All You Need to Know About Twitter’s Lawsuit Against Elon Musk
July 18, 2022
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by Stephen Kanyi

Following Elon Musk’s decision to terminate a signed deal to acquire Twitter, the social media giant is filing a lawsuit against the tech tycoon. The two parties already had a less than amicable relationship but had finally reached a deal worth over $44 billion for a takeover.

However, after ensuing disagreements especially over twitter’s spam accounts Elon Musk pushed him to terminate the agreement. This has obviously infuriated the Twitter board who were keen to see the deal through.

The company responded by launching a lawsuit in the US state of Delaware, where the company’s headquarters are located. Twitter accuses Musk of ‘trashing the company and walking’ while Musk maintains that the company has not been honest about the correct number of spam accounts.

Here is a detailed breakdown of the Twitter saga and the details of the lawsuit.

What Are Spam Bots and Why are They Such a Big Issue

“Bots”, “Spam” or “fake accounts” are inauthentic accounts that imitate real users on Twitter. Bots can tweet, retweet, share, follow and be followed by real users. This makes it very hard to detect them.

Why are they such a big issue?

Well for one, they are many. That is according to Elon Musk who has voiced concerns over spam accounts for years. He encouraged the company to do more in the prevention and removal of spam accounts.

However, with his recent intention to buy Twitter, Mr Musk has been adamant about the removal of bots from Twitter. In May, for instance, Musk responded with a poop emoji to a tweet by Twitter CEO Parag Agrawal stating how the company detects and fights spam bots.

Musk has also carried regular polls on Twitter to gather opinions on user experience with bots on the platform. Most of the polls indicate that there are way more bots than is reported by Twitter.

While Twitter says that only 5% of accounts on Twitter are bots, Musk is convinced that the number is a lot higher. Last month Musk’s lawyers wrote a six-paragraph letter demanding more information about spam accounts from the company. The letter stated that Twitter was “refusing Mr. Musk’s data requests” to disclose the number of fake accounts on its platform. This, according to them, amounted to a “clear material breach” of the deal giving Elon Musk the right to terminate the deal.

Twitter then agreed to allow Mr. Musk direct access to its “fire hose” which is the company’s daily stream of millions of tweets that flow through its network.

The company has also reiterated that it removes about one million spam bot accounts each day and locks millions more per week until the owners behind these accounts can pass anti-spam tests.

The company does however allow spam accounts called automated bots which perform essential services. @earthquake bot, for instance, tweets about an earthquake with a 5.0 or higher reading on the Richter Scale.

While these bots are clearly useful, Mr Musk is concerned over malicious bots used by governments, corporations and bad actors for nefarious purposes. Russia for instance used spam bots to impersonate Americans and interfere with the 2016 elections. Other spam bots engage in scams trying to persuade people to send cryptocurrency to online wallets as an ‘investment’ or for non-existent prizes.

Moreover, not only do these bots make the platform worse for users, they also inflate the number of daily active users. This is obviously a big problem for any social media platform, especially if you are about to be acquired by the world’s richest person.

Why Elon Musk Wanted to Walk Away

Musk has given three reasons for cancelling the deal with Twitter.

  • As stated earlier, Twitter had failed to provide enough information on spam accounts
  • That the company also mispresented the number of spam accounts in its disclosures
  • Twitter had also breached the agreement by failing to consult him when firing senior employees recently.

Are these enough grounds to grant him a clean cancellation without incurring a lot of costs? Only time will tell. For now, however, Elon seems confident of a clean termination of the agreement.

Twitter however is still keen to follow through with the deal at $54.20 per share. That is why the company has responded to the Musk termination with a lawsuit.

Here is a breakdown of the lawsuit.

About the Lawsuit

The lawsuit is a scathing 62-page legal document that criticizes Musk’s behaviour throughout the whole saga. Contrary to Musk’s assertions, the document says that he pulled out of the deal because “the deal no longer serves his personal interests.”

It starts saying:

Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he – unlike every other party subject to Delaware contract law – is free to change his mind, trash the company, disrupt its operations, destroy stockholder value and walk away.”

The document goes on to accuse Musk of unreasonable demands and inconsistent behaviour that the company defines as “a model of bad faith.” It also continues to accuse Musk of treating the process as an “elaborate joke”.

Twitter Alleges Multiple Breaches of the Agreement

The lawsuit alleges that Musk had breached the agreement on several occasions.

First, he is said to be breaching a pledge not to send tweets that “disparage” the company or its representatives. Twitter cites for instance the poo emoji to Twitter’s CEO Parag Agrawal.

Most importantly the lawsuit asserts that Musk cannot terminate the deal anyway:

“The merger agreement provides that if defendants are in material breach of their own obligations under the merger agreement, they cannot exercise any termination right they might otherwise have.”

The company also attributes the recent stock slump to Musk’s decision to walk away from the deal.

Musk has been acting against this deal since the market started turning, and has breached the merger agreement repeatedly in the process.”

So, what next?

The company has asked a Delaware court to schedule a four-day trial in mid-September for the case. Twitter hopes for a quick conclusion in time for the completion of the deal scheduled to be on 24 October.

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1 comments

One response to “All You Need to Know About Twitter’s Lawsuit Against Elon Musk”

  1. Twitter's lawsuit against Elon Musk to go to trial in October • Uteckie says:

    […] uncertainty caused by Musk’s threat to pull out of the deal “inflicts harm on Twitter every hour of every day,” Bill Savitt, Twitter’s lead […]

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