Billionaire wants to convince a Delaware court he was right to withdraw his $44 billion bid for the microblogging website.
The legal battle between Elon Musk and Twitter (TWTR) – Get Twitter Inc. Report is heating up the closer we get to the five-day expedited trial date set by the Delaware Chancery Court.
Indeed, from October 17, the billionaire and CEO of Tesla (TSLA) – Get Tesla Inc. Report will try to convince Judge Kathaleen McCormick that he had good reasons to withdraw his $44 billion offer to acquire the platform after more than three months of a drama marked by multiple twists.
The tech tycoon had decided to end his desire to buy Twitter on the pretext that the social network did not tell the truth about the exact number of spam bots, or fake accounts, existing on the platform. Twitter has always disclosed in regulatory filings with the U.S Securities and Exchange Commission (SEC) that less than 5% of its users are fake accounts. Musk, who has publicly ranted about the issue with Twitter CEO Parag Agrawal, estimates that spam bots can account for 20% of the number of users. What is surprising is that the entrepreneur had given as a reason for buying Twitter his determination to solve this problem of fake accounts.
Twitter has counterattacked and wants the court to force Musk to keep his pledge. The two parties are therefore currently engaged in a guerrilla campaign to gather information to support their arguments. They are competing with subpoenas issued against different personalities.
Musk Subpoenas His Friend Jack Dorsey
Twitter, for example, sent subpoenas to friends of Musk in order to prove that the problem of spam bots was not new to the billionaire when he made his bid. The idea is to show that spam bots are just an excuse the billionaire uses to abandon an expensive transaction even for the richest man in the world with a fortune estimated at $255 billion on August 22 by Bloomberg Billionaires Index.
Musk has just created a splash by addressing a subpoena to Jack Dorsey, the former CEO and founder of Twitter, according to courts documents filed on August 22. The two billionaires are also friends and Dorsey warmly welcomed Musk’s acquisition offer.
“In principle, I don’t believe anyone should own or run Twitter,” Dorsey posted on the social media two weeks after Musk made his bid in April. “It wants to be a public good at a protocol level, not a company. Solving for the problem of it being a company however, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.”
In the past, Dorsey, who stepped down as CEO of Twitter in November 2021 and left the board last May to focus on his fintech Block (SQ) – Get Block Inc. Class A Report, said Musk was the most influential person on Twitter.
“To me personally? I like how @elonmusk uses Twitter. He’s focused on solving existential problems and sharing his thinking openly. I respect that a lot, and all the ups and downs that come with it #karajack,” the entrepreneur said in February 2019.
Given their friendship, it’s unclear why Musk needs a subpoena to get information from Dorsey. Is the decision simply a strategic maneuver?
Musk requests : “documents and communications regarding the merger and the transaction contemplated by the merger, the merger agreement, any potential acquisition or transaction between defendants and Twitter, defendants’ potential or actual acquisition of shares of Twitter common stock, defendants’ potential membership on the Twitter Board, and documents and communications otherwise regarding Twitter and any of defendants,” according to the subpoena that you can read in its entirety here.
The billionaire also wants access to “documents and communications reflecting, referring to, or relating to the impact or effect of false or spam accounts on Twitter’s business and operations,” and to “documents and communications reflecting, referring to, or relating to Twitter’s use of any other user metric other than mDAU, including but not limited to daily active users, monthly active users, daily user engagement, monthly user engagement, or advertisement engagements.”
MDAU refers to monetizable daily active users.
He also wants to know if some employees had underestimated the number of spam bots because mDAUs were one of their bonus criteria. He is asking Dorsey to produce “documents and communications relating to incorporating mDAU into executive or director compensation, including but not limited to any annual compensation targets, bonus pools, incentive plans, or performance-based restricted stock units.”
The billionaire recently obtained a victory in this legal battle when Judge McCormick allowed his team to subpoena the former Twitter head of product Kayvon Beykpour, who joined the platform in 2015 when he sold his live video app, Periscope, to the company.