Lawyers for Elon Musk and Twitter are warring over how one whistleblower’s revelations could affect Musk’s desperate, months-long scramble to get out of the $44 billion takeover he once smugly attempted, and the subsequent trial he’s facing for trying to squirm out of the deal.
As Bloomberg reports, lawyers for Musk on Tuesday said the allegations by Peiter Zatko, Twitter’s former head of security, meant that Twitter had violated the terms of their merger agreement. Zatko claimed there were “egregious deficiencies” in the social media platform’s defense against hackers among other things. According to The Hollywood Reporter, Zatco also claimed that “Twitter misled government regulators and the company’s own board about the prevalence of spam on the platform, as well as its own security protocols and internal reporting.”
“The Zatko Complaint alleges far-reaching misconduct at Twitter—all of which was disclosed to Twitter’s directors and senior executives, including (CEO) Parag Agrawal—that is likely to have severe consequences for Twitter’s business,” Musk’s attorneys wrote in the letter.
Those in finance had their own ideas about Musk’s move.
“Like Musk’s previous letter terminating the merger agreement for an unrelated list of reasons, this letter is a strange piece of work—it misrepresents what the merger agreement says for some reason?—but it certainly says a lot of things,” wrote Matt Levine on Bloomberg’s Money Stuff newsletter.
“If Zatko’s complaints are all true and maximally bad, then, as we discussed yesterday, Musk might have some argument that he can get out of the deal for fraud. He might also have an argument that he can get out of the deal for some failure of Twitter’s representations in the merger agreement, and this letter opens up that argument… Will it work? Man, I have no idea.”
Zatko, who was fired from Twitter earlier this year, publicly addressed serious issues at the company about the way the social media platform handled users’ personal data. He also said executives had withheld information about security breaches.
Zatko has been deposed by Musk’s legal team and has agreed to testify in court.
This was Musk’s second attempt to terminate the deal, following a July 8 letter he sent hoping everyone would just forget about his $44 billion bid. The case is now in Delaware Chancery Court.
Twitter’s lawyers replied with a filing of their own, saying Musk’s argument for termination of the deal was “invalid and wrongful.”
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