Elon Musk has accused Twitter of fraud in a countersuit over his aborted $44bn
deal for the social media company, which he claimed held back necessary
information and misled his team about the true size of its user base.
Musk’s counterclaims were filed confidentially last week and unsealed in a filing late
Thursday at the Delaware Chancery Court.
Musk offered to buy Twitter earlier this year, then tried to back out of the deal by
claiming the social platform was infested with a larger numbers of “spam bots” and
fake accounts than Twitter had disclosed.
Twitter sued to force him to complete the acquisition. Musk responded by filing his
Musk’s attorneys argue in the countersuit that Twitter’s “misrepresentations or
omissions” distorted the company’s value and caused Musk to agree in April to buy it
at an inflated price. They said Twitter’s own disclosures revealed that it has 65
million fewer “monetizable daily active users,” who can be shown digital ads, than
the 238 million that Twitter claims.
The filing also said most of Twitter’s ads are shown only to a sliver of the company’s
Musk’s team also accused Twitter of making too many major changes in recent
months without consulting Musk, including personnel decisions and allegedly
disobeying social media restrictions imposed by the government of India, which is
Twitter’s third largest market. Musk had pledged to make Twitter a haven for free
speech but has also said it must comply with the local laws where it operates.
In an unexpected twist, Twitter filed its response denying Musk’s accusations before
Musk’s own counterclaims surfaced.
Twitter called Musk’s reasoning “a story, imagined in an effort to escape a merger
agreement that Musk no longer found attractive.” The company, in particular, took
issue with Musk’s estimate of fake accounts, saying the analysis relied on a “generic
web tool” that designated Musk’s own Twitter account as a likely bot.
“The result is a distortion that Musk is hoping will nonetheless make waves,”
Twitter’s response said.
The case is scheduled to go to trial on October 17. The Delaware court handles many
high-profile disputes between businesses, such as Twitter, that are incorporated