Twitter-Musk drama continues as both sides file new claims of bad behavior

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On October 17, Elon Musk and Twitter will appear in court in Delaware.
Legal papers are being used by both sides to attempt and support their accusations against the other.
Twitter claims that Musk is embellishing events and facts in an effort to back out of the agreement.

Image Source- Gulf News

This week saw a new chapter in the Twitter-Elon Musk dispute as the two parties hurled insults in court documents ahead of a five-day trial that will begin on October 17.

According to recently made public legal docs from Musk’s attorneys in a countersuit against Twitter, the social media giant plotted to “mislead investors” by reporting misleading financial information with the Securities and Exchange Commission. Musk asserts that Twitter’s platform has fewer “monetizable daily active users” and at least twice as many bots than the firm says in SEC filings.

Twitter retaliated by saying that the billionaire CEO of Tesla and SpaceX is making false assumptions and looking for a justification to break his $44 billion deal to purchase the social network in April.

In preparation for the Delaware court date slated to decide whether Musk must complete the purchase, both sides are preparing their arguments.

Early in April, when Musk revealed a sizable Twitter ownership, the turmoil started. He first agreed to join the Twitter board, but later changed his mind and proposed either buying the business or liquidating his stakes.

Although Twitter first resisted the proposal and looked for an alternative, it ultimately decided to sell to Musk for about $54.20 per share. But once the market collapsed and Twitter’s stock price dropped, Musk began publicly disparaging Twitter in an obvious attempt to back out of the agreement.

Following is a summary of recent developments based on fresh court filings from both parties, some of which were previously secret:

Numbers are far from accurate

Musk said in a legal filing that claims made by Twitter in its SEC disclosures “were far from truthful.” Musk said that the social media giant is “miscounting the amount of fraudulent and spam accounts on its network” in order to paint a positive picture for investors through his corporate legal firm Skadden-Arps.

Musk has long complained on Twitter about fraud, spam, and bots.

Musk stated that one of his objectives and driving forces for acquiring Twitter was “fighting the spam bots” in a news statement announcing his agreement to do so.

In a response this week, Twitter said that Musk and his team had “spent months trying to fabricate a spam disclosure problem and have discovered none” in a separate petition in the Delaware court.

Metrics that are ill-defined

The “monetizable daily active users,” or mDAU, of Twitter are “not as closely related to revenue as Twitter urges the public to believe,” according to Musk’s attorneys in their countersuit. They assert that Twitter does not adequately disclose to Musk or shareholders how they arrive at the crucial statistic of mDAU.

Twitter responded by claiming that Musk never cited mDAU issues as a justification for ending the agreement.

Twitter’s attorneys stated that Musk’s claims regarding false mDAU data “are a newly invented litigating position.” Additionally, Twitter said that it “accurately discloses in its SEC filings” what the mDAU statistic means to the firm and how important it is.

Filings as a source of information

Musk claimed in his countersuit that he based his knowledge of Twitter’s operations and difficulties on the company’s SEC filings.

What Musk omits to mention is that he has known Jack Dorsey, the former CEO of Twitter, for many years. The two execs even discussed ways to improve Twitter.

Additionally, Egon Durban, a member of the Twitter board, and Musk have a long-standing business relationship with Silver Lake, a financial institution. Silver Lake was apparently one of the companies advising Musk when he indicated he was considering taking Tesla private for $420 per share and had “money secured” to do so. Silver Lake was a significant and early sponsor of SolarCity, where Musk served as chair.

In its filings, Twitter reaffirmed that its “SEC disclosures are truthful” and that it “misrepresented nothing.” Musk’s comments, according to Twitter, “are not backed by any facts.”

The Twitter lawyers stated that Musk “sought a hasty deal, performed no due diligence, and offered a self-described’seller friendly’ merger agreement that made no guarantees about fraudulent or spam accounts or mDAU.”

Twitter, according to Musk, rejected his team by refusing to provide sought and essential information regarding bots and spam on the platform. The fact that Musk has suggested he would launch a rival social media platform is not mentioned in the complaint.

According to Twitter’s legal representatives, Musk “invents representations Twitter never made and then attempts to use, selectively, the substantial confidential data Twitter provided him to conjure a breach of those putative representations.”

According to the lawyers, Musk “incoherently alleges” that Twitter violated the merger agreement by refusing to provide the information he requested.

Double your bots

According to the counterclaim, Musk’s team relied on “accounts visible on the Firehose utilising the University of Indiana Botometer programme” when accusing Twitter of having at least twice as many bots as the business acknowledged.

In particular, Twitter questioned Musk’s usage of the Botometer tool when monitoring spam and bots. The technology “applies different rules than Twitter does and which earlier this year labelled Musk himself as very likely to be a bot,” the attorneys claimed in their letter.

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