Elon Musk has accused Twitter of deliberately miscounting the number of spam accounts on its platform as part of a “scheme” to mislead investors.
Tesla’s chief executive made the allegations as part of a countersuit against the social media company, which is suing Musk in an attempt to get him to complete an agreed-upon $44 billion takeover (36, £5 billion) from the company.
Musk repeats a claim that Twitter is miscounting the number of fake and spam users on its platform as part of a ‘plan to mislead investors about the company’s prospects,’ the lawsuit alleges. , which was unsealed on Friday. Valid user counts are a key metric for Twitter, which derives 90% of its revenue from advertisers.
The lawsuit says Twitter’s disclosures to the US financial watchdog are inaccurate and misrepresented the value of a company Musk agreed to buy for $54.20 a share.
It says documents filed with the Securities and Exchange Commission (SEC) 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.”
Referring to Twitter’s lawsuit asking Musk to buy the company, he adds: “Twitter’s lawsuit, filled with personal attacks on Musk and garish rhetoric more directed at a media audience than this Court, is nothing. more than an attempt to distract from these misrepresentations.”
Twitter has always said that spam accounts make up less than 5% of its user base, which currently stands at just under 238 million.
Musk claims that Twitter has overstated the number of monetizable daily active users on the platform, or users who see ads. The number of users who see ads is 65 million lower, according to the lawsuit.
Spam accounts are automated, which means they are not managed by a human hand, and are designed to manipulate users or disrupt their interactions on the platform.
Musk argues that the misrepresentations represent a “significant adverse effect on society” that significantly alters the value of Twitter and therefore invalidates the agreement. Musk pulled out of the Twitter deal in July, citing concerns about spam accounts.
Twitter’s response to Musk’s counter-suit was posted on Thursday. In it, Twitter called Musk’s arguments to scrap the deal “a story, dreamed up for the purpose of escaping a merger deal that Musk no longer found attractive once the stock market and with him, his massive personal wealth, have lost value”.
“Counterclaims are a story made for litigation that is contradicted by evidence and common sense,” the response reads.
Twitter’s lawsuit to force Musk to buy the company is due to begin in Delaware on October 17.
Robert Frenchman, a partner at New York law firm Mukasey Frenchman, said he doesn’t believe Musk’s claims will ultimately prevail, having agreed to buy the company with minimal due diligence, but his legal claims hurt to the society.
“Whether Musk’s claim is meritorious or not, and I don’t think it is, it made things extraordinarily difficult for Twitter. Twitter finds itself in a kind of legal limbo, while the litigation continues and the trial awaits. It’s a huge distraction for the company. It puts the company’s strategy and direction on hold,” said Frenchman, who added that Twitter was making life “more difficult” for Musk by issuing subpoenas against the Tesla CEO’s associates and banks.