Elon Musk accused Twitter of deliberately miscounting the number of spam accounts on its platform as part of a scheme to mislead investors.
The CEO of Tesla has made allegations in a countersuit against the social media company, which is taking Musk to court in an attempt to make him complete an agreed $44 billion 36.5 billion takeover of the business.
Musk claims that Twitter miscounts the amount of false and spam users on its platform as part of a scheme to mislead investors about the company's prospects, according to the suit, which was unsealed on Friday. The metric for Twitter is the user number, which makes 90% of its revenue from advertisers.
The suit says that Twitter's disclosures to the US financial watchdog are inaccurate and have distorted the value of a company that Musk has agreed to buy for $54.20 a share.
It states that filings to the Securities and Exchange Commission SEC contain numerous material misrepresentations that distort Twitter's value and cause the Musk PartiesMusk Parties to agree to buy the company at an inflated price. It adds that Twitter s suit demanding Musk buy the company is an attempt to distract from these misrepresentations. There are less than 5% of its user base, which currently stands at just over 238 million, according to Twitter.
Musk says that Twitter has overstated the number of monetisable daily active users on the platform, or users who see ads. The lawsuit claims that the number of users that see ads is 65 million lower.
Spam accounts aren't operated by a human hand, and are designed to manipulate users or disrupt their interactions on the platform.
Musk believes that the misrepresentations are a company material adverse effect that significantly affects Twitter's value and invalidates the deal agreement. Musk pulled out of the Twitter deal in July, citing concerns about spam accounts.
The response to Musk's countersuit was published on Thursday. In it, Twitter called Musk's arguments for abandoning the deal a story, imagined in an attempt to escape a merger that Musk no longer finds attractive, and along with it his massive personal wealth, declined in value. counterclaims are a made-for litigation tale that is contradicted by the evidence and common sense, the response says.
On 17 October, Twitter's lawsuit to force Musk to buy the company is due to start in Delaware.
Robert Frenchman, a partner at New York law firm Mukasey Frenchman, said he does not believe Musk will prevail in the end, because he agreed to buy the company with a minimal amount of due diligence, but his legal claims are damaging the company.
It has made things extraordinarily difficult for Twitter, regardless of whether or not Musk claims is meritorious, and I don't think it is. While the litigation continues and trial is on hold, Twitter finds itself in a kind of legal limbo. It is a huge distraction for the company. Frenchman said that Twitter is making life harder for Musk by issuing subpoenas on the Tesla CEO's associates and banks, which puts the company's strategy and direction into hiatus.