Twitter accuses Elon Musk of lying
Twitter has accused Elon Musk of lying in a counterclaim he recently filed against the company. Musk’s claim – that “a mere fraction” of Twitter’s users are genuine – was “imagined in an effort to escape a merger agreement,” the social media company said on Thursday.
Musk announced in early July that he would no longer follow through with his offer in April to purchase the company for around $44 billion at $54.20 per share. Twitter sued Musk after the announcement, arguing that his claims – that Twitter is less profitable than he was told due to the prevalence of fake accounts – should not hinder the deal he agreed to, and Musk countersued last week.
The details of Musk’s countersuit are sealed, but excerpts can be found in a response by Twitter, published ahead of Musk’s filing being made public.
Musk attempted to withdraw from the Twitter deal after learning “troubling facts” regarding the company’s “double-counting” of certain users. According to Musk’s lawyers, the billionaire was led to believe that fewer than 5% of Twitter’s users are fake accounts, when in reality the number could be closer to a third.
“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’s suit read.
As Twitter relies on advertisements for 90% of its revenue, fewer “monetizable users” means a poorer return on Musk’s investment. However, Twitter insists that Musk is using flawed metrics to estimate which accounts are real, and that it never “hoodwinked” him into the deal.
Musk’s story “is just that – a story, imagined in an effort to escape a merger agreement that Musk no longer found attractive once the stock market – and along with it, his massive personal wealth – declined in value,” read Twitter’s response.
“Musk’s counterclaims, based as they are on distortion, misrepresentation, and outright deception, change nothing,” the response concluded, after arguing that even if the platform were full of fake accounts, “the merger agreement does not contain a single reference to false or spam accounts,” and their prevalence should therefore not influence Musk’s purchase.
However, Twitter has previously admitted in regulatory filings that it may undercount bots, and the company revealed in its response that it did not notify Musk that it had overstated its user base for three years before the merger agreement was signed.
Twitter is scheduled to hold a shareholder meeting to vote on the acquisition on September 13, while the company’s lawsuit against Musk will go to trial in Delaware in October.