Today I want to revisit an old prediction. I got this one wrong. And I think the relevant lesson for 2026 is that I am still not nearly jaded enough.
One of the definitive asymmetries in our modern legal system is that some people pay their lawyers by the year, while the rest of us pay our lawyers by the hour. A good rule of thumb is never underestimate how much the people who pay their lawyers by the year can get away with.
In March 2023, I wrote a post on Substack titled “How Long Does Twitter have left?” I gave it about six months. That… has not happened. Ex-Twitter isn’t going great, but it is still extremely here.
My reasoning at the time was that the publicly-reported finances were atrocious, and the underreported finances were even worse. Twitter was sitting on two financial time bombs — the pending employment lawsuits, and the inevitable regulatory fines. Once those hit, it seemed likely that Elon would make a face-saving exit.
Here are the relevant passages from three years ago:
The company is in even worse shape than it appears. Twitter has two financial time bombs waiting to go off. My hunch is that Elon will file for bankruptcy as soon as one of these time bombs self-detonates. I can’t say exactly when that will be.
I give it about six months.
—
The first financial time bomb is all the pending employment lawsuits.
(…)
Lawyers are expensive, and even simple legal proceedings tend to drag on. The court system is slow and can be rendered much slower if you are a well-lawyered billionaire. But eventually, Musk is either going to reach non-public settlements for close to what he owes or he’s going to get smashed in the courtroom and have to pay full freight.
If the early reporting that Twitter was cutting costs by not paying out severance packages was true, then there are a whole lot of busy lawyers racking up billable hours right now. If Twitter hasn’t declared bankruptcy before the bulk of those lawsuits are decided, don’t be surprised if Elon declares bankruptcy just in time to dodge those judgements and screw over his former employees one final time.
…But it probably won’t come to that. Because the other time bomb is going to go off sooner.
—
Let’s talk about the fines.
Twitter operates under a consent decree with the FTC. Just last May, the company was fined $150 million for user privacy violations. That was back when Twitter had thousands of employees and was notoriously slow and careful in rolling out new features. Twitter is required under the consent decree to dutifully report any changes in how it “maintains and protects the security, privacy, confidentiality, or integrity of any nonpublic consumer information.”
(This is one of the many reasons why Elon-Twitter can’t afford to act like a startup, even if Elon would desperately like to reclaim that startup vibe from his youth. Startups don’t have major FTC reporting requirements. Huge companies with a checkered regulatory history do.)
Elon-Twitter has been flagrantly ignoring the FTC consent decree. The FTC has already opened an investigation. Current and former employees have talked openly about the regulatory exposure he has created. One of his former lawyers basically shouted warnings on the company Slack, encouraging people to seek whistleblower protection.
European regulators have also sent repeat warnings that, if the company is in violation of the Digital Services Act, it will face several hundred million dollars in fines. Europe has a stronger regulatory state than the U.S. They do not fuck around.
The fines are coming. They will not be small. Between US and EU violations, I’d guess Twitter’s tab will be in the low single-digit billions. Might be more, might be less.
Regulatory investigations take time, but not as much time as the US legal system. And, again, these are broad-daylight violations. Twitter basically doesn’t have a Trust and Safety team anymore. Twitter’s compliance team is at least as decimated as all its other teams. The company has fired everyone who isn’t sufficiently obsequious to Elon. Elon’s management philosophy is a chaotic mix of lying and cyberbullying employees. That’s not going to earn him much goodwill from regulators.
My hunch is that the fines will be the final straw. When the fines come, Elon is going to seize on them as a reputational life raft.
He’ll declare bankruptcy and blame the regulators. “I was THIS CLOSE to turning around this important, innovative company that is a threat to the mainstream media and all those crooked politicians,” he’ll say. “But then the liberal bureaucrats stepped in and fined the company out of existence! There’s nothing I can do about it. Twitter is dead now. It all would’ve worked out if not for that meddling government.”
That narrative will, objectively, be bullshit. But his VC buddies and the MAGA/Tesla fanboys and the intellectual dark web podcasters will lap it up. It will be a face-saving story with all the right villains. Elon Musk, certified business genius, didn’t burn Twitter to the ground. He almost saved Twitter, until he was foiled by the machinations of the professional managerial class.
That’s how I expect Twitter will end. The finances are bad, the product is breaking down, the userbase is decaying. That downward slide will continue at a slow, steady pace. But what will finally break it is one of these financial time bombs self-detonating. It will probably be the regulatory fines, and that will have the knock-on effect of offering him a face-saving story to tell his friends and obsessive fans.
The company will go bankrupt with a bang, not a whimper.
I wasn’t wrong about either of those financial time bombs. But I was, in retrospect, pretty naive about the time horizon.
The lawsuit from the former Twitter executives finally settled in October 2025. The lawsuit by former Twitter employees who Elon decided to just… not pay their promised severance settled in August 2025. That’s two-and-a-half years for a couple of trivial, open-and-shut cases.
The EU announced a $120 million fine in December 2025. And Elon lost a jury verdict last month regarding some light fraud he committed when acquiring the company. All the rest of the regulatory investigations (and there were several) were erased by the incoming Trump administration. They dragged on long enough for Elon to purchase the Executive Branch. He spent something like $278 million on the election. If Kamala had won, he likely would’ve been on the hook for much more than that in fines. (What do you call an electoral system like this? The Aristocrats!)
Those are… abominably slow processes. None of the investigations were particularly complicated. Elon was told (basically. I’m paraphrasing here) “hey boss, this is the law.” Elon replied, “lol no. That isn’t fun. We’re just not going to do that.” Elon’s lawyers said “jfc, fine, I quit. Here’s the number for the whistleblower hotline, y’all.” I remain generally Abundance-skeptical, but looking at how long these cut-and-dry investigations took is enough to Abundance-pill me at least a little bit.
The thing that I find particularly interesting here is the arbitrage opportunity it creates. Let’s just consider the employment lawsuits: Elon just decided not to pay what he contractually owed. The sum total of the two lawsuits (what they asserted he owed — the final settlement numbers are non-public) was around $628 million. By refusing to to honor his contracts, Elon Musk effectively had an interest-free loan from his counterparties for two and a half years. He could pay them right away, or he could hold onto the money and pay them later. In the intervening years, he was free to invest that money, make other deals with that money, and earn interest on that money. His counterparties were prevented from investing/making deals/earning interest/exchanging that money for goods and services.
That’s a tremendous financial deal. If you are rich enough, why would you ever honor your contracts in a timely fashion? Why not roll the dice on lawyering it out? Worst-case scenario, you get a multi-year interest-free loan. Best-case, your opponent settles at a discount, or outright loses on a weird technicality.
It’s only a tremendous deal, though, if you don’t have to account for the legal fees. Lawyers are expensive, and they generally charge by the hour. Elon’s lawyers are also expensive, but the trick is that he pays them by the year. They get paid whether they’re filing frivolous lawsuits or not. That’s a sunk cost, already on the books. So long as he’s paying them, he might as well keep them busy.
So that’s the jaded lesson I’m taking from this incorrect prediction: the legal system and the regulatory state move slowly, particularly when well-resourced actors are invested in slowing them down.
This is all fixable, but not without reforms to the legal system that won’t see the light of day anytime soon. For the near-term, this strikes me as a durable and terrible status quo feature. Never underestimate how much the people who pay their lawyers by the year can get away with. The asymmetry between their access-to-lawyers and everyone else’s creates arbitrage opportunities that they predictably exploit.