Elon Musk Countersues Twitter, Files Response in Lawsuit

Elon Musk Countersues Twitter, Files Response in Lawsuit
Elon Musk attends The Metropolitan Museum of Art's Costume Institute benefit gala in New York on May 2, 2022,. (Evan Agostini/Invision/AP, File)
Gary Bai

Tesla CEO Elon Musk has filed a counterclaim against Twitter after the social media company sued the billionaire for walking away from their $44 billion purchase deal.

Musk’s counterclaims are an abrupt escalation in the legal battle between the big tech company and the richest man in the world, where Twitter is suing Musk to complete the acquisition deal he entered into with Twitter on April 25. Musk's lawyers alleged that Twitter did not provide the bot user data that the billionaire sought when Musk backed away from the deal on July 8. Twitter sued days later, rejecting Musk's assertion and seeking to complete the deal.
Musk’s move against Twitter was made public a day after Delaware Chancery Court Judge Kathaleen McCormick, the judge overseeing the lawsuit, ordered that the five-day trial was to begin on Oct. 17, 2022.

McCormick ordered Twitter to answer the counterclaim on or before Aug. 4, 2022. The discovery phase of the lawsuit ends in the first half of September.

It is unclear, as of now, when the public version of Musk’s counterclaim will be available. The Wall Street Journal confirmed that a redacted version of Musk’s counterclaim would be available “as soon as next week.”

While the court file was not immediately accessible to the public, Musk’s legal team had repeatedly hinged its argument on the number of bot accounts on the social media platform, a piece of information that Musk’s lawyers say was made available to them only after the signing of the deal, but could significantly impact Twitter’s value.

“The core dispute over false and spam accounts is fundamental to Twitter’s value. It is also extremely fact and expert intensive, requiring substantial time for discovery,” Musk’s lawyers said in a July 15 filing requesting a February 2023 trial date, adding that Twitter’s refusal to provide this information drove Musk to file to walk away from the deal on July 8.
Musk’s lawyers assert that the platform’s monetizable daily active users metric is indicative of the proportion of bot accounts on the social media platform. An avid Twitter user himself, Musk previously alluded on Twitter that the discovery phase may lead to more insights into the proportion of bots on Twitter and, therefore, the platform’s profitability.
Meanwhile, Twitter, in a July 19 hearing, said that Musk has been trying to “sabotage” the social media company by requesting an “unreasonably elongated” schedule.

“Musk has been and remains contractually obligated to use his best efforts to close this deal,” William Savitt, the attorney representing Twitter, said during the hearing. Twitter requested during the hearing that a trial take place in September 2022.

“What he’s doing is the exact opposite; it’s sabotage,” Savitt said.

The material damage to Twitter, according to the company's July 18 filing, arises from the damage to Twitter’s relationships with employees and customers in this “very public dispute” between the platform and Musk. Twitter alleges that Musk, with his more than 100 million Twitter followers, is “using [Twitter's] own platform as a megaphone to disparage it.”

“Millions of Twitter shares trade daily under a cloud of Musk-created doubt,” the social media platform's filing said. “No public company of this size and scale has ever had to bear these uncertainties.”

Judge McCormick, who presided over the hearing, sided closer to Twitter and ordered that a five-day trial take place in October 2022.

“The reality is that delay threatens irreparable harm to the sellers,” McCormick said in her ruling, referring to Twitter. “The longer the delay, the greater the risk.”