Elon Musk’s counter-suit against Twitter claims to have misled him

  • Musk has made several claims against Twitter, including the robustness of its user metrics.
  • He said Twitter is trying to “distract” from its many “misrepresentations”.
  • Twitter dismissed it, saying the billionaire’s story is “implausible and contrary to the facts”.

Elon Musk’s 164-page confidential lawsuit against Twitter is rife with allegations about the validity of the social media company’s commercial claims, according to a copy obtained by Insider.

The counterclaim is another escalation of the ongoing legal fight over Musk’s attempt to back out of his $ 44 billion Twitter purchase deal. The billionaire and the platform are already scheduled to confront an October trial in the Delaware court to find out if he is legally able to abandon the deal to acquire the platform.

In his counter-arguments, Musk has long argued that he has the right to completely abandon the deal. He claims he was led to believe through Twitter’s public assurances to investors that his business, built around user metrics, was solid. They are anything but, he says. For months, Musk has publicly claimed that Twitter had more “bots” or spam accounts than he admitted. After pushing for more information on the matter, he decided to cancel the deal in early July.

Now, he’s accusing the company of intentionally “mispricing” the number of spam accounts it hosts in order to leverage its user metrics “as part of its scheme to mislead investors about the company’s prospects.” He further states that Twitter’s reliance on the mDAU metric, or monetizable daily active Twitter users, as a basis for revenue is in itself misleading. Meanwhile, Twitter actually has 65 million fewer daily users than it claims, according to Musk. And those who see ads and should be considered “monetizable” are just 16 million users.

Twitter’s lawsuit to enforce the merger deal is “full of personal attacks on Musk and flamboyant rhetoric more directed at a media audience than this court” and “is nothing more than an attempt to distract from these false claims” , Musk’s counter-arguments affirm.

“This has always been Twitter’s strategy: to distract and obfuscate the truth about its revelations, first from its investors and then from the Musk parties when they began to discern the truth,” the claims continue.

Twitter denied Musk’s allegations. He filed a court response after hours calling the billionaire’s claims “a” made-up “story in an attempt to escape a merger deal that Musk no longer found attractive once the stock market – and along with it, his enormous wealth. staff – decreased in value. ”

“Counterclaims are a litigation tale that is contradicted by evidence and common sense,” Twitter added.

Musk’s counter-arguments were initially unavailable to the public because they allegedly contained information on private companies that needed to be blacked out, according to the arguments of Twitter’s lawyers. After days of back-and-forth between attorneys on both sides, the judge overseeing the case at Delaware Chancery Court said the lawsuit had to be made public by Friday.

Musk faces a tough battle in his efforts to pull out of the deal due to the ironclad contract he signed earlier this year, several experts previously told Insider.

But his counterclaim is an attempt to create a way out of the deal. While Twitter has repeatedly pointed out that Musk gave up his right to information before signing the merger deal, Musk says he was following the traditional route of “trust but verify,” which means he trusted public revelations of Twitter and continued to validate them afterwards, and negotiated the right to do so.

“Musk’s parties … fully expected that Twitter would not hide anything from its would-be owner, including the extent of the problem with his fake or spam account,” the complaint said. “Instead, the opposite happened. Twitter played a game of hide and seek that lasted months to try to expire the time before the musky parties could discern the truth about these representations, which had to shut down. The more Twitter avoided even simple requests, the more the musky parties were starting to suspect that Twitter had misled them. ”

He did this intentionally, he claimed. The platform’s user authentication process is weak, according to the counter arguments. The company does not send emails, SMS or other push notifications to users to verify them, and its CEO Parag Agrawal could not explain to Musk how he selected which accounts to manage by human moderators.

Twitter delivered massive amounts of account and user information to Musk. Although Musk’s claims refer to it as “limited”, his analysis so far shows “shocking results”. In early July, for example, a review by Musk’s experts showed that “a third of visible accounts may have been fake or spam.” For him, this means that a “conservative minimum” for spam accounts on the platform is 10%, not the 5% publicly claimed by Twitter.

This, combined with the allegation that Twitter’s mDAUs are much lower than he claimed, means Musk has every right to terminate his deal to acquire the company, he said. Musk has asked the court to terminate the merger agreement and pay undisclosed damages.

Are you a Twitter employee or do you have information to share? Contact Kali Hays at khays@insider.com, on the Signal secure messaging app at 949-280-0267 or via Twitter DM at @hayskali. Contact using a non-work device.

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