Elon Musk, CEO of Tesla (NASDAQ:TSLA), has accused Twitter (NYSE:TWTR) of fraud, claiming the social media company misled him about the state of its company and vital data on platform users before agreeing to buy the company for $44 billion.
In a countersuit, Musk stated that he opted to terminate the merger agreement after learning about "troubling facts" about Twitter's business, such as the company's restatement of its monetizable daily average users just days after the transaction was completed. He said that Twitter misrepresented the genuine amount of bot and spam accounts on the micro blogging platform.
“Twitter’s own disclosures to the Musk parties show that although Twitter touts having 238 million ‘monetizable daily active users,’ those users who actually see ads (and thus, would reasonably be considered ‘monetizable’) is about 65 million lower than what Twitter represents,” Musk said in a court filing.
In response, Twitter’s board chairman Bret Taylor published a tweet saying Musk’s allegations “are factually inaccurate, legally insufficient, and commercially irrelevant.” Taylor also provided a link to Twitter’s 127-page response, adding the company is looking forward to the upcoming trial in Delaware, scheduled for October 17.
Twitter also dismissed Musk's accusations of being mislead, adding that Tesla's CEO should not be able to pull out of the arrangement only because of his concerns about the amount of spam and bot accounts.
“According to Musk, he—the billionaire founder of multiple companies, advised by Wall Street bankers and lawyers—was hoodwinked by Twitter into signing a $44 billion merger agreement,” Twitter said.
“The billionaire comes up with representations Twitter never made and then tries to selectively wield the confidential data he received from Twitter “to conjure a breach of those purported representations,” the company added.