Twitter has filed a detailed response to Tesla CEO Elon Musk’s countersuit against the microblogging platform, saying his claims are “truly inaccurate, legally insufficient and commercially irrelevant.”
According to Musk, Twitter tricked him into signing a $44 billion merger deal.
That story is as farfetched and contrary to fact as it sounds. And it is just that: a story, imagined in an effort to escape a merger deal that Musk no longer found appealing once the stock market, and along with it, his massive personal wealth, dwindled in value,” Twitter said. in his statutory response filed in US Chancery Court in Delaware.
Musk’s lawyers filed 90 pages of counterclaims in court, and Twitter responded to them paragraph by paragraph.
“Counterclaims are a story made for litigation that is contradicted by the evidence and common sense. Musk invents representations that Twitter never made and then tries to selectively manage the large amount of sensitive data that Twitter provided to him to conjure up a violation of those alleged representations, “argued the company led by Parag Agrawal.
However, Musk simultaneously and inconsistently claims that Twitter violated the merger agreement by obstructing his requests for information, Twitter said.
Musk, in his countersuit, said his action stems from Twitter’s misrepresentations regarding the company’s condition and the “key metrics” Twitter uses to assess the number of users on its platform.
“They contain numerous material misrepresentations or omissions that misrepresented the value of Twitter and caused the Musk parties to agree to acquire the company at an inflated price,” the countersuit stated.
In its disclosures, Twitter claims to have nearly 238 million monetizable daily active users (mDAUs) participating on the platform, telling its investors that this user base metric is an indicator of its ability to generate revenue and the “best way to measure”. The success of Twitter’.
When Musk’s legal team began “peeling the onion from fake and spam accounts,” two things became abundantly clear.
“First, Twitter was miscounting the number of fake and spammy accounts on its platform, as part of its scheme to mislead investors about the company’s prospects by targeting its alleged hundreds of millions of mDAU,” the countersuit said. by Musk.
Second, while Twitter has repeatedly touted mDAU as a “key metric” for revenue growth, “mDAU is not as closely related to revenue as Twitter would have the public believe.”
Twitter disputed its claim, saying that when Musk offered to buy Twitter, he did not ask for, and Twitter did not make, any representations regarding the number of fake or spam accounts.
‘The merger agreement does not contain a single reference to fake accounts or spam. Musk also did not ask Twitter for any information to verify “the number of fake or spam accounts before signing the merger agreement,” Twitter said.
Musk also attacked Twitter’s process for estimating the proportion of fake or spam accounts among monetizable daily active users because Twitter’s quarterly estimates are based on daily samples of 100 mDAU, combined for a total sample of approximately 9,000 mDAU per quarter.
“But attacking an estimate as unreliable based simply on sample size relative to population size is an ‘elementary statistical error,'” Twitter said.
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