Elon Musk responds to Twitter’s request for an expedited trial – HotAir

Last week Elon Musk announced he was terminating the deal to buy Twitter. On Tuesday, Twitter responded by filing a lawsuit in a Delaware court demanding that Musk be ordered to complete the deal he’d agreed to. The general consensus seems to be that Twitter has a pretty good case. However that doesn’t mean they’re going to win. Twitter has requested an expedited trial which would be over in a week but today Musk’s lawyers responded by saying the expedited trial should not be allowed because this case is going to turn on a lot of details about Twitter’s business that will require expert testimony.

Musk’s court filing accuses Twitter of dragging its feet on giving him the data he wanted on bots and then asking for “warp speed” when it came to setting a trial date. Twitter argued in its lawsuit that Musk has been acting in bad faith and every day that the uncertainty around the acquisition hangs over them, the more damage is done to the company. The tone of Musk’s response is similarly fiery, offering a preview of the heated legal wrangling that is to come…

Musk asserts that the case should revolve around Twitter’s statements about how many bots it thinks are on its platform, which he believes are incorrect, though he hasn’t provided evidence of that claim.

“The core dispute over false and spam accounts is fundamental to Twitter’s value,” Musk’s lawyers wrote in the filing. “It is also extremely fact and expert intensive, requiring substantial time for discovery.”

According to the filing, the turning point came when Musk sought to understand how the process for identifying bots worked and was shocked to see it involved human reviewers looking at very small samples.

On April 28, just three days after signing the Agreement, Twitter restated three years of its mDAU numbers, despite never disclosing the issue to Defendants pre-signing. Post-signing, Defendants promptly sought to understand Twitter’s process for identifying false or spam accounts. In a May 6 meeting with Twitter executives, Musk was flabbergasted to learn just how meager Twitter’s process was. Human reviewers randomly sampled 100 accounts per day (less than 0.00005% of daily users) and applied unidentified standards to somehow conclude every quarter for nearly three years that fewer than 5% of Twitter users were false or spam. That’s it. No automation, no AI, no machine learning…

Twitter has led Defendants on a two-month treasure hunt of delays, technical bottlenecks, evasive answers, and, ultimately, refusals. For example, on June 15, Twitter provided Defendants with something it misleadingly labeled the “Twttr Firehose Internal,” which the media has widely reported was Twitter’s “Firehose,” but it was not, in fact, the Firehose. (Ex. 6 at 1-2) Instead Defendants received a bespoke partial data set structured to make the necessary machine analysis impossible. (Id.)

Defendants attempted to navigate these roadblocks with requests from Morgan Stanley beginning May 9, and sent follow-up letters on May 25 and 31, and June 6 (putting Twitter on notice of breach), 17, and 29, before ultimately concluding that Twitter was intentionally withholding requested information. (Ex. 5) Twitter itself admitted as much, writing to Defendants on June 20 that while it would finally provide its existing Firehose stream (over a month late), that data would be “insufficient to perform the spam analysis” Defendants sought to conduct, because Twitter still refused to provide the “private data required.” (Ex. 7 at 3) Twitter even refused to provide the basic account lists necessary for an analysis based on public information. (See Ex. 8 at 4) The user information requested relates directly to the closing conditions, the availability of financing, and transition planning for the business.

CNN Business published an analysis piece today, prior to Musk’s court filing, about what’s really going on in this case. The author’s argument is that while Twitter may have a strong case that does not mean they are going to win. In fact, given that the company’s stock is now in the dumps, a protracted legal battle with the world’s richest man is not really great for business. Basically, Twitter is negotiating toward the most favorable final settlement which probably won’t be Musk buying the company for $54.20 per share.

…since the deal price of $54.20 per share represents a huge premium over Twitter’s current stock price, Twitter’s board has a duty to shareholders to try to see the deal through, or at least to get as much money out of Musk as possible. And the only way a court will side in its favor is if Twitter shows it is making a good faith effort to complete the agreement.

Alternatively, Twitter could negotiate a lower price for the deal or a settlement that allows Musk to walk away — and hope that its shareholders don’t disapprove. Or Musk could win and walk away, leaving Twitter with nothing, or worse. Deal or no deal, Musk remains one of Twitter’s largest shareholders, but that too could change if he chooses to wash his hands of the company, with potential ripple effects for the company’s other shareholders…

“It’s hard to imagine how the company is going to get itself together and go forward” regardless of how the suit resolves, said Carl Tobias, a professor at the University of Richmond School of Law. “It may just not have a very happy resolution, unfortunately.”…

“It’s going to be a very messy litigation,” said Kenneth Henderson, a partner at law firm Bryan Cave Leighton Paisner…

“Twitter isn’t necessarily litigating to go all the way through to the end and get a court order compelling Musk to close,” Henderson said. “They’re litigating to position Twitter in the best place to get as much money out of Musk that they can.”

The next move in this case is a hearing this coming Tuesday on whether or not to grant the expedited trial requested by Twitter. If the judge grants that, it would put Twitter in a stronger position and signal the judge may only be looking at this as Musk trying to bust a contract. If the judge doesn’t grant that request, that could set up the war of attrition CNN Business is suggesting is likely, an outcome that would probably benefit Musk. So we’ll have our first indication of how this is going next week.