Elon Musk responds to Twitter’s lawsuit over $ 44 billion

Elon Musk accused Twitter on Friday of tricking him about the service, obscuring the facts and not notifying him of changes in management, in his first formal response to the company’s lawsuit with a view to forcing him to complete a $ 44 billion acquisition of the social media service.

Lawyers for Mr. Musk, who entered into the blockbuster deal to buy Twitter in April but has since sought to end the deal, came up with the arguments in a legal filing intended to oppose the company’s claim for a four-day trial in September in the case.

Twitter is rushing to court after “a two-month treasure hunt of delays, technical bottlenecks, evasive responses and eventual rejections,”[ads1]; Musk’s lawyers said in the archive. They added that Twitter was trying to “cover up the truth” about fake accounts on the service, an issue that Mr. Musk has put at the heart of his desire to withdraw from the deal.

Twitter had requested a lawsuit in September because Mr. Musk was to complete the deal to buy the company by October 24. Mr. Musk’s lawyers suggested a February date for a trial instead, noting that the contract deadline is automatically extended in case of litigation. . The banks that have committed to help finance the agreement have promised that financing until 25 April 2023.

Mr. Musk’s legal filing was a strong rebuke to Twitter’s allegations that he was trying to wrongfully terminate the acquisition. In the lawsuit this week, Twitter said Musk “knowingly, intentionally, intentionally and materially violated” his agreement to buy the company by falsely claiming that he did not receive information about the spread of fake accounts on the service.

The ensuing legal battle promises to be ugly and protracted. The back and forth between the two sides had already escalated for several weeks before they landed in court. Mr. Musk has made spiky comments about the company and often questioned the spread of fake accounts on the platform. Fake accounts are used to spread spam or manipulate Twitter’s service by erroneously increasing trends, and are often automated rather than run by real people.

At one point, Musk tweeted that the deal with Twitter was on hold. His actions coincided with a fall in the value of technology stocks, including Tesla, the electric car maker led by Mr. Musk, who is the main source of his wealth.

Twitter has claimed that they have worked with Mr. Musk to terminate the agreement and are willing to review the sale. In the agreement, Twitter and Mr. Musk have a so-called specific performance clause that allows the company to sue to force the agreement through, as long as the debt that the billionaire has set up for the acquisition is in place.

A Twitter spokesman declined to comment.

Ann Lipton, a professor of corporate governance at Tulane Law School, said it was clear why Twitter was moving fast and Mr. Musk was not.

“The Twitter board has every interest in getting this settled quickly, and he has every interest in delay – time is money,” she said. About Mr. Musk, she added: “He will want to get as much discovery as possible and take as much time as possible, mainly hanging up the threat from the trial itself and, as time goes on, the uncertainty associated with it. force a form of settlement or to withdraw. “

In the legal filing, Mr. Musk’s lawyers reiterated many of the arguments they had made this month when the billionaire said he intended to end the deal.

Twitter did not conduct a strict count of fake accounts and hindered Mr. Musk’s attempts to understand how spam was registered, the archive states. “Musk was surprised to find out how lean Twitter’s process was,” the submission states, noting that the company used people to find out the information instead of machine learning.

Mr Musk tried to get more data from Twitter about fake accounts, the submission added, but the company “deliberately erected artificial roadblocks and frustrated the defendants’ efforts”.

To find out how Twitter counts fake accounts, Mr. Musk needed months of discoveries and dozens of deposits, his lawyers said. Mr. Musk has claimed that Twitter’s public revelations that fake accounts make up around 5 percent of active users are misleading. Incorrect numbers can have a “significant negative effect” under the terms of the agreement and allow Mr. Musk to walk away, his lawyers said, claiming that the numbers have “directly on Twitter the potential value for users and advertisers.”

Twitter has made mistakes with its user numbers before, said Mr. Musk’s lawyers. In April, the company said it had outperformed its active users from 2019 to 2021.

The company said in its case that it had notified Mr. Musk’s lawyers about the two leaders and that the lawyers had not “raised any objections.”

Twitter and Mr. Musk are scheduled for a hearing on the case Tuesday at the Chancery Court in Delaware, where the company filed a lawsuit against the billionaire. The court’s chancellor, Kathaleen St. J. McCormick, has been instructed to oversee the case, and will decide whether to expedite the case, as Twitter has requested, or postpone it to Mr. Musk.

If the case goes to trial, Judge McCormick will decide whether Mr. Musk must terminate the agreement. She could also let Mr. Musk go away while forcing him to pay compensation. In many readings of Twitter’s contract with Mr. Musk, the damage would be limited to $ 1 billion. The two sides can also reconcile or renegotiate the agreement.

Twitter has lost about a third of its value since Musk signed the deal to buy the company for $ 54.20 per share. The company is scheduled to report its quarterly results next Friday.