The Elon Musk Twitter saga continues, as Musk now countersues Twitter.
The billionaire entrepreneur has filed a countersuit against Twitter, saying the company is operating a scheme to mislead investors.
In April, Elon Musk announced that he held a 9.2% stake in Twitter, which made him the social-media company’s largest shareholder. Twitter’s stock price soared 25 percent after the announcement.
Later that month, the billionaire entrepreneur offered to buy all of Twitter at $54.20 per share—equaling about $44 billion. He said he originally invested in the platform because he believes it is failing in its potential to be the leading platform for free speech around the globe. In fact, he asked his 2 million followers if Twitter adhered to principles of free speech, and 70 percent said “no.”
Last month, Musk decided to back out of the deal, claiming there were too many fake accounts on the platform. Twitter has since sued Musk in Delaware Court of Chancery to complete the deal and requested the trial to take place in September. Musk, on the other hand, wanted to delay the trial until February 2023, stating that a case of this size takes time to prepare. Twitter was granted its wish of an expedited trial, with Chancellor Kathaleen McCormick, the presiding judge, setting a five-day trial for October.
Musk has since countersued Twitter. He said in a countersuit made public Thursday that he decided to terminate the merger agreement after learning of what he described as troubling facts, including a restatement of Twitter’s monetizable daily average users days after the pact was signed and that Twitter was allegedly miscounting the number of false and spam accounts, according to The Wall Street Journal.
“Twitter’s own disclosures to the Musk parties show that although Twitter touts having 238 million ‘monetizable daily active users,’ those users who actually see ads (and thus, would reasonably be considered ‘monetizable’) is about 65 million lower than what Twitter represents,” Musk said in a court filing. The counterclaims were filed confidentially last week and unsealed Thursday in a late filing in Delaware Chancery Court.
Twitter board chairman Bret Taylor tweeted that Musk’s claims are “factually inaccurate, legally insufficient, and commercially irrelevant.”
In a reply filed Thursday in Delaware Chancery Court, Twitter calls Musk’s reasoning “a story, imagined in an effort to escape a merger agreement that Musk no longer found attractive.”
“The counterclaims are a made-for-litigation tale that is contradicted by the evidence and common sense,” Twitter’s response says, as reported by the Associated Press. “Musk invents representations Twitter never made and then tries to wield, selectively, the extensive confidential data Twitter provided him to conjure a breach of those purported representations.”
Twitter is hurting amid the Elon Musk turmoil. It suffered from a fall in revenue in the second quarter, which the company ultimately blamed on the economy and the “uncertainty” over the pending acquisition by Musk and a slump in digital ad spending. Twitter also reported it had significantly slowed hiring, been more selective with the new roles it was hiring for, and seen its attrition rate increase.
With other social media platforms flourishing and taking market share from Twitter, advertising agencies wonder if Twitter will survive all of this.