Multiple people including Elon Musk will be deposed in the ongoing lawsuit between the Tesla Billionaire and social media company Twitter, Inc. The Depositions started on Tuesday.
Musk first made a $44 billion bid to buy Twitter in April, promising to uphold free speech and change the platform to be more transparent. He then tried to back out of the deal weeks later, citing inaccurate user numbers due to the growing number of fake accounts. Twitter disputed these claims and sued Musk in July in an effort to force him to follow through with the deal.
Building the Case Against Twitter
Musk and his lawyers are looking for ways to further support their reasoning for backing out of the acquisition. Former Twitter CEO Jack Dorsey was the latest person to take the stand in the trial. Both parties will question him about his tenure and hope to portray the company in a certain way. Dorsey has criticized Twitter’s board in the past and has referred to Musk as the “singular solution I trust” after the deal was announced. However, he is not expected to confirm any claims of discrepancies in Twitter’s financials or in the way it reports user numbers. Experts believe this would only help Musk and be against Dorsey’s self-interest to admit to wrongdoing during his time as CEO. It will be hard for Twitter’s dirty laundry to be fully covered up, however.
Musk Brings Twitter Whistleblower into the Mix
In August, Twitter got exposed by its former head of security, Peiter Zatko. Zatko appeared in front of the Senate Judiciary Committee last week. He claimed that the company knowingly put its users, investors, and national security at risk with the existence of dangerous security vulnerabilities. The accusations include hiding information from the Federal Trade Commission (FTC) during its probe of the company back in 2011. Twitter has to agree to a consent decree after it was alleged to have suffered a data attack from hackers in 2009. The hackers supposedly took control of the social media site and got access to non-public information on users and private tweets.
Twitter paid $150 million in fines after the FTC found it in violation of the decree. The agency found the company guilty of using ill-gotten data to sell personalized ads. It used data like cellphone numbers that were supposed to be used for user’s security for targeted advertising. Now, after the concerns raised by Zatko, FTC Chairwoman Lina Khan is “extremely disturbed.”
There has absolutely been a problem with companies treating FTC orders as suggestions. We have a program underway to really toughen that up.
A judge has given Musk’s legal team the go-ahead to base some of their claims on Zatko’s disclosures on Twitter’s harmful practices. They point to Zatko’s claims as further proving Twitter’s shady underbelly and need for the acquisition to fall through.
Zatko’s disclosure and the events surrounding it have revealed that the misrepresentations regarding mDAU [monetizable daily active users] were only one component of a broader conspiracy among Twitter executives to deceive the public, its investors, and the government about the dysfunction at the heart of the company.
Twitter v. Musk
Twitter criticizes Zatko for improperly portraying the company with false accusations. It also labeled Musk’s claims as “factually inaccurate, legally insufficient and commercially irrelevant.” Musk no longer wants to go through with the deal due to Twitter allegedly falsifying data about itself. Twitter sees the SpaceX billionaire as desperate, using Zatko and other presumed issues to cover up possible buyer’s remorse. The two parties are preparing their cases, both claiming the other broke the April agreement. Twitter’s lawyers are scheduled to depose Musk, Jared Birchall, and lawyer Alex Spiro next week. The trial will last for five days starting on Oct. 17.
Written by Chiagozie Onyewuchi
CNN: Twitter to depose Elon Musk next week; by Brian Fung and Clare Duffy
Yahoo!Finance: Twitter founder Jack Dorsey gives deposition in lawsuit with Elon Musk; yahoo staff
CNN: Twitter founder Jack Dorsey to be deposed in Twitter v. Musk case; by Clare Duffy
CNBC: Ex-CEO Dorsey criticizes Twitter board; Musk says it ‘owns almost no shares!’; by Lauren Feiner
The Guardian: Twitter to depose Elon Musk in takeover tug-of-war; by Reuters staff
MarketWatch: FTC’s Khan is ‘extremely disturbed by’ Twitter whistleblower allegations, says investigation could target CEO; by Chris Matthews