Musk Gets A Potential Boost With Twitter Whistle-Blower’s Claims

(Bloomberg) -- A whistle-blower complaint alleging Twitter Inc. ignored a rash of spam and bot accounts will help Elon Musk in his effort to walk away from a $44 billion buyout of the company, legal experts say. 

Peiter Zatko, Twitter’s former head of security, alerted US authorities to “egregious deficiencies” in the social media company’s defenses against hackers, according to his complaint. Zatko, who was fired from Twitter earlier this year, said he had raised concerns at the company in early 2021 and was told by the head of site integrity that Twitter didn’t know how many bots were on the platform. 

“We have already issued a subpoena for Mr. Zatko, and we found his exit and that of other key employees curious in light of what we have been finding,” Alex Spiro, a lawyer for Musk, said in a statement.

Twitter sued Musk in July to make him complete his proposed acquisition. Since then, dozens of people, banks, funds and other firms have been subpoenaed in the Delaware lawsuit, with a trial scheduled to begin in October. At the center of Musk’s defense are the company’s disclosures about the quality of its customer base as it is affected by spam and automated accounts.

Zatko claims Twitter executives failed to disclose the true extent of such accounts on the platform. His complaint was reported earlier by the Washington Post and CNN.

If Zatko’s assertions are true, “that’s just the kind of smoking gun Musk had to be pinning his hopes on,” said Larry Hamermesh, a University of Pennsylvania law professor who specializes in merger-and-acquisition disputes.

Twitter said Zatko was fired for cause. 

“Mr. Zatko was fired from his senior executive role at Twitter in January 2022 for ineffective leadership and poor performance,” the company said in a statement. “What we’ve seen so far is a false narrative about Twitter and our privacy and data security practices that is riddled with inconsistencies and inaccuracies and lacks important context.”

Twitter said Zatko’s allegations and “opportunistic timing” seemed “designed to capture attention and inflict harm on Twitter, its customers and its shareholders.” It added that “security and privacy have long been company-wide priorities at Twitter and will continue to be.”

The case is Twitter v. Musk, 22-0613, Delaware Chancery Court (Wilmington).

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