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Twitter Wins First Round of Legal Showdown Against Musk

The First Round of the Musk-Twitter legal showdown is won by Twitter

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TWITTER WON their first spar against Elon Musk during their first day at court this Tuesday. Delaware Judge ruled in favor of a request to expedite the trial on the lawsuit brought by Twitter against Musk after the eccentric billionaire pulled back from his dramatic $44 billion offer to take over the company. The Musk-Twitter legal battle is expected to be a long and contentious process that could go on for years, with the potential of having severe effects on both Musk’s and Twitter’s financial and legal standings. 

The first episode inside the courthouse of the Musk-Twitter legal battle was around the date and length of the trial. Twitter was looking for a four-day trial in September, while the Musk legal team was pushing for a shot in February of next year; both teams presented their requests to Chancellor Kathleen St Judge McCormick, who serves as a judge in the Delaware Chancery Court.

Musk argued for a later date on the trial since he says he needs time to prepare the case against Twitter, as the investigation process over the extent and importance of spam and bots accounts on Twitter (Musk’s main argument against Twitter) will be “extremely fact and expert intensive, requiring substantial time for discovery.” On the other hand, Twitter argued that the case should be heard quickly as Musk’s decision to rescind his purchase offer has brought legal uncertainty to their shareholders.  

The First Round of the Musk-Twitter legal showdown is won by Twitter
Tesla and SpaceX CEO Elon Musk (R) gives a statement at the construction site of the Tesla Giga Factory in Gruenheide near Berlin, Germany, 03 September 2020. (EFE)

The decision was delivered quickly, and McCormick could have agreed to either of the timelines or chosen an entirely different one. While the judge did not grant Twitter the exact date they were demanding (mid-September), McCormick’s date for the trial, in October, was closer to Twitter’s request than Musk’s. 

The complicated story of the Twitter-Musk legal battle began from the very moment Musk announced his intention to buy the company. This move disrupted the tech world and created a slew of controversy.  Musk framed his initial decision to buy the company as part of a fight to restore free speech in the public square —criticizing the company’s content moderation policies.

The founder of Tesla pushed for a hostile takeover of Twitter. First, by becoming Twitter’s biggest shareholder by buying 10% of the company’s shares and then making a $44 billion offer to buy the entire social media platform in April of this year. Twitter accepted despite reports of discontent among some staffers over Musk’s views on free speech. 

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However, just a few weeks after the deal was signed, the divisions between Musk and Twitter started to grow even more, especially around the issue of the prevalence of bot and spam accounts on the platform.

Musk started to pressure Twitter to release information on the percentage of users that are real and those that are fake or spam. The billionaire claimed that the rate of bot accounts was far greater than the 5% that Twitter disclosed in their SEC filings. The spat over the true extent of spam accounts was aired to the public as Musk and the CEO of Twitter, Parag Agrawal, fought in a heated Twitter discussion over the issue. In May, Musk said that the deal was temporarily on hold until the spam account issue becomes resolved. 

Eventually, Musk pulled back from the $44 billion deal earlier this month. Musk’s legal team explained in a letter filed to the SEC that Musk’s decision to pull back from the deal is because Twitter has “ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”  

Twitter rapidly reacted to the decision, accusing Musk of breaching their previous agreement and filing a lawsuit against him, arguing that Musk’s concerns over the number of bots and spam accounts did not give him the legal right to retire from the purchase. In contrast, the Tesla founder argues that the information withheld by Twitter and the alleged inaccuracies on the spam data had a material effect on the value of his purchase. 

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