Elon Musk’s legal team on Friday released its official response to Twitter’s lawsuit in an attempt to force him to complete their $ 44 billion acquisition deal.
In response to Twitter’s complaint, which includes counter-arguments against the company, Musk’s team attempts to refute the company’s allegations that Tesla’s CEO is unfairly trying to get out of the deal. His team reiterates allegations that Twitter has incorrectly listed the number of fake accounts and spam bots on its platform – a central allegation Musk made to justify terminating the acquisition deal after initially citing a desire to “beat spam bots” as a reason to buy the company.
Musk’s response, which was filed publicly on Friday, claims that the billionaire’s team conducted an analysis of the fake and spam accounts on the platform using data provided by Twitter’s Twitter “fire pump” and a public tool called the Botometer created by Indiana University researchers. He did not further detail the process of that evaluation and added that his analysis of him was “constrained” by Twitter’s lack of time and information.
Based on that analysis, Musk claims that during the first week of July, spam bots accounted for 33% of visible accounts on the platform and about 10% of Twitter’s monetizable daily active users, or mDAUs. (Twitter, for its part, has consistently reported that fake spam and bot accounts make up less than 5% of its mDAU.)
Twitter (TWTR) has repeatedly denied Musk’s claims about the prevalence of spam bots on the platform. Twitter (TWTR) chairman Bret Taylor tweeted Thursday evening a link to the company’s response to its response and counter-arguments. (Musk’s team filed a confidential version of the response last week to give Twitter (TWTR) time to review it for company information that should have been blacked out, before making it publicly available on Friday.) Taylor defined the claims. Musk “factually inaccurate, legally insufficient, and commercially irrelevant”.
In its response, Twitter disputes Musk’s analysis of spam bots, stating that the “fire hose” of the data he used “reflects many Twitter accounts that are not included in mDAU” and that the Botometer tool he used is based on a different process than the company to determine if an account can be a bot. He added that Botometer “designed Musk himself as highly likely to be a bot earlier this year.”
The question and answer between Twitter and Musk offers a preview of the arguments each party will make when the case goes to trial, assuming they don’t agree to a deal first. A five-day trial will begin on October 17, after Twitter insisted on expediting the process.
Last month Musk decided to terminate his Twitter purchase deal, accusing the company of violating the deal by making misleading claims about the number of bot accounts on his platform and withholding information he believes could help him assess the issue. . Days later, Twitter filed a lawsuit against the billionaire, claiming he violated the deal and asking a court to force him to carry out the deal.
In addition to doubling down on concerns about bot accounts, Musk’s responses also criticized Twitter’s use of monetizable daily active users, a metric that Twitter publicly reports to advertisers and shareholders to represent growth.
Musk says his ratings show that only a small fraction of users Twitter considers mDAU actually generate significant revenue for the company by viewing and interacting with advertisements, arguing that the measure isn’t actually a nearly as good indicator of growth potential. future revenue and long-term performance as Twitter’s public archives imply.
“Twitter also doesn’t publish the methodology it follows for determining its mDAU count, or how it excludes non-monetizable accounts from that metric,” Musk’s response states. “Therefore, it is extremely difficult for any third party to completely recreate Twitter’s mDAU calculations.”
Musk’s response says that Twitter’s leadership has incentives to report “high mDAU numbers to stimulate investor interest” and because its executive compensation structure is based in part on mDAUs.
In its response, Musk’s team explains that the billionaire is concerned about the spam bot problem because “transferring users who are not generating revenue into more active users … is not an easy task.” Musk’s team adds, “A company focused on adding these active users would invest substantial resources in trying to improve Twitter to maximize engagement, such as effectively targeting spam or fake accounts.”
Twitter said in its response to Musk’s counterclaims that its mDAU tally never purported to show how many users generate significant revenue by interacting with the ads, but rather shows the number of real users who could be monetized by viewing the ads. He also noted that Musk’s mDAU claims were not included in his initial termination statement and “are a newly invented contentious position.”
The company also continues to argue that the bot issue is not, and never was, relevant to completing the acquisition agreement. “Musk has been receiving huge amounts of information from Twitter for months, and hasn’t been able to come up with a valid excuse to withdraw from the contract,” the Twitter response states.
In a letter to Twitter employees that was included in the regulatory filing on Friday, Twitter general counsel Sean Edgett said that while Twitter had the opportunity to request redactions in Musk’s response, it chose not to. (Twitter had previously sent a letter to the judge overseeing the case asking her to make sure Musk’s team wouldn’t submit the public response ahead of time so that they have enough time to review it for potential newsrooms.)
“We have chosen not to withhold any information – we fully support our SEC documents, the methodologies we use to calculate the mDAU and our statements on the percentage of spam accounts on our platform,” Edgett said in the letter.