Elon Musk Vs Twitter Legal Battle
Elon Musk Vs Twitter Legal Battle
Prepared by:
Joseph Sunny
Submitted to:
George Bromall
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Elon Musk VS Twitter Legal Battle
In Apr 2022, the world’s richest man, Elon Musk created a bid to shop for Twitter
offering roughly $44 billion, $54.20 for a share. He vowed to loosen the company’s policing of
content and extirpate pretend accounts. Since then, however, the social media giant and Musk are
bolted into a very legal battle, as Musk claimed that Twitter broke many provisions of the
acquisition and thus, he would need to back out of the deal. Amidst the claims and
counterclaims, Twitter filed its response on a weekday in Delaware Chancery Court, making an
attempt to ridicule the claims created by Elon Musk, explaining that Twitter didn't live up to
acquisition terms. Later on, Elon Musk's legal team joined the battle by claiming that Twitter has
misstated the number of fake and spam bot accounts on its platform, a central charge Musk has
made to justify terminating the acquisition agreement after originally citing a desire to "defeat
the spam bots" as a reason for buying the company. Musk's main claim against Twitter is that the
San Francisco-based company breached their deal because it will not share with him enough
information to back up its claim that spam or fake accounts constitute less than 5% of its active
users. Twitter has stood by this estimate but also said it's possible the number of these accounts
is higher.
In my opinion, Twitter Inc has a strong legal case against Elon Musk for walking away
from the deal, he could have opted for a renegotiation or settlement instead of a court fight.
Musk claims that the company's misrepresentation of the number of spam accounts might be a
"material adverse effect (MAE)" that would allow him to walk away under the terms of the deal
contract. But MAEs are invoked generally when dramatic, unexpected events that cause long-
term harm to a company's performance. The issue of spam and fake accounts are nothing new
and it is common to all social media giants, Twitter still able to produce growth despite the effect
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of spam accounts. Musk also has the burden to prove more likely than not, that the spam account
numbers not only were false, but they were so false that it will have a significant effect on
Twitter's earnings going forward. When looking into the history of such litigations, most of the
time the courts find in favor of the target companies and order acquirers to complete their deals.
A recent development in the case was, Kathaleen McCormick, the judge overseeing the
case, hands Elon Musk a win in Court after ruling that to include whistle-blower accusations
from Peiter Zatko, a former Twitter security chief who claimed that the social network had
misled the public about its security practices. However, she rejected Musk’s request for a delay
of the trial, which will proceed on Oct. 17. Twitter shares surged 4 percent on the news.
Testimony from Twitter’s former security chief to US senators was undoubtedly bruising for the
social media company. But it is unlikely to have a significant impact on Elon Musk’s legal battle
to terminate the deal. All social media portals face privacy and security issues, but for this to
affect the trial, it has to amount to a material adverse effect or fraud, which is a very high
standard. If more egregious violations come out from the whistleblower, it may start to affect the
trial.
The New York Times reported that Musk discussed re-pricing the deal with Bob Steel, a partner
at Perella Weinberg, according to text messages Twitter’s lawyers disclosed. These may point
out to the fact that there is still a window for discussions and if the deal was renegotiated it may