Twitter Labels Elon Musk’s Counterclaim ‘Factually Inaccurate’

Twitter has hit back at Elon Musk, after he filed a counter lawsuit against the microblogging platform last week.

Musk had responded with his own legal action, as Twitter is currently suing him over his attempt to terminate his agreed $44 billion deal to acquire the social media platform.

Musk’s counter lawsuit was filed ‘under seal’ last Friday and his allegations against Twitter were not known until this Thursday, when it was made public.

Musk’s counter claims

In his counter lawsuit filing, Elon Musk alleged he was “hoodwinked” into signing the deal to buy the social media company.

Musk accused Twitter of stepping up efforts to conceal the true number of its users, as the market plummeted.

“As a long bull market was coming to a close, and the tide was going out, Twitter knew that providing the Musk Parties the information they were requesting would reveal that Twitter had been swimming naked,” the counterclaims allege.

Musk also claimed that “Twitter’s misrepresentations run far deeper than simply providing incorrect numbers” about its spam or false accounts.

While “Twitter touts having 238 million ‘monetizable daily active users,’ those users who actually see ads” is roughly 65 million lower, Musk said in the counterclaims.

Twitter response

But Twitter’s chairman Bret Taylor hit back at Elon Musk, labelling his counterclaims as “factually inaccurate, legally insufficient, and commercially irrelevant.”

And Twitter published its detailed response to Elon Musk’s claims with its own filing, and it insisted that its SEC disclosures about monetisable daily active users were accurate.

“That story is as implausible and contrary to fact as it sounds,” Twitter responded. “And it is just that – a story, imagined in an effort to escape a merger agreement that Musk no longer found attractive once the stock market – and along with it, his massive personal wealth – declined in value.”

“After spending months looking for an excuse to get out of the contract, Musk claimed to terminate it, explaining his supposed reasons for doing so in a July 8 letter to Twitter,” the firm added.

“When Twitter sued to enforce its rights and exposed the weakness of those reasons, Musk spent weeks coming up with more supposed reasons – the Counterclaims – which offer up an entirely new set of excuses for his breach.”

Twitter is going after Elon Musk hard, and earlier this week the platform sent dozens of civil subpoenas to global banks and other co-investors in Elon Musk deal and Musk advisers.

Twitter is seeking information about what lenders, investors and advisers were saying to each other about Musk’s behaviour after he signed the deal in late April.

Musk responded and issued subpoenas to Twitter’s advisers at Goldman Sachs and JP Morgan over their work.

“The (Musk) Counterclaims are a made-for-litigation tale that is contradicted by the evidence and common sense,” added Twitter in its filing. “Musk invents representations Twitter never made and then tries to wield, selectively, the extensive confidential data Twitter provided him to conjure a breach of those purported representations.”

“Yet Musk simultaneously and incoherently asserts that Twitter breached the merger agreement by stonewalling his information requests,” Twitter stated. “As explained below and will be demonstrated at trial, the Counterclaims are factually inaccurate, legally insufficient, and commercially irrelevant.”

Courtroom showdown

Twitter’s response filing is the latest salvo in what is proving to be an increasingly acrimonious legal showdown between the two parties.

The two sides are headed to a Delaware Court of Chancery on 17 October, after a win for Twitter, which had sought a trial as early as September over concerns that the uncertainty over the deal was harming its bottom line.

Musk’s legal team had initially requested a date in February 2023, before suggesting the 17 October date.

The social media firm agreed on condition that the trial could be concluded in five days.

In the agreement he signed with Twitter, Musk can only back out if something major happens to Twitter’s business, and there is doubt that Twitter’s bot issue may be enough of a justification.

Twitter can demand the $1 billion (£836m) contractual breakup fee from Musk, if he reneges on the agreement.

But Musk cannot be ordered to close the deal if his financing fails – provided he was not the cause of the failed funding.