Musk Subpoenas Twitter Bot Whistle-Blower In Buyout Dispute
Lawyers for Elon Musk subpoenaed a whistle-blower who says Twitter didn’t care to find out how many of the accounts were spam.
(Bloomberg) -- Lawyers for Elon Musk subpoenaed a whistle-blower who says Twitter Inc. officials didn’t know or care to find out how many of the social-media platform’s accounts were spam and robot accounts as the billionaire seeks to cancel a $44 billion buyout of the company.
Peiter Zatko, Twitter’s ex-head of security, said in a lawsuit last week that the company had “egregious deficiencies” in its defenses against hackers and lacked concern for privacy issues. Zatko also said he raised concerns to company officials about the number of bots on the system and that those apprehensions were ignored.
Some analysts say Zatko’s claims bolster Musk’s legal argument that he can walk away from the Twitter deal over the bot issue. Twitter sued Musk in July to force him to complete his proposed acquisition. Since then, more than 100 people, banks, funds and other firms have been subpoenaed in the Delaware suit, with a trial scheduled to begin Oct. 17.
Read More: Musk Gets Potential Boost From Twitter Whistle-Blower Claims
A Twitter spokesperson declined to comment Monday. Last week, the company called Zatko’s complaint “a false narrative about Twitter and our privacy and data security practices that is riddled with inconsistencies and inaccuracies and lacks important context.” Whistleblower Aid, the group representing Zatko, didn’t immediately respond to a request for comment.
The subpoena is aimed at getting Zatko to hand over documents about his bot concerns and anything else he knows about Twitter’s metrics for evaluating customers that can be “monetized” for advertising purposes. The information demand also zeros in on what Zatko knows about Twitter’s securities filings, particularly its statements about bots making up about 5% of its customer base, according to court filings.
Musk’s lawyers said last week they’d already subpoenaed Zatko, but no record of the information demand was on the court docket until Monday.
In the complaint, Zatko said Twitter’s “Integrity Team” was reluctant to dig deeply into how many bot accounts were included in the platform’s customer base. That left the former security executive thinking “the company had no appetite to properly measure the prevalence of bots, in part because if the true number became public, it could harm the company’s value and image.”
Musk has argued that Twitter’s regulatory disclosures putting spam and bot accounts at no more than 5% of its customer base were misleading. The Tesla Inc. chief executive officer has made public some of his analysis of the issue, which holds that a full third of Twitter’s more than 230 million users may fall into the bot category.
If that’s the case, Musk contends it creates a material adverse event that justifies him cancelling his $54.20-a-share deal under Delaware law. The state is the corporate home of more than half of US public companies, including Twitter and Tesla, along with more than 60% of Fortune 500 firms. Its chancery court judges are business-law experts who hear cases on a fast-track basis.
The case is Twitter v. Musk, 22-0613, Delaware Chancery Court (Wilmington).
(Updates with details on Musk’s bot arguments starting in eighth paragraph. An earlier version corrected the size of the buyout deal in first paragraph.)
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