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Elon Musk Finds New Reason To End Twitter Deal

Elon Musk, the CEO of Tesla, has once more submitted paperwork to terminate his deal to purchase Twitter. This time, he did so in response to details in a whistleblower complaint made by Twitter’s former head of security.

Musk said his legal team informed Twitter of “additional bases” for terminating the contract in addition to those stated in the initial termination notice delivered in July in a filing with the Securities and Exchange Commission on Tuesday.

Twitter responded to Musk’s attempt to terminate as “invalid and wrongful.”

Twitter has filed a lawsuit against Musk, requesting that the Delaware Chancery Court force him to finalize the $44 billion U.S. deal. The week of October 17 will see the beginning of this crucial trial.

However, Musk’s advisers cited the whistleblower claim by former executive Peiter Zatko in a letter to Twitter Inc. that was added in the filing. 

Before being fired at the beginning of this year, Zatko was Twitter’s head of security, also known by his hacker handle “Mudge. In his complaint to U.S. officials, he claimed that the company had misled regulators about its poor cybersecurity defences and its negligence on the part in trying to dig out fake accounts that spread misinformation.

In a letter to Twitter’s chief legal officer Vijaya Gadde, Elon Musk stated that Zatko’s claims provide further grounds for terminating the agreement

 if the July termination notice “is determined to be invalid for any reason.” 

Billionaire Musk has claimed for months that the company he agreed to buy undercounted its fake and spam accounts, meaning he does not have to go through the deal. 

Twitter’s response

According to Twitter, Musk’s current “purported termination” is “based primarily on statements provided by a third party that, as Twitter has already noted, are riddled with inconsistencies and inaccuracies and lack important context,” the company said in a separate SEC filing.

In light of the upcoming court battle between Twitter and Musk, Zatko was served with a subpoena on Saturday by Musk’s legal team requiring him to participate in what Zatko’s attorneys underlined would be an “involuntary” deposition.

In a prepared statement, Zatko’s attorneys claimed, “He did not make his whistleblower disclosures to the appropriate governmental bodies to benefit Musk or to harm Twitter, but rather to protect the American public and Twitter stockholders.”

Elon Musk may face an uphill battle, says attorney

For the court to be able to rule on both the bot and cybersecurity issues, Twitter is expected to amend its case to incorporate Zatko’s claims. But, according to Boston College law professor Brian Quinn, it could delay the trial because Musk might say he needs more time to prepare.

According to Quinn, the court will have to determine whether the bot or cybersecurity problems are a “material adverse effect” that will affect Twitter’s business for years. It is a challenging legal hurdle to overcome.

Quinn continued saying it seemed Twitter would prevail in the bot dispute, which Twitter disclosed in SEC filings. However, he cautioned that solving the cybersecurity issues raised by Zatko might not be so simple.

Further, Quinn explained the situation as “This is more grist for the mill,” which is not evident, but for the most part, it is a win for Twitter. While Musk still has an “uphill battle” if analyzed closely. 

Presented by CTC News