Elon Musk did not become the richest person in the world by being a push over. However, the Tesla CEO disclosed on Tuesday that he has sold $6.9 billion (£5.7 billion) worth of company shares to hedge against failing in his bid to withdraw from a $44 billion buyout of Twitter.
Due to Musk's termination of the agreement, Twitter is suing him in Delaware and demanding that he acquire the business. Musk presented his defense in a countersuit that was published last week. He claims that Twitter misled investors, violated the agreement by failing to provide sufficient information about spam accounts, violated the agreement again by failing to consult with him before making business decisions like firing senior employees, and that its misrepresentation of user numbers constitutes a material adverse effect that materially reduces Twitter's value and renders the deal agreement invalid.
There is $44 billion on the line, and Musk's countersuit uses language that is just as sharp and direct as Twitter's original complaint, in which the latter referred to Musk's conduct as an example of bad faith. Twitter is charged with providing false financial information to the US financial authority in the preliminary statement.
The lawsuit says:
“Instead, they contain numerous, material misrepresentations or omissions that distort Twitter’s value and caused the Musk parties to agree to acquire the company at an inflated price. Twitter’s complaint, filled with personal attacks against Musk and gaudy rhetoric more directed at a media audience than this court, is nothing more than an attempt to distract from these misrepresentations.:
Musk will require substantial proof to support his claims. User counts are at the heart of Musk's argument. The validity of Twitter's statistics came into sharp view as soon as the deal began to go south. It also serves as the focal point of Musk's countersuit. He contends that Twitter's miscounting of the number of phony and spam accounts on the network artificially inflates the number of monetizable daily average users.
In addition to posing a threat to Twitter's ad revenue, Musk claimed that his intention to launch a subscription service for the social media platform would be hampered because there would be fewer consumers to target than initially anticipated.
As of right now, Twitter's active genuine base, which is slightly about 238 million, is estimated to be fewer than 5% bogus or spam accounts, according to statements made repeatedly.
According to the lawsuit, three days after signing the agreement, Twitter revealed that it has exaggerated its total for three years by between 1.4 million and 1.9 million users per quarter. Musk allegedly grew concerned about how Twitter accounts for its genuine users at that point.
Elon Musk with his son, 'X' at Time's Person of the Year Interview. Dec 2021.
With Twitter's verification procedures, Musk is not pleased. The lawsuit claims that after agreeing to purchase the company with little due diligence, Musk was shocked to see how weak Twitter's procedures for spotting spam accounts were. It claimed that human reviewers sampled 100 accounts per day to arrive at the less-than-5% result. The CEO and CFO of Twitter were unable to clarify the process used to choose these accounts as a representative sample.
Musk saw that Twitter's dependence on, and promotion of its approach was, at best, imprudent and, at worst, purposefully deceptive. Twitter claims that it uses a much more complex procedure, including automated algorithms, to screen out suspicious accounts. Additionally, it referred to the thorough explanations of how it manages spam accounts that CEO Parag Agrawal had provided to Musk, the media, the Securities and Exchange Commission, and the general public via a Twitter thread.
One of the clauses in the agreement states that Musk must be informed if Twitter deviates from normal operations to conduct business. In the countersuit, Musk claims that Twitter has made several significant changes, like firing two executives, putting out a hiring freeze and initiating a legal clash with the Indian government – that occurred without his consent.
This story continues to develop.