What to know about Elon Musk’s response to Twitter

Elon Musk is headed to trial with Twitter next month, and a lot has happened since the $44 billion merger agreement was initiated in April. As Musk attempts to back out of the deal, a few key events may help predict what’s to come — including a recent whistleblower’s reports from behind closed doors at Twitter.

In a letter to the Securities and Exchange Commission this month, Musk’s legal team highlighted recent allegations from a former security head at Twitter, saying they show that the company breached the merger agreement (via NPR). The response is just the latest as Musk and his legal team continue to request the trial be delayed.

Earlier this month, former Twitter security head and hacker Peiter “Mudge” Zatko claimed the company led federal regulators astray regarding bot account data earlier this month. Zatko also alleged that the company didn’t actually have resources to find out how many bot accounts there were on the platform, which was part of Musk’s originally-stated reason for backing out of the purchase.

To be sure, the fact that Zatko’s claims are directly related to Musk’s initial concerns with Twitter could prove helpful. However, they don’t necessarily make it more likely that the trial would be delayed, though these complaints and the company’s other related violations could give Musk the right to walk away, according to his lawyers.

“The Zatko Complaint alleges that Twitter has been violating a consent decree it entered into with the FTC in 2011. That consent decree required Twitter to establish and maintain ‘a comprehensive information security plan’ to ensure that its users’ personal data was sufficiently protected from disclosure” writes Musk’s legal team in the letter.

“Mr. Zatko’s statements purport to reveal that Twitter has not been, and perhaps never will be, in compliance with that decree. Twitter has already paid a fine of $150 million for violating an aspect of that decree, and Facebook recently paid $5 billion for similar user data violations,” the letter continues.

Above: Elon Musk files another notice to terminate the Twitter deal after whistleblower claims. Video: CNBC / YouTube

After Zatko is deposed by Musk’s lawyers, he’ll testify before the Senate Judiciary Committee.

Heads of the committee Illinois Democrat Dick Durbin and Iowa Republican Chuck Grassley released a joint statement saying that, if accurate, Zatko’s allegations “may show dangerous data privacy and security risks for Twitter users around the world." The statement continued, adding that the committee would "get to the bottom of these alarming allegations."

The news comes just a few weeks after a Delaware judge demanded Twitter hand over data on bot accounts requested by Musk, as reported by Financial Times. While Musk asked the trial’s presiding Judge Kathaleen McCormick to offer information on all of the platform’s users, McCormick limited the number of accounts to 9,000, calling the initial request “absurdly broad.”

“[Musk’s] documents request would require plaintiff to produce trillions upon trillions of data points,” McCormick wrote. “[Twitter] has difficulty quantifying the burden of responding to that request because no one in their right mind has ever tried to undertake such an effort.”

It’s tough to say what could happen at the trial in October, but Musk and his legal team certainly want to see him walk away without paying for the company, or the $1 billion termination fee. Alternatively, Musk could be forced to officially purchase Twitter at a price of $54.20 per share, though these developments could significantly influence the trial’s outcome.


Source: SEC / NPR / Financial Times