Elon Musk on Friday accused Twitter of cheating him on his service, obscuring facts and failing to notify him of executive changes, in his first formal response to the company’s lawsuit to force him to complete a 44,000 acquisition. millions of dollars from the social media service.
The lawyers of Mr. Musk, who reached the highly successful deal to buy Twitter in April, but has since tried to rescind the purchase, presented the arguments in a legal document aimed at opposing the lawsuit. company of a four-day trial in September in the case.
Twitter is rushing to court after a “treasure hunt of two months of delays, technical bottlenecks, evasive responses and ultimately denials,” Mr.’s lawyers said. Musk at the presentation. They added that Twitter was trying to “wrap the truth” about the service’s fake accounts, an issue that Mr. Musk has made central to his desire to withdraw from the deal.
Twitter had called for a lawsuit in September because Mr. Musk was to complete his deal to buy the company on Oct. 24. The lawyers of Mr. Musk proposed a February date for a trial, noting that the term of the agreement was automatically extended in the event of a dispute. . Banks that have pledged to help fund the deal have pledged this funding until April 25, 2023.
The legal presentation of Mr. Musk was a blunt rebuke of Twitter allegations that he was trying to unfairly end the acquisition. In its demand this week, Twitter said Mr. Musk had “knowingly, intentionally, voluntarily and materially breached” his agreement to buy the company by falsely claiming that he did not obtain information about the prevalence of false accounts in the service.
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The next legal battle promises to be ugly and prolonged. The back and forth between the two sides had already intensified for weeks before landing in the courts. Mr. Musk has made strong 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 the Twitter service by falsely increasing trends, and are often automated rather than being managed by real people.
At one point, Mr. Musk tweeted that the deal with Twitter was pending. His actions coincided with a drop in the value of technology stocks, including those of Tesla, the electric car maker led by Mr. Musk and that is the main source of his wealth.
Twitter has maintained that it has worked with Mr. Musk to close the deal and intends to conduct the sale. In the deal agreement, Twitter and Mr. Musk have a so-called specific performance clause that allows the company to sue to force the deal, as long as the debt the billionaire has granted for the acquisition is in effect.
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 so fast and Mr. Musk no.
“The Twitter board has every interest in fixing it quickly and he has every interest in delaying it: time is money,” he said. About Mr. Musk added: “You will want to get as much discovery as possible and spend as much time as possible, essentially hanging the threat of litigation itself and, as time goes on, the uncertainty associated with it. Forcing some type of agreement or reversal “.
In the legal presentation, Mr. Musk reiterated many of the arguments they had made this month when the billionaire said he intended to terminate the deal.
Twitter did not make a rigorous count of false accounts and hindered the efforts of Mr. Musk to understand how spam was accounted for, according to the file. “Musk was stunned to learn how scarce the Twitter process was,” the file said, noting that the company used people to find out information instead of machine learning.
Mr Musk tried to get more data from Twitter about fake accounts, the archive added, but the company “deliberately erected artificial blockades and thwarted the defendants’ efforts.”
To determine how Twitter counts fake accounts, Mr. Musk needed months of discovery and dozens of statements, his lawyers said. Mr. Musk has claimed that Twitter’s public revelations that fake accounts are about 5 percent of active users are misleading. Incorrect figures could be a “material adverse effect” under the terms of the agreement and allow Mr. Musk left, his lawyers said, arguing that the figures have “directly the potential value of Twitter for users and advertisers.”
Twitter has been wrong with its user numbers before, Musk’s lawyers said. In April, the company said it had surpassed its active users from 2019 to 2021.
The company said in its lawsuit that it had notified Mr. Musk on the two executives and that the lawyers “had raised no objection.”
Twitter and Mr. Musk are scheduled for a hearing on the case Tuesday in Delaware’s Chancery Court, where the company filed its lawsuit against the billionaire. The Chancellor of the Court, Kathaleen St. J. McCormick, has been assigned to oversee the case, and will decide whether to expedite the case, as requested by Twitter, or delay it for Mr. Musk.
If the lawsuit goes to trial, Judge McCormick will determine whether Mr. Musk must close the deal. He could also let Mr. Musk left while forcing him to pay damages. According to many readings of the Twitter contract with Mr. Musk, the damage would be limited to $ 1 billion. The two parties could also agree or renegotiate the agreement.
Twitter has lost about a third of its value since Mr. Musk signed the deal to buy the company for $ 54.20 a share. The company plans to report its quarterly earnings next Friday.