In his countersuit against Twitter, Tesla CEO Elon Musk accused the social media organisation of "fraud". Musk had aborted a $44 billion deal for the social media company, which he claimed held back necessary information and misled his team about the true size of its user base. Musk claimed that Twitter committed fraud, breach of contract and violation of a securities law in Texas.
Musk and Twitter have been bracing for a legal fight since the billionaire said a month back he was backing off of his April agreement to buy the company. Twitter had filed the first lawsuit, opening with a sharply-worded accusation that Musk refused to honor his obligations to Twitter and its stockholders because the deal he signed no longer served his personal interests. "Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, 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," the suit said.
Musk's attorneys argue in the countersuit that Twitter misrepresentations or omissions distorted the company's value and caused Musk to agree in April to buy it at an inflated price. They said Twitter's own disclosures revealed that it has 65 million fewer monetisable daily active users, who can be shown digital ads, than the 238 million that Twitter claims.
The filing also said most of Twitter's ads are shown only to a sliver of the company's user base.
Musk's team also accused Twitter of making too many major changes in recent months without consulting Musk, including personnel decisions and allegedly disobeying social media restrictions imposed by the government of India, which is Twitter's third largest market. Musk had pledged to make Twitter a haven for free speech but has also said it must comply with the local laws where it operates.
In an unexpected twist, Twitter filed its response denying Musk's accusations before Musk's own counterclaims surfaced.
Twitter called Musk's reasoning a story, imagined in an effort to escape a merger agreement that Musk no longer found attractive. The company, in particular, took issue with Musk's estimate of fake accounts, saying the analysis relied on a generic web tool" that designated Musk's own Twitter account as a likely bot.