Drama between Twitter and Musk escalates into misbehavior lawsuits

Twitter– The Elon Musk saga continued this week as both sides exchanged barbs in court documents ahead of a five-day trial due to begin in October. 17.

Recently released legal documents from lawyers representing Musk in a counterclaim against Twitter allege that the social media company engaged in a scheme to “deceive investors” by providing false figures in financial filings with the Securities and Exchange Commission. Musk claims that the Twitter platform has at least doubled the number of bots the company claimed in SEC filings and fewer “monetizable daily active users” than claimed.

Twitter responded that the billionaire CEO Tesla and SpaceX is making the wrong assumptions and looking for an excuse to forgo its $44 billion. agreement in April to buy a social network.

Both parties are building their cases ahead of a Delaware court date set for decide a dispute over whether Musk should go through with the deal.

The drama began in early April when Musk revealed a significant stake on Twitter. After initially agreeing to join Twitter’s board of directors, he reversed course and instead offered to buy the company or sell his assets.

Twitter was initially opposed to the deal and looked for another route, but eventually came to an agreement to sell Musk for about $54.20 a share. But then, as the market crashed and Twitter’s share price plummeted, Musk began publicly vilifying Twitter in an apparent attempt to get out of the deal.

Here is a summary of the latest developments, based on new and some previously confidential documents filed in court by both parties:

The numbers are far from the truth

In the lawsuit, Musk accused Twitter of including statements in the SEC disclosure that “were far from the truth.” Through his corporate law firm Skadden-Arps, Musk said the social network is “miscalculating the number of fake and spam accounts on its platform” to give investors a rosy picture.

Musk has been complaining about scams, spam and bots on Twitter for years.

In with Press release announcing his agreement to buy Twitter, Musk wrote that “defeating spambots” was one of his goals and motives for taking over the company.

Twitter responded this week in a separate Delaware court filing that Musk and his team “spent months trying to come up with a spam disclosure problem and found nothing.”

Poorly defined indicators

Musk’s lawyers also said in their counterclaim that Twitter’s “monetizable daily active users,” or mDAUs, “are not as closely related to income as Twitter makes the public believe.” They argue that Twitter is not entirely accurate in explaining to shareholders or Musk how they get the mDAU key metric.

In response, Twitter reported that Musk never mentioned mDAU as a reason for canceling the deal.

Musk’s claims about misleading mDAU statistics “are a newly invented judicial position,” lawyers wrote on Twitter. In addition, Twitter said it “accurately discloses in its SEC filings” how it defines mDAU and what it means to the company.

Trust in Documents

Musk said in his counterclaim that he relied on Twitter SEC reports to find out details about the social network’s business and problems.

What Musk doesn’t say is that he was friends with former Twitter CEO Jack Dorsey for many years. As reported by CNBC in January 2020, the two executives even exchanged ideas on how to improve Twitter.

Musk also has a longstanding business relationship with Silver Lake, a financial firm run in part by Twitter board member Egon Durban. Silver Lake was a major and early supporter of SolarCity, where Musk was chairman, and was reportedly one of the firms advising Musk when he said he was considering making a decision. Tesla private at $420 per share, and funding was “secured” for it.

Twitter confirmed in its filings that “the SEC disclosures are accurate” and that the company “has not misrepresented anything.” Twitter reported that Musk’s claims “are not supported by any facts.”

“Musk sought to secure a snap deal, failed to exercise due diligence, and proposed a self-proclaimed ‘seller-friendly’ merger agreement that contained no allegations of false or spam accounts or mDAUs,” Twitter lawyers wrote.

“stone wall”

Musk said Twitter rebuffed his team by not providing the requested and required information about bots and spam on the platform. The complaint does not mention that Musk said he could create a rival social media platform.

Twitter’s lawyers said that “Musk invents representations that Twitter has never made and then attempts to selectively use the extensive sensitive data that Twitter has given him to cause a violation of those supposed representations.”

Lawyers said Musk “incoherently alleges” that Twitter “violated the merger agreement by blocking his information requests.”

Double the number of bots

Accusing Twitter of having at least twice as many bots on its platform than the company reported, Musk’s team relied on “accounts visible on Firehose using Indiana University’s Botometer tool,” the counterclaim says.

Twitter has questioned Musk’s methods for analyzing spam and bots, especially his use of the Botometer tool. Lawyers wrote that the tool “enforces different standards than Twitter, and which earlier this year Musk himself referred to as it’s most likely a bot.”

WATCH: Twitter legal team subpoenas Elon Musk’s associates in connection with the collapse of the deal