How does Elon Musk not love Twitter? Let him count the ways anew, with an assist from Peter “Mudge” Zatko.
Alas, an SEC filing does not exactly fit the Elizabeth Barrett Browning mold, but then again, Twitter is hardly a poetic muse either. Musk today renewed his efforts to sever the purchase agreement he made with the social-media platform’s board, adding even more grounds in a filing for a clean break. Musk has added the allegations from a former Twitter executive-turned-whistleblower to claim that Twitter misled him and regulators over several matters, including bots on the platform:
In an SEC filing Tuesday, Musk said his legal team notified Twitter of “additional bases” for ending the deal on top of the ones given in the original termination notice issued in July.
In a letter to Twitter Inc., which was included in the filing, Musk’s advisors cited the whistleblower report by former executive Peiter Zatko — also known by his hacker handle “Mudge.”
Zatko, who served as Twitter’s head of security until he was fired early this year, alleged in his complaint to U.S. officials that the company misled regulators about its poor cybersecurity defenses and its negligence in attempting to root out fake accounts that spread disinformation
The letter, addressed to Twitter’s Chief Legal Officer Vijaya Gadde, said Zatko’s allegations provide extra reasons to end the deal if the July termination notice “is determined to be invalid for any reason.”
Musk isn’t leaving it entirely in the hands of the SEC either. The Washington Post reports that his legal team has subpoenaed Zatko to testify under oath about his allegations of mismanagement and lack of compliance at Twitter, especially pattens of misleading users and investors:
Elon Musk’s legal team subpoenaed Twitter whistleblower Peiter Zatko to appear Sept. 9 for a deposition in an ongoing legal fight over the billionaire’s deal to acquire the social network for $44 billion.
The subpoena seeks any documents Zatko has related to his complaint to federal regulators that Twitter has misled the public about “extreme, egregious deficiencies” in its security practices, as well as any documents related to spam on the platform, the company’s attempts to hide its security vulnerabilities, and allegations that company employs foreign intelligence service agents.
The subpoena, which became public Monday, signals how Zatko’s allegations could factor into the litigation in Delaware’s Chancery Court between Musk and Twitter of the Tesla CEO’s efforts to back out of his pledge to acquire the social network. Musk has alleged that the company is vastly undercounting the number of spam and bot accounts on its platform, and therefore overstating the number of legitimate users. …
Zatko’s complaint could add ammunition to Musk’s legal arguments. His complaint, which was filed last month with the Securities and Exchange Commission, specifically accuses Twitter of “Lying about Bots to Elon Musk.” He alleges that the company is not incentivized to tally the true number of bots and accounts on the service. Still, there was little hard documentation included in the disclosures viewed by The Washington Post, which obtained the complaint.
Twitter’s trying to play hardball too, but with presumably less effect. They’ve subpoenaed one of Musk’s friends, investor David Sacks, with the intent of proving that Sacks was more involved in the buyout bid than Sacks has admitted. Sacks has responded on Twitter by tweeting out Zatko’s allegations, as well as more, ah, colorful commentary:
— David Sacks (@DavidSacks) August 2, 2022
The clip is from The Wolf of Wall Street. Your irony may vary, but more seriously, Sacks accused Twitter of harassing him with the subpoena. He claimed that Twitter justified their pursuit of his testimony because he tweeted about the deal, which pushes the Irony Meter all the way to eleven:
This is "harassment" says David Sacks to @emilychangtv, as he holds up a subpoena from Twitter's lawyers for the Musk trial https://t.co/SQfCwbWyKj pic.twitter.com/TWpkA11pEQ
— Bloomberg Technology (@technology) August 10, 2022
The upshot of all this seems to be that no one wants to buy Twitter now, least of all Musk and his friends. This doesn’t look any more like a hardball squeeze on the share price for the buyout. Whether Musk intended to shred Twitter from the get-go knowing what Zatko had already discovered, or whether Zatko’s whistleblowing dropped providentially into his lap, seems almost beside the point now. Given the real issues that Zatko raises in Twitter’s lack of compliance with the FTC and its apparent massive internal issues, it seems very unlikely that a court will enforce the sales agreement now, and might not enforce the billion-dollar penalty either.
That’s too bad. A new owner might have been able to fix Twitter and especially its cooked political bias. Musk may or may not have improved matters, but at least he’s forced the issues out into the open — and perhaps at a minimal cost in the end.
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