Elon Musk accused Twitter of fraud in a counterclaim over its thwarted $44 billion deal with the social network, which he claimed withheld necessary information and misled his team about the true size of its user base.
A counterclaim by the billionaire and Tesla CEO alleges that Twitter committed fraud, breach of contract, and securities law violations in Texas, where Musk lives.
Musk’s counterclaims were filed confidentially last week and unsealed during filing late Thursday night at the Delaware Court of Chancery.
Earlier this year, Musk offered to buy Twitter and then tried to back out of the deal, saying the social platform was infested with more “spambots” and fake accounts than Twitter had reported.
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Twitter sued to force it to complete the acquisition. In response, Musk filed a counterclaim.
In a counterclaim, Musk’s lawyers allege that “false information or omissions” on Twitter misrepresented the value of the company and forced Musk to agree to buy it at an inflated price in April. They said that Twitter’s own disclosures showed that it has 65 million fewer “monetizable daily active users” to which digital ads can be served than the 238 million that Twitter claims.
The document also states that most of Twitter’s ads are shown to only a small portion of the company’s user base.
Musk’s team also accused Twitter of making too many major changes in recent months without consulting Musk, including staffing decisions and alleged failure to comply with social media restrictions imposed by the government of India, Twitter’s third largest market. Musk promised to make Twitter a haven for free speech, but also said he must comply with the local laws in which he operates.
Unexpectedly, Twitter filed its own response, refuting Musk’s allegations before Musk’s own counterclaims surfaced.
Twitter called Musk’s reasoning “a story made up in an attempt to avoid a merger agreement that Musk no longer found attractive.” The company specifically disagreed with Musk’s assessment of the fake accounts, saying the analysis was based on a “generic web tool” that identified Musk’s own Twitter account as a likely bot.
“The result is a distortion that Musk hopes will set off a wave nonetheless,” Twitter said in a response.
The case is due to go to court on October 17. The Delaware court hears many high-profile disputes between companies such as Twitter that are registered there.
Credit: www.usatoday.com /