After announcing the abandonment of his bid to acquire the Twitter network on the grounds that the platform’s administrators were hiding a huge number of fake accounts in order to inflate the company’s real value, Elon Musk is now the target of a lawsuit filed by the company’s own shareholders, seeking to force the SpaceX chief to complete the acquisition as per the original offer of $54.2 per share, or $44 billion.
According to the charges filed in the case, Musk “refuses to honor his obligations” to Twitter and stakeholders by reneging on the deal. At the same time, the plaintiffs discredit the primary reason given for abandoning the deal, namely, a lack of transparency regarding the number of spam accounts on the platform. Insinuating that the head of SpaceX knew about the problem they now allege, Twitter shareholders point to an earlier tweet distributed from the official Elon Musk account, in which he specifically alleges the problem of spam bot accounts and promises to fix it after the deal is official:
If our twitter bid succeeds, we will defeat the spam bots or die trying!
– Elon Musk (@elonmusk) April 21, 2022
The opening of the lawsuit cites other instances where Musk states his plan to get rid of spam accounts by buying Twitter.
One is a text message from Musk to Twitter board chairman Bret Taylor on April 9, the day Musk announced he wanted to buy the social media company, in which he said that “‘removing fake users’ from the platform had to be done in the context of a private company,” according to the lawsuit.
There was also an official press release announcing the April 25 deal to take over Twitter, which reaffirmed Musk’s intentions to “defeat the spam bots.”
According to the plaintiffs, the real reason Musk backed out of his plans was the downturn in the tech market and worsening global economic conditions, including affecting his own business and the credit terms through which he was going to raise the funds for the deal. So instead of using his personal wealth to honor his promise, Musk preferred to look for an excuse to walk away from the deal.
Another reason why the same Twitter shareholders who vehemently rejected the sale of the platform are now seeking in court to get the deal completed is the fall in Twitter shares, with the forced sale at a price per share that would now be vastly overvalued becoming much more attractive. True enough, it is also true that Elon Musk’s change of heart, made by exposing as publicly as possible a rather serious problem with the microblogging platform, has contributed to a vicious circle in which Twitter shareholders have the most to lose.
“Musk’s strategy is a model of hypocrisy,” Twitter’s lawyers argued.
This wouldn’t be the first time Elon Musk has been taken to task for an uninspired comment made on Twitter. In 2018, after Musk tweeted that he “secured financing” to take Tesla public at $420 per share, the Securities and Exchange Commission (SEC) sued Musk for misleading investors. Shortly after the incident, Musk was forced to step down as chairman of Tesla , the company he founded, and pay a $20 million fine in a settlement agreement.