Musk accused the Twitter platform of at least twice as many bots as the company claimed in SEC filings, and that it had fewer “monetizable daily active users” than Twitter claimed in its earnings report.
Twitter responded that Musk made false assumptions and made excuses to back out of his April deal to buy the social network for $44 billion.
The farce began in early April, when Musk bought a large stake in Twitter. After first agreeing to join Twitter’s board, he reversed course and offered to buy the company instead.
Twitter initially opposed the deal, but eventually reached an agreement to sell it to Musk for about $54.20 a share. But then, as the market tumbled and Twitter’s stock price fell, Musk began to denigrate Twitter in public, in what Twitter thought was an apparent attempt to get out of the deal.
Is the data true or false?
The legal battle between the two sides has begun, and in a legal filing, Musk accused Twitter of including “far from true” statements in its SEC disclosures. Musk, through his corporate law firm Skadden-Arps, said the social media company “miscounted the number of fake and spam accounts” on its platform, giving investors a false pretence.
Musk has been complaining about scams, spam and bots on Twitter for years. In a press release announcing his agreement to acquire Twitter, Musk wrote that defeating spam bots was one of his goals and motivations for taking over Twitter.
Twitter responded this week in a separate filing with a Delaware court, saying that Musk and his team “spent months trying to invent a spam disclosure problem and found nothing.”
Does mDAU really matter?
In addition, Musk’s lawyers also stated in their counterclaim that Twitter’s “monetizable daily active users” (mDAU) number is not actually that closely related to Twitter’s revenue. Not as closely related to income as the public would believe. “They allege that Twitter did not explain exactly to shareholders or Musk how they arrived at the key mDAU metric.
In response, Twitter said Musk never cited concerns about mDAU as a reason to terminate the deal.
Twitter’s lawyers wrote that Musk’s allegations about the misleading mDAU statistic “are a newly invented litigation position.” Additionally, Twitter said it “disclosed accurately in its SEC filings” how it defines the mDAU metric and its importance to the company. “
In addition to questioning the mDAU data, Musk’s lawyers also claimed that there are twice as many bots on Twitter as the company claims.
Musk got to know Twitter from documents?
Musk said in his countersuit that he relied on Twitter’s SEC filings to determine details about the social network’s business and challenges.
What Musk didn’t say is that he and former Twitter CEO Jack Dorsey have been friends for years, and the two even exchanged ideas about how to improve Twitter two years ago.
Musk also has a long-standing business relationship with Silver Lake, a financial company run by Twitter board member Egon Durban.
In its filing, Twitter reiterated that the company’s “SEC disclosures were accurate” and that the company “did not misrepresent the facts.” Twitter said Musk’s claims were “not supported by any facts”:
Musk sought an emergency deal without due diligence and provided a merger agreement that he described as “seller friendly” that contained no representations about false or spam accounts or mDAU.