new York First he wanted to, then no longer – and maybe he has to. Elon Musk could soon take over the short message service Twitter. Because this Tuesday, a majority of Twitter shareholders voted for the takeover by the Tesla boss, as the company announced at an extraordinary shareholder meeting.
The courts must now decide whether Twitter will actually be sold. The Tesla boss announced in April that he wanted to buy Twitter for $54.22 a share. He is already the largest shareholder. Twitter’s price reached around $42 per share on Tuesday.
But then, on July 8, Musk backed down: Twitter broke the contract because the company made false statements about fake profiles and the security of the platform. Musk has since wanted to withdraw from the purchase.
Among other things, Musk accuses Twitter of making false statements about spam and fake accounts on the platform. According to an internal estimate, the company had given the figure as less than five percent. However, Twitter always referred to the proportion of monetizable users – not the total user base.
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Musk says the company doesn’t have a reliable method for identifying the accounts. Twitter replies that these are estimates and that one million fake accounts are deleted every day.
Musk is not alone in his allegations. Disney CEO Bob Iger, for example, made it public last week that when he was considering buying Twitter in 2016, he too had found that a “significant portion” of the accounts were “not genuine.”
What does Musk want from Twitter?
Musk accuses Twitter of withholding data from him about how the service calculates the proportion of his false user accounts – he has therefore sued. The company now has to give him a record. This was confirmed by the competent court in Delaware. These are 9000 user accounts used in 2021 to filter out possible fake accounts.
Elon Musk accuses Twitter of false statements about spam and fake accounts on the platform
(Photo: AP)
Why does Musk have security concerns?
Twitter allegedly falsely pretended to have a good security plan for the company. But the opposite could have been the case. Infiltration by foreign intelligence agencies is said to have been turned a blind eye and the company provided government authorities with misleading or inaccurate information about its security practices.
The former head of security for the platform, Peiter Zatko, had filed a complaint against the company with the US Securities and Exchange Commission after his dismissal on Twitter. He testified before the US Senate Judiciary Committee on Tuesday. Twitter has “repeatedly covered up failures to protect sensitive data and lied to supervisors and users about it.”
>> Read here: Weak Security on Twitter? Ex-employee raises serious allegations
Twitter had fired the whistleblower, but is said to have paid him a seven million dollar settlement. According to Musk’s lawyers, Twitter once again violated the takeover rules that restricted such payments. The company should have obtained Musk’s approval.
Why does Twitter still want Musk to buy the company?
Twitter wants to legally enforce that the Tesla boss has to go through with the purchase for around 44 billion dollars. The short message service recently reported a loss of 270 million dollars.
CEO Parag Agrawal also blames Musk for this. His statements would unsettle investors. After Musk’s criticism, Twitter shares temporarily fell to around $32, well below the agreed price of $54.22.
“Musk appears to believe that, unlike any other party subject to Delaware contract law, he is free to change his mind, trash the company, disrupt operations, destroy shareholder value and to disappear,” according to Twitter’s complaint.
What’s next?
The Tesla boss is still trying to withdraw from the purchase and not have to pay the agreed penalty of over one billion dollars. On October 17th, the court case in Delaware, USA, will decide whether Musk must take over Twitter as agreed in the contract. The trial is scheduled for five days.
Musk had tried to move the date to February next year to gain more time to prepare. However, trial judge Kathaleen McCormick wrote that “the longer the delay in trial, the greater the risk of irreparable harm to Twitter.”
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