Elon Musk responds. Although he himself is the subject of a legal action initiated by Twitter, he in turn filed a complaint against the social network on Friday, July 29, reported the Wall Street Journal.
The complaint was filed in a court in Delaware (United States), specialized in business law, in a “confidential” manner. This procedure is commonly used during legal proceedings relating to listed companies in order not to reveal sensitive information.
That is why the complaint has not yet been made public. A revised version, without confidential information, could be available this week, according to the American newspaper. This filing of a complaint adds an episode to the strategic and now legal soap opera that the billionaire and the social network have been starring in since mid-April, with a most uncertain outcome.
• Why are Twitter and Elon Musk fighting a legal battle?
The richest man in the world had positioned himself since April 14 in taking control of the social network, for an amount that valued Twitter at 43 billion dollars. Since the beginning of the negotiations, the tone is full. Elon Musk threatened to “reexamine his position as a shareholder” within the social network in case of refusal.
After many twists and turns, with the number of fake accounts present on the social network at the center of the debates, the head of Tesla gave up on acquiring the American company on July 8. Therefore, Twitter filed a complaint on July 12 to force Elon Musk to honor his purchase commitment.
• What are the arguments of Elon Musk and Twitter?
The company accuses the head of Tesla of having retracted regarding the stock market, in full shock. Elon Musk thus shows a drop in his personal fortune of more than 100,000 million dollars compared to its peak in November 2021, according to the Bloomberg Billionaires Index. “Instead of bearing the cost of the market crash, as required by the merger agreement, Mr. Musk wants to pass it on to Twitter shareholders,” Twitter said, according to the report. Wall Street Journal.
For his part, the businessman would accuse the social network of having lied about its real number of users -and the latter, after having accepted his purchase offer, affirms the Wall Street Journal.
During the negotiations, Elon Musk wanted to make sure that Twitter did not contain no more than 5% fake accounts. This data is an extremely scrutinized indicator for social media investors. Since their revenue is based on displaying advertisements to real Internet users, fake accounts are all potential users that cannot actually be monetized.
• What should be expected from the trial?
The trial will take place from October 17, for five days. The social network, which claims that less than 5% of its users are fake accounts, seeks to enforce the agreement. For his part, Elon Musk has not communicated at the moment about the reasons for his complaint.
If the judge considers that the arguments put forward by Elon Musk are not strong enough to justify breach of contract, then the sale could be forced. As part of the negotiations, the two sides also agreed to pay severance pay of up to $1 billion.
If one or the other of the parties refuses to comply with the court decision, the court has the necessary powers to impose fines or even freeze the assets.
Source: BFM TV
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