Elon Musk’s legal team sought ways for the tech entrepreneur to pull from his $44 billion agreement to purchase social media platform Twitter. The Musk legal team on Tuesday submitted an additional notice, which was disclosed to the SEC in which they cited the claims made by ex-security chief Peiter “Mudge” Zatko as further reasons to end the deal.
Twitter must now address the threat of Musk and Zatko’s accusations in his complaint. The allegations the two men have made aren’t identical; however, neither do their motives. Facebook is a social network but is still confronted with two distinct issues – and is expected to take action on each.
The lawsuit on Tuesday came in the wake of a lawsuit filed on a July 8 report claiming that the social media company violated its obligations under its contract. Musk will now use allegations made by Zatko, famous as the “Twitter Whistleblower” as a reason to pull-out of the agreement.
“Allegations concerning specific facts that were known to Twitter before and on July 8, 2022, but not disclosed by Musk Parties before and at the time of their disclosure, Musk Parties before and the time of the merger has become public and provide further and distinct grounds for a termination of the Merger Agreement,” Mike Ringler Musk’s legal representative wrote in an email addressed to Twitter’s legal director, Vijaya Gadde, CNBC reported.
Twitter’s legal department quickly replied, saying Musk’s termination claim was “invalid and untrue in the context of” the agreement to acquire.
“It is solely based on statements that a third party has made which, according to what Twitter has stated before, are strewn with contradictions and inaccuracies, and are devoid of details,” the letter written by lawyer William Savitt said. “Contrary to the claims contained in the letter Twitter is not in breach of any obligations or representations under the Agreement, and Twitter has not been impacted or is susceptible to suffering a Material adverse effect.”
Dual Challenges for Twitter
“It’s difficult to know if Musk or the whistleblower Musk or whistleblower are any significant threat to Twitter at the moment,” suggested technology industry analyst Charles King of Pund-IT.
This could change over the coming few months.
“Heading to Delaware Chancery Court in October, the Twitter vs. Elon Musk case is just around the corner, and both legal teams are making preparations for this historic fight over the $44 billion Twitter deal,” explained Dan Ives. In an email, he is the managing director for Equity Research at Wedbush Securities.
“A likely major development… is the whistleblower case brought by the former chief of security and Twitter executive Peiter “Mudge” Zatko, which could grant Musk an important small win,” Ives continued.
Musk’s legal team demanded Zatko to appear in a deposition during its legal battle with Twitter on September 9. Zatko has claimed in his 200-page whistleblower document that Twitter has grave security and privacy vulnerabilities that expose users to danger and also put the nation at threat due to the security issues with data.
“Importantly, Zatko claims that Twitter doesn’t have precise information about the amount of spam and fake bot accounts on its platform. This issue will be a major concern to Musk and the Musk team as they talk to Zatko because this would significantly increase the credibility of its claims. Twitter,” said Ives.
“There are a lot of other legal backs and forths that are going on in the Twitter matter,” Ives noted. “But ultimately, the Zatko advancement and timing is an enormous win for Musk that could make it more difficult for the Twitter lawsuit.”
What is it? for Twitter
The board of directors at Twitter is determined to keep Musk under the original contract. However, whether the deal is pushed through or not, some changes will likely come to the platform.
“Despite the numerous arguments he has made, the argument for their purchase appears pretty robust,” King told this reporter. “If Musk is forced to buy the organization, he will likely make significant changes to Twitter’s management and leadership staff, but this assumes that the employees he wants to target will still be there. In the end, I think that many Twitter employees would quit rather than join Musk.”
Even if Musk can pull from the agreement and buy the company, Twitter could face future problems.
“The whistleblower is a distinct circumstance,” King continued. “Depending on the way the whistleblower’s (Zatko’s) testimony before Congress is received, Twitter could be required to make major accustoming to the way it handles the security of and accessibility to user accounts.”
This could be seen as a benefit for the business and the people who use it.
“However, this assumes there’s some substance to whistleblower’s allegations,” King added. “It isn’t certain at this point.”