand? Mr. Musk offered to try to rescue them by bringing a submarine. A British diver criticized his act as a publicity stunt. Since Mr. Musk called him ‘pedo guy’ in twitter, the diver sued Mr. Musk for defamation. We defended Mr. Musk and won the lawsuit. Since then, we have worked with Mr. Musk on several other cases. So, he contacted us for this twitter lawsuit.”
Backstage of Cancelling the Acquisition of Twitter ーWhy did Mr. Musk try to cancel the contract?
The reason why Mr. Musk tried to terminate the contract was that he did not get the answers to some questions. Mr. Musk asked them about the number of the bots, how to calculate the bots, how they manage the company etc., but he did not get those answers.”
Twitter seemed to think that the reason why Mr. Musk cancelled the contract was because the acquisition would not be sufficiently beneficial and also he was concerned about the acquisition price. Considering the market value of Twitter, the acquisition price of 44 billion dollars was said by some to be too high.
Background Investigation, Depositions
Why did Twitter decide to bring a lawsuit against Mr. Musk and how did he respond to the lawsuit?
“Mr. Musk gave them notice for terminating the acquisition, so Twitter sued him for breach of contract. Mr. Musk brought a countersuit against them for their misrepresentation of the number of the bots and fraud. Also, certain management issues and the fact that key personnel left the company after the contract was signed were also included in the complaint. To get ready for trial, our New York Office investigated the background and prepared for depositions, etc.”
But, eventually, Mr. Musk decided to acquire Twitter at the contract price. Some experts speculated that Mr. Musk decided to acquire Twitter because he thought he would not be able to win the lawsuit. However, there might have been another reason there.
What did Twitter offer to Mr. Musk？
After Twitter sued Mr. Musk, they offered a discount from the acquisition price. It was a substantial discount. But, in return for the discount, they requested two things. One is golden parachutes for some in senior management. A golden parachute means that people are given a significant amount of money when they are fired. Secondly, they requested a release of claims’. In other words, they asked Mr. Musk to promise not to sue them.”
Everything is for the Company
“But Mr. Musk said No’ to their offer. He did not want the money going to the pockets of the management. Also, he did not want to give a release of claims. He wanted to protect the right to sue Twitter after the contract was closed. ”
Does it mean that there is a possibility that Mr. Musk will bring lawsuit in the future?
Now, Mr. Musk owns Twitter. He can talk to the people in the company and can get various information from them. That information could support claims against Twitter’s former senior management and directors. This is my speculation, but we cannot rule out the possibility that he could sue the former senior management and directors. He could sue them for the misrepresentation of the number of the bots and the breach of fiduciary duties.”
What is the breach of fiduciary duty about?
People who work for the company have duties to fulfill for the company. Breach of fiduciary duties means people act for their own interests instead of the interests of the company. A conflict of interest could be a breach of fiduciary duties. It is an act in which people try to deal with a company for their own interests rather than for their company’s interests. If people do not fulfill their duties, the golden parachute could be regarded as a breach of fiduciary duties.”
After Mr. Musk acquired Twitter, it was reported that hate speech increased. One survey showed that n-word increased by 1300% on the day of his acquisition.
Twitter Deepens the Divisiveness?
Automobile manufacturers such as GM, Audi, and Volkswagen paused on advertising. They might be worried that a relationship with Twitter that now has more racially discriminatory tweets might hurt their brand images and reputations. Also, Mr. Musk called for voting for the Republican party at the Mid-term election. He may be thinking that it is also a part of the freedom of speech.
After Mr. Musk, an advocate of the freedom of speech, acquired Twitter, we have more hate speech. What do you think about it?
Speech can sometimes be dangerous. SNS, such as Twitter, especially has a big influence on young people. I think that dangerous speech needs to be restricted. However, if Twitter tries to restrict discussions based on a particular political agenda or political points of views, that would not be healthy. Even a very unpopular, extreme political view should not be restricted. Obviously, I think it is very difficult to draw a line between what should be restricted and what should not be restricted.”
People say that SNS such as Twitter would deepen the divisiveness in the US.
“Trump inflamed the divisiveness, but I think the divisiveness had already begun before Trump era. I think it began in the Obama era or even in the George W. Bush era. Some people liked Bill Clinton, while others hated him. Hilary divided the US. Richard Nixon, who was involved in the Watergate incident, incredibly divided the US. The question is how to measure the degree of the divisiveness. A polarized society like the US has a lot of divisiveness and differences in opinions.”
People say that we have more divisiveness now, but I wonder about that. Looking back, we had more divisiveness and more controversies at other times in our past. Martin Luther King and Robert Kennedy were assassinated. During the Vietnam war, there were students who protested, and some were shot to death and some were put in jail. In the 60’s and 70’s, we had riots and much more divisiveness. There is no question about it. American people who say there is more divisiveness now might be forgetting about what happened in the past.”
After his acquisition, in order to reduce cost, Mr. Musk laid off half of Twitter’s 7500 employees after firing the CEO and CFO. Although it was cancelled once, he announced a paid blue badge plan. There is criticism from media saying Mr. Musk is trying to destroy the functions and reputation of the platform.
How do you think that Mr. Musk will transform Twitter?
Since Mr. Musk owns Twitter now, it is not unusual for him to fire employees. He can choose the people he trusts and put them in the right positions. I think he would like to bring in new people who can change Twitter because he is looking for a transformation. Also, it is usual for people who take over a company to manage it with their own ideas and to consider how to reduce cost. Mr. Musk has just taken over the company, so I would like to wait and see how he will transform the company.”
At the end, I asked Mr. Quinn about Japan’s issue of declining birthrate and aging population because Mr. Musk caused controversy by saying unless something changes to cause the birth rate to exceed the death rate, Japan will eventually cease to exist.”
Is Japan Ending?
Mr. Quinn recalled the speech conducted by Mr. Lawrence Summers, secretary of the treasury under the Clinton administration and said:
Mr. Summers, who talked about alternative to the US, said Europe is a museum, Japan is a nursing home, and China is a jail”. By saying this, he pointed out that there was no alternative to the US and US dollars.”
“Japan is a nursing home” is an analogy that exactly points out the reality of Japan that is heading toward an aging society. However, Mr. Quinn still sees potential in Japan.
In the 1980’s, a book called The Japan That Can Say NO” and a book called Japan As Number One” sold well and that was a time with significant Japanese investments in US real estate. After that, stagflation occurred. However, still now, Japan is the third largest economy in the world. I think people have long predicted that Japan would be declining, but Japan is still the third largest economy in the world. I believe Japan has potential.”
People will increasingly watch what kind of actions Mr. Musk will take in the future.