Elon Musk accused Twitter on Friday of deceiving him about its service, obfuscating facts and failing to notify him of executive changes, the first formal formality of his lawsuit against the company aimed at forcing him to complete a $44 billion acquisition of the social media service. respond.
Lawyers for Mr. Musk, which struck a blockbuster deal to buy Twitter in April but have since sought to end the acquisition, made those arguments in a legal filing aimed at opposing the company’s request for a full-term settlement of the case in September. A four-day trial.
Twitter rushed to court after a “two-month treasure hunt of delays, technical bottlenecks, evasive answers and, ultimately, refusal,” Mr. Musk’s lawyers said in the filing. They added that Twitter was trying to “cover up the truth” by covering up fake accounts on the service, an issue at the heart of Mr Musk’s desire to back out of the deal.
Twitter has asked for a trial in September as Musk has until October 24 to complete a deal to buy the company. Musk’s lawyers have proposed setting the trial date for February, noting that the deal deadline would be automatically extended if a lawsuit occurs. The banks that pledged to fund the deal have pledged to do so by April 25, 2023.
Mr. Musk’s legal filing is a powerful rebuke to Twitter’s accusations that he was trying to unjustly end the acquisition. Twitter said in its lawsuit this week that Musk “willfully, deliberately, intentionally and materially violated” his agreement to acquire the company, falsely claiming he had not obtained information about the prevalence of fake accounts on the service.
Read more about Elon Musk and Twitter
The ensuing legal battle is bound to be ugly and long. The row between the two sides had escalated for weeks before it ended up in court. Mr Musk has made barbed comments about the company and has often questioned the prevalence of fake accounts on the platform. Fake accounts are used to spread spam or manipulate Twitter’s service by falsely promoting trends, and are often automated rather than run by real people.
At one point, Musk tweeted that the Twitter deal was on hold. His actions coincided with a slide in the value of technology stocks, including the share price of Musk-led electric car maker Tesla, the main source of his wealth.
Twitter insists it has worked with Mr. Musk on the deal and intends to close it. In the deal agreement, Twitter and Mr. Musk have a so-called performance-specific clause that allows the company to sue to force the deal through, as long as the billionaire’s debt 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’s clear why Twitter is growing fast and Musk isn’t.
“The Twitter board is totally interested in fixing this as soon as possible, and he is totally interested in procrastinating — time is money,” she said. Of Musk, she added: “He wants to make as much discovery as possible and spend as much time as possible, essentially removing the threat of litigation itself and, over time, the force of uncertainty associated with it. Some sort of solution or concession.”
In legal filings, Mr. Musk’s lawyers reiterated many of the arguments they made this month, when the billionaire said he intended to end the deal.
The document said Twitter did not strictly count fake accounts and hindered Musk’s efforts to understand how spam was counted. “Musk was surprised by how trivial Twitter’s process was,” the document said, noting that the company uses humans to calculate information, not machine learning.
The filing added that Musk attempted to obtain more data from Twitter about the fake accounts, but the company “deliberately erected artificial barriers to frustrate the defendants’ efforts.”
To determine how Twitter counts fake accounts, Musk needs months of discoveries and dozens of testimonies, his lawyers said. Mr. Musk has argued that Twitter’s public disclosure that fake accounts account for about 5 percent of active users is misleading. His lawyers said that under the terms of the deal, the incorrect numbers could have a “material adverse effect” and let Musk go, arguing that the numbers are “directly related to Twitter’s expected value to users and advertisers.”
Twitter has User ID error Earlier, Mr. Musk’s lawyers said. In April, the company said it overestimated the number of active users from 2019 to 2021.
In the lawsuit, the company said it notified Musk’s attorneys about the two executives, who “didn’t object.”
Twitter and Mr. Musk are scheduled to hold a hearing on the case Tuesday in Delaware Chancery Court, where the company filed a lawsuit against the billionaire. Court President Kathaleen St. J. McCormick has been assigned to oversee the case and will decide whether to expedite the case at Twitter’s request or delay it for Musk.
If the lawsuit goes to trial, Judge McCormick will decide whether Musk must close the deal. She could also tell Mr. Musk to walk away while forcing him to pay compensation. After several readings of Twitter’s contract with Mr. Musk, the damage would be limited to $1 billion. The parties may also settle or renegotiate the deal.
Twitter has lost about a third of its market value since Musk signed a deal to buy the company for $54.20 a share. The company is scheduled to report its quarterly earnings next Friday.
