The Tesla CEO is attempting to escape the $44 billion Twitter purchase agreement, which he has made attempts to renegotiate.
In a countersuit filed in relation to his botched $44 billion acquisition of the social media business, Elon Musk accused Twitter of defrauding him by withholding crucial information and misleading his team about the real size of its user base.
Musk, a multibillionaire and CEO of Tesla, is suing Twitter in retaliation for allegedly violating Texas securities laws and engaging in fraud and contract breaches.
Musk’s counterclaims were submitted confidentially to the Delaware Chancery Court last week and then made public in a late-Thursday filing. Earlier this year, Musk made an offer to purchase Twitter, but later sought to back out of the agreement by asserting that Twitter had underreported the extent of the social media platform’s “spam bot” and false account infestation. Twitter filed a lawsuit to compel him to finish the deal. Musk’s countersuit was filed in response.
In the countersuit, Musk’s attorneys claim that Twitter’s “misrepresentations or omissions” skewed the company’s worth and led Musk to agree to purchase it for an exorbitant price in April. They claimed that, in contrast to Twitter’s estimates of 238 million “monetizable daily active users,” Twitter really had 65 million less users.
According to the filing, just a small portion of Twitter’s user base sees the majority of the company’s advertisements.
Along with making too many significant changes recently without consulting Musk, Twitter was also accused by Musk’s team of breaching social media regulations established by the government of India, Twitter’s third-largest market. Musk had promised to turn Twitter into a haven for free expression, but he also stated that it must abide by local laws in each country where it conducts business.
“a story, imagined in an effort to escape the merger”
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.