The Twitter-Elon Musk saga continued this week, as the two parties traded barbs in legal filings ahead of a 5-day trial that is scheduled to start out Oct. 17.
Newly released legal documents from lawyers representing Musk in a countersuit against Twitter claim the social media organization engaged in a scheme to “mislead investors” by offering false numbers in monetary filings with the Securities and Exchange Commission. Musk says Twitter’s platform has at least double the quantity of bots the organization claims in SEC filings and fewer “monetizable day-to-day active customers” than claimed.
Twitter responded that the billionaire CEO of Tesla and SpaceX is creating incorrect assumptions, and searching for an excuse to back out of his $44 billion agreement in April to obtain the social network.
Each sides are creating their case as they head to court in Delaware to resolve their initial dispute more than whether or not Musk has to comply with by way of with the deal.
The drama started in early April, when Musk disclosed a considerable stake in Twitter. Soon after Musk agreed to join Twitter’s board, he reversed course and as an alternative presented to obtain the organization or sell his Twitter holdings.
Twitter was initially opposed to the deal, and sought a further route, but at some point came to an agreement to sell to Musk for about $54.20 per share. Soon after that, as the market place tanked and Twitter’s share cost declined, Musk began badmouthing Twitter in public in a clear work to get out of the deal.
Here’s a rundown of the newest developments primarily based on new, and some previously confidential, filings to the court from each parties:
Numbers ‘far from true’
In a legal filing, Musk accused Twitter of like statements in its SEC disclosures that “have been far from accurate.” By way of his corporate law firm Skadden-Arps, Musk mentioned that Twitter is “miscounting the quantity of false and spam accounts on its platform” to give a rosy image to investors.
Musk has complained about scams, spam and bots on Twitter for years.
In a press release announcing his agreement to obtain Twitter, Musk wrote that “defeating the spam bots,” was 1 of his objectives and motivations for taking more than the organization.
Twitter responded in a separate filing in the Delaware court this week that Musk and his group have “spent months attempting to invent a spam disclosure issue and have discovered practically nothing.”
Musk’s attorneys also mentioned in their countersuit that Twitter’s “monetizable day-to-day active customers,” or mDAU, are “not as closely tied to income as Twitter leads the public to think.” They allege that Twitter does not accurately clarify to shareholders or to Musk how they derive the important metric of mDAU.
In response, Twitter mentioned that Musk under no circumstances brought up issues about mDAU as a explanation to terminate the deal.
Musk’s allegations about misleading mDAU statistics “are a newly invented litigating position,” Twitter’s lawyers wrote. Furthermore, Twitter mentioned it “accurately discloses in its SEC filings” how it defines the mDAU metric and its significance to the organization.
Reliance on filings
Musk mentioned, in his countersuit, that he relied on Twitter’s SEC filings to ascertain information about the social network’s organization and challenges.
What Musk does not say is that he’s been mates for years with former Twitter CEO Jack Dorsey. As CNBC reported in January 2020, the two executives even exchanged suggestions about how to strengthen Twitter.
Musk also has a longstanding organization partnership with Silver Lake, a monetary firm run in element by Twitter board member Egon Durban. Silver Lake was a significant and early backer of SolarCity, exactly where Musk was chairman, and was reportedly 1 of the firms advising Musk when he mentioned he was contemplating taking Tesla private for $420 a share, and had “funding secured” to do so.
Twitter reiterated in its filings that the company’s “SEC disclosures are correct” and that organization “misrepresented practically nothing.” Twitter mentioned Musk’s claims “are not supported by any details.”
“Musk sought an urgent deal, undertook no due diligence, and presented a self-described ‘seller friendly’ merger agreement that contained no representations about false or spam accounts or mDAU,” the Twitter lawyers wrote.
Musk mentioned Twitter rebuffed his group, failing to hand more than requested and vital details about bots and spam on the platform. The complaint does not mention that Musk has mentioned he may perhaps start out a competing social media platform.
Twitter attorneys alleged that “Musk invents representations Twitter under no circumstances created and then tries to wield, selectively, the substantial confidential information Twitter supplied him to conjure a breach of these purported representations.”
The lawyers mentioned that Musk “incoherently asserts” that Twitter “breached the merger agreement by stonewalling his details requests.”
Double the bots
In accusing Twitter of getting at least twice as lots of bots on its platform as the organization disclosed, Musk’s group relied on “accounts visible on the Firehose applying the University of Indiana Botometer tool,” the counterclaim says.
Twitter questioned Musk’s strategies of analyzing spam and bots, especially the use of the Botometer tool. The lawyers wrote that this tool “applies unique requirements than Twitter does and which earlier this year designated Musk himself as highly likely to be a bot.”