Elon Musk Responds to Twitter’s Lawsuit Regarding $44 Billion Agreement
In his first formal answer to the company’s lawsuit intended to compel him to complete a $44 billion acquisition of the social media service, Elon Musk accused Twitter on Friday of misleading him about its service, obscuring facts, and failing to notify him of leadership changes.
The arguments were made by Mr. Musk’s attorneys in a legal filing intended to counter the company’s request for a four-day trial in the case in September. Mr. Musk signed the historic agreement to buy Twitter in April but has since tried to back out of the deal.
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After “a two-month treasure hunt of delays, technical snags, evasive responses and, eventually, refusals,” Twitter is rushing to court, according to Mr. Musk’s attorneys in the complaint. They also claimed that Twitter was attempting to “shroud the truth” regarding false accounts on the platform, a concern that Elon Musk has made a fundamental part of his case for terminating the agreement.
Twitter had asked for a September trial because Mr. Musk needed to finalise his purchase of the business by October 24. Instead, Mr. Musk’s attorneys suggested a trial date in February, pointing out that in the event of litigation, the agreement deadline is automatically extended. The finance has been promised by the banks who agreed to contribute to the deal’s funding until April 25, 2023.
In his court filing, Mr. Musk strongly refuted Twitter’s claims that he was attempting to unfairly terminate the deal. Twitter claimed in its lawsuit filed this week that Mr. Musk had “knowingly, purposefully, willingly and materially broken” his agreement to purchase the business by making a false claim that he was unaware of the frequency of phoney accounts on the platform.
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The next court dispute is expected to be bitter and lengthy. Before going to court, the back and forth between the two parties had already been worse for weeks. Mr. Musk frequently questioned the abundance of phoney accounts on the network and has made scathing remarks about the corporation. Fake accounts, which are frequently automated rather than managed by real individuals, are used to transmit spam or to manipulate Twitter’s service by artificially raising trends.
Mr. Musk tweeted at one point that the agreement with Twitter was on hold. The value of tech stocks, notably those of Tesla, the electric carmaker that Mr. Musk heads and is the main source of his riches, fell at the same time as his actions.
According to Twitter, it worked with Mr. Musk to finalise the sale and is committed to seeing it through. As long as the debt that the billionaire has secured for the acquisition is in place, Twitter is permitted to sue to force the deal through a so-called particular performance clause in the agreement between the two parties.
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A spokesperson for Twitter declined to comment.
Professor of corporate law Ann Lipton of Tulane Law School said it was obvious why Mr. Musk was moving slowly while Twitter was moving quickly.
Time is money, and the Twitter board has every incentive to resolve this issue swiftly while he has every incentive to drag things out. She continued, “Mr. Musk will want to obtain as much discovery as he can and take as much time up as he can, essentially hanging the threat of the litigation itself and, as time passes, the uncertainty associated with it to force some sort of settlement or backing down.”
In the court document, Mr. Musk’s attorneys reaffirmed many of the points they had made earlier this month when the entrepreneur announced his intention to cancel the agreement.
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According to the petition, Twitter did not carry out a meticulous tally of false accounts and thwarted Mr. Musk’s attempts to comprehend how spam was tallied. According to the statement, Musk was “flabbergasted to find just how poor Twitter’s approach was,” stressing that the firm relied on humans rather than machine learning to gather the data.
According to the statement, Mr. Musk attempted to obtain more information from Twitter regarding phoney accounts, but the social media platform “deliberately created artificial hurdles and hindered defendants’ efforts.”
According to Mr. Musk’s attorneys, it took months of discovery and numerous depositions to learn how Twitter counts false accounts. According to Mr. Musk, Twitter’s public statements indicating bogus accounts make up about 5% of active users are deceptive. According to the provisions of the agreement, incorrect data might have a “substantial detrimental effect” and enable Mr. Musk to withdraw, according to his attorneys, who claim that the figures “directly affect Twitter’s projected worth to users and advertisers.”
According to Mr. Musk’s attorneys, Twitter has already made mistakes with its user statistics. The business admitted in April that it had overestimated the number of active users from 2019 to 2021.
In its lawsuit, the business claimed that it had alerted Mr. Musk’s attorneys about the two executives and that they had “made no issue.”
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The matter between Twitter and Mr. Musk will be heard on Tuesday in Delaware’s Chancery Court, where the corporation filed its complaint against the businessman. The case will be overseen by Kathaleen St. J. McCormick, chancellor of the court, who will determine whether to expedite it as Twitter has requested or delay it in favour of Elon Musk.
Judge McCormick will decide whether Mr. Musk needs to close the agreement if the case goes to trial. She could alternatively let Mr. Musk leave while requiring him to make restitution. According to various interpretations of Twitter’s agreement with Mr. Musk, damages would be restricted to $1 billion. The agreement may also be settled or renegotiated by the parties.
Since Mr. Musk agreed to buy the business for $54.20 per share, Twitter’s valuation has fallen by almost a third. Next Friday is when the corporation is expected to release its quarterly profits.
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