According to a copy obtained by Business Intern.
The countersuit is another escalation in the ongoing legal battle about Musk’s attempt to walk away from his $44 billion deal to buy Twitter. The billionaire and the platform they are already set to face trial in October in a Delaware court to find out whether Musk can legally drop the purchase.
In his countersuit, Musk argues at length that he has the right to opt out of the deal altogether. He claims that, thanks to Twitter’s public assurances to investors, he was led to believe that his business, built around user metrics, was solid.
They are far from it, he said. For months, Musk has publicly argued that Twitter has more “bots” or spam accounts than he admits. After insisting on getting more and more information on the subject, in early July he decided to call off the deal.
Now, accuses company of intentionally ‘miscounting’ number of spam accounts it hosts to take advantage of its users’ actions “as part of its scheme to mislead investors about the company’s prospects.”
He also claims that Twitter’s reliance on the mDAU, or Monetizable Daily Active Twitter Users, metric as its revenue base is itself misleading. Meanwhile, Twitter actually has 65 million fewer daily users than it claims, according to Musk. And those who see ads, and who should be considered “monetizable”, are only 16 million users.
Twitter’s lawsuit to enforce the merger deal is “filled with personal attacks on Musk and garish rhetoric more directed at a media audience than this court” and “is nothing more than an attempt to distract from these misrepresentations,” according to the counterclaim.
“This has always been Twitter’s strategy: to distract and obscure the truth about its revelations.first from its investors, then from Musk as they began to discern the truth,” he continues.
Twitter has dismissed Musk’s accusations. He filed a response in court after hours, calling the billionaire’s claims “a fabricated story to escape a merger deal that Musk no longer found attractive once the stock market, and with it, his huge personal wealth, decreased in value.
“Counterclaims are a story made for litigation that is contradicted by evidence and common sense,” Twitter added.
Musk’s countersuit was initially not publicly available because it allegedly contained information from the private company that needed to be redacted, Twitter’s attorneys argued.
After days of back and forth between attorneys on each side, the judge handling the case in the Delaware Court of Chancery said the trial was due to be released Friday.
Musk faces an uphill battle in his effort to pull out of the deal, due to the unbreakable contract he signed earlier this yearas several experts had previously assured Business Intern.
But his counterclaim is an attempt to create a way out of the deal. While Twitter repeatedly pointed out that Musk waived his right to know before signing the merger deal, Musk said he was going the traditional route of “trust but verify,” meaning that he relied on Twitter’s public disclosures and then validated them and negotiated the deal.
“Musk’s party hoped that Twitter would hide nothing from its potential owner, including the extent of its spamming or fake account problem,” the complaint states. “Instead, the opposite happened. Twitter played hide and seek for months trying to run out of time before Musk could discern the truth about this.”
“The more Twitter evaded even simple queries, the more suspicion grew that Twitter had misled them.”
The platform user authentication process is weakaccording to counterclaims.
The company does not send emails, text messages or other push notifications to users to verify them, and its CEO, Parag Agrawal, was reportedly unable to explain to Musk how he selected the human moderated accounts.
Twitter delivered to Musk huge amounts of account and user information. Although Musk’s claims call it “limited”, his analysis so far has reportedly shown “shocking results”.
In early July, for example, a review by Musk insiders showed that “a third of visible accounts may have been fake or spam.” For him, that means a “conservative minimum” for spam accounts on the platform is 10%, not the 5% that Twitter publicly claims.
This, combined with the accusation that Twitter’s mDAUs are far inferior to what it claims, results in Musk has every right to terminate his deal to acquire the company. Musk asked the court to terminate the merger agreement and undisclosed compensatory damages.