Elon Musk files response and counterclaims to Twitter’s $44 billion suit

One of Musk’s counterclaims is expected to focus on the allegation that Twitter changed the number of monetized daily active users shortly after the deal was approved, and then failed to provide comprehensive responses to Musk’s team’s requests for spam number data. , according to people familiar with the matter.

Mr. Musk’s response on Friday includes a reference to Warren Buffett’s quote: “Only when the tide goes do you find out who was swimming naked,” People said, a suggestion from Mr. Musk that Twitter was jamming up spam and fake accounts because it knew to review. The market can reveal its weaknesses.

Mr. Musk’s response was submitted on Friday, hours after the judge oversaw the case against Mr. Musk Select the week of October 17 for a 5-day trial.

While Mr Musk’s answer and the counterclaims regarding the Twitter lawsuit are not immediately accessible, the billionaire CEO of

Tesla a company

He was outspoken about his reasons for wanting to walk away from the deal and indicated in previous regulatory and court filings how he was trying to make his case to end the merger agreement.

Mr. Musk He said in a regulatory filing earlier this month That he wanted to get out of the deal in the first place because Twitter hadn’t provided the necessary data and information it needed to assess the prevalence of fake accounts or spam.

Twitter rejected that assertion and argued that Mr Musk had not adhered to the terms of the deal, including violating a non-disclosure agreement and then bragging about it on Twitter. social media company Mr. Musk was sued on July 12 in Delaware Chancery Courttrying to enforce the terms of the deal.

In the regulatory filing to finalize the deal, Mr Musk’s lawyer cited concerns about Twitter’s estimates about How many of its daily users are fake or spam accountsAn issue the billionaire raised as a concern about the deal nearly three weeks after he signed it. The company has said for years that it estimates that less than 5% of monetized daily active users are from spam and fake accounts, a figure that Mr. Musk disputed.

On July 18, a court filed against A Twitter request for an urgent trialFor the first time, the billionaire publicly laid out a clear timeline of his concerns about data related to fake accounts and spam, and included new allegations about Twitter’s level of cooperation on the issue.

He said his team first became concerned about the company’s user numbers after it disclosed in its April earnings report It has overestimated its user base for nearly three years Until the end of 2021 due to an error in how people associated with multiple accounts are calculated. The review reduced the number of monetized daily active users by 0.9% for the fourth quarter of last year. The company said last week that it averaged 237.8 million users in the last quarter.

According to that recording, Mr. Musk met with Twitter executives in May to discuss how the company measures spam and fake accounts, and expressed dissatisfaction with the company’s operation and noted the lack of automated tools to help with the account.

Twitter said in its lawsuit against Mr. Musk That his attempt to walk away from the deal reflects tense market conditions that have reduced his personal wealth by more than $100 billion from its peak in November 2021. “Instead of bearing the cost of the market downturn, as the merger agreement requires, Musk wants to transfer it to Twitter shareholders,” the company said. .

On July 19, Chancellor Kathleen St. Jude McCormick, chief justice of the Delaware Court of Chancellors, agreed to Twitter’s request to speed up her lawsuit over Mr. Musk’s objections.

In a regulatory filing this week, Twitter said it would Shareholders are asked to vote on the merger at the September 13th meeting. The company reiterated its commitment to complete the acquisition at the agreed price and said its board of directors had unanimously recommended that shareholders vote in favor of it. This process is taking place in parallel with the legal case in Delaware that will determine whether the merger agreement can be enforced.

write to Sarah E. Needleman at [email protected] and Cara Lombardo at [email protected]