Twitter has accused Elon Musk in a lawsuit of halting his planned acquisition of the company because the stock market turbulence made the deal more difficult for him. But Mr Musk is firing back in a legal filing, saying it was Twitter that torpedoed the $44 billion takeover.
Mr Musk argues that Twitter hid the actual number of inauthentic accounts on its platform and accused the company of fraud. Such accounts made up at least 10 percent of Twitter’s daily active users who see ads, Mr. Musk’s legal team claimed, reiterating his concerns he expressed shortly after signing the deal in April. Twitter insists the figure is less than 5 percent.
Twitter also hid the number of users seeing ads, lawyers for Mr. Musk said in the filing, which was made public on Thursday. During the first quarter of the year, 65 million of the company’s 229 million daily active users saw no ads, according to the filing.
Twitter said Mr Musk was trying to “warp the data he received from Twitter to draw wild conclusions” and that the numbers were accurate.
Using Botometer, a tool designed by Indiana University to measure inauthentic accounts, analysts for Mr. Musk found a higher number of inauthentic accounts than Twitter had disclosed, according to the filing. Their analysis was preliminary and will be expanded, the filing said.
What happened to Elon Musk’s Twitter deal?
A blockbuster deal. In April, Elon Musk made a unsolicited bid of over $40 billion for the social network, saying he wanted to turn Twitter into a private business and let people speak more freely about the service.
The misrepresentation hid weaknesses in Twitter’s business model and enticed Mr. Musk to agree to buy Twitter at “a high price,” lawyers for the Tesla CEO said.
“Twitter miscounted the number of fake and spam accounts on its platform as part of its plan to mislead investors about the company’s prospects,” Mr. Musk’s lawyers wrote. “Twitter’s revelations have slowly unraveled, with Twitter frantically closing its gates to information in a desperate attempt to prevent the Musk parties from exposing its fraud.”
The application, made last Friday but kept confidential until Thursday, was Mr Musk’s first comprehensive response in what is expected to be a protracted legal battle between the social media company and one of the world’s richest people. There will be a trial in October.
“His claims are factually false, legally inadequate and commercially irrelevant,” Twitter chairman Bret Taylor said in a statement on Thursday. The company also responded to Mr. Musk’s claims in a: legal filing.
The Botometer tool is unreliable, Twitter said in its application. The company noted that the tool used different standards than Twitter’s internal calculations and that Mr. Musk’s Twitter account was once “very likely a bot.”
Mr. Musk started buying shares on Twitter early this year and had become the company’s largest shareholder by April. he rejected Twitter’s offer to join the board, instead launching a quick and aggressive takeover attempt. But when Twitter agreed to the takeover, Musk began to voice his doubts. In July he stated that: he no longer wanted to buy the company.
Twitter complained Mr. Musk on in Delaware Chancery Court in an effort to push through the takeover. Twitter has claimed it lost interest in the deal when the market collapsed and shares in Twitter and the electric car maker Tesla, the main source of Mr Musk’s wealth, fell.
“Musk is refusing to honor his obligations to Twitter and its shareholders because the deal he signed no longer serves his personal interests,” Twitter said in its press release. lawsuit.
In recent days, the company has contacted Mr. Musk laced with: subpoenasdemanding communications about the deal that could shed light on why Mr. Musk decided to walk away.
The deal includes a “specific performance” clause that allows Twitter to sue to push through the deal as long as the debt incurred by the billionaire for the takeover remains. But Mr. Musk could pay a $1 billion fee to end the deal if his funding falls.
Mr. Musk has maintained that Twitter is inundated with fake accounts and that the company has misled him about the true number of cheaters on his platform. Fake accounts are used to spread spam or manipulate Twitter’s service by falsely amplifying trends, and are often automated rather than run by real people.
Twitter gets most of its revenue from advertising. But Mr. Musk claimed that if Twitter was flooded with fake accounts, advertisers would not reach their intended customers. His lawyers argued that inaccuracies in Twitter’s user statistics had a material adverse effect on the company, allowing him to exit the acquisition.
Twitter said in a message to employees seen by The New York Times that it chose not to edit any of Mr Musk’s claims because it was confident in his statistics. “We provide our customers with a highly advanced set of tools and features to run and measure the effectiveness of their campaigns on our platform, with a foundation of transparency,” said Sean Edgett, Twitter general counsel.
On Thursday, Mr. Musk continued to ponder how Twitter could change. “I understand the product quite well, so I think I have a good idea where to point the technical team on Twitter to make it radically better,” he said at a Tesla shareholders’ meeting.
Mike Isaac and Jack Ewing reporting contributed.