Elon Musk is being sued for abandoning his ambitious plan to buy Twitter. We explain why.
This Tuesday, July 12, Twitter filed a lawsuit against Elon Musk to force him to fulfill his commitment to buy the social network for $ 44 million in late April. Indeed, the boss of Tesla made it known last Friday that he refused to buy the social network under the agreed terms, accusing the company of having provided “false and misleading” data on the number of dormant accounts and bots. The social network denounces a “model of hypocrisy”.
By ending his commitment to buy Twitter, the businessman exposes himself to significant legal action. Both parties have agreed to pay a break-up fee of up to $1 billion under certain circumstances.
Elon Musk trolls Twitter
The entrepreneur had taken a stake in Twitter earlier this year to announce his intention to buy the platform in the interest of free speech. For several months, the billionaire had multiplied the attacks and mockery of the network where he criticized its content moderation policy, and publicly mocked some executives.
“Elon Musk’s exit strategy is a model of hypocrisy” and a “model of bad faith,” the social network’s lawyers said. “After putting on quite a show to make Twitter a target and after proposing and then signing a merger agreement, Musk seems to think he is free – unlike any party bound by contract under Delaware law – to change his mind, defame the company, disrupt its operations, destroy its stock value, and wash his hands of it.”They said in a court document consulted by AFP, accusing among other things the contractor of not having “used the necessary means to achieve the acquisition.
Musk said Twitter had no way of verifying how many of its 229 million daily active users were actually human. Twitter CEO Parag Agrawal then responded with a thread of 13 tweets – publicly stating that bots comprised less than 5% of the bluebird network’s accounts.
Our actual internal estimates for the last four quarters were all well under 5% – based on the methodology outlined above. The error margins on our estimates give us confidence in our public statements each quarter.— Parag Agrawal (@paraga) May 16, 2022
But the multi-billionaire and his team believe that the network is lying and that this would affect the viability of its business, and therefore the value of the company.
Elon Musk furthermore responded to Parag Agrawal’s thread with a turd emoji.
?— Elon Musk (@elonmusk) May 16, 2022
Subsequently, last Friday, the billionaire filed a brief with the U.S. Securities and Exchange Commission (SEC), stating there that he had “repeatedly” requested additional information about the bots – data that was not available.
Yet, skeptics say that this interest of Musk in bots is just an excuse for him to get out of this agreement.
“Musk’s conduct simply confirms that he wants to evade the binding contract he freely signed and damage Twitter in the process,” the suit said. “Twitter has suffered and will continue to suffer irreparable harm as a result of the defendants’ failures.” Indeed, the social network was hit hard on Wall Street on Monday by Elon Musk’s abandonment. The company’s stock fell 11.3 percent on the New York Stock Exchange to finish at $32.65: 40 percent below what the entrepreneur had offered when he announced his bid.
“A Game of Thrones battle in the courts.”
A judge of a court specialized in business law, in the state of Delaware, will therefore be in charge of determining whether or not the American businessman will be able to terminate the acquisition agreement, which provides for termination indemnities of up to one billion dollars. But legal experts and market analysts are unanimous: Twitter will have a strong advantage in court. That’s what Wedbush analyst Dan Ives said in a note to investors. “It’s going to be a Game of Thrones battle in court with the fake account/bot issue at the forefront, but in the end, the Twitter board is holding Musk’s feet to the fire to close the deal at the agreed-upon price,” Ives said. “Overall, this has been a black eye for Musk and a horror movie for Twitter (and its employees) with no winners since the soap opera began in April.”