Musk, who made a proposal earlier this year to purchase the entirety of Twitter for $44 billion, argues that the company’s disclosed quantity of false or spam accounts is inaccurate — perhaps numbering as high as 33% rather than Twitter’s reported 5%. A lower number of monetizable daily active users (mDAU) than the number Twitter has reported could justify a lower company valuation.
The entrepreneur is therefore locked in a legal battle, with Twitter trying to force the completion of the deal and Musk attempting to terminate the arrangement. The trial to determine the outcome is scheduled for October.
Musk is therefore subpoenaing former Twitter CEO Jack Dorsey, who resigned at the end of last year and was replaced by Twitter CTO Parag Agrawal, over documents related to “the impact or effect of false or spam accounts on Twitter’s business and operations, Twitter’s use of mDAU as a Key Metric.” The subpoena also asks Dorsey to provide “any process or workflow, other than the mDAU Audit and the suspension workflow, that Twitter uses, has used, or has discussed or considered using to detect and label accounts as spam or false,” according to court documents obtained by The Verge.
The legal team representing Musk — who desired to purchase Twitter for the purpose of increasing its commitment to free speech — has argued that the company repeatedly failed to provide accurate information about its user base, precluding the possibility of a complete deal.
“Mr. Musk and his financial advisors at Morgan Stanley have been requesting critical information from Twitter as far back as May 9, 2022 — and repeatedly since then — on the relationship between Twitter’s disclosed mDAU figures and the prevalence of false or spam accounts on the platform,” the attorneys wrote last month. “Notwithstanding these repeated requests over the past two months, Twitter has still failed to provide much of the data and information responsive to Mr. Musk’s repeated requests.”
Twitter’s lawsuit nevertheless claims that Musk is required to complete the deal. “Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests,” the lawsuit said. “Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.”
Dorsey and Musk have been friendly in the past, even appearing at a bitcoin event together last summer. Indeed, Dorsey approved of Musk purchasing Twitter earlier this year. “In principle, I don’t believe anyone should own or run Twitter. It wants to be a public good at a protocol level, not a company,” Dorsey explained. “Solving for the problem of it being a company however, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.”
Musk recently floated the idea of refurbishing the website X.com as a new social media platform if the Twitter deal does not come to fruition. In 1999, the entrepreneur co-founded X.com as an online bank before it merged with Cofinity to become PayPal. Musk repurchased the domain name in 2017 since it has “sentimental value.”