Elon Musk’s legal team filed its official response to Twitter’s lawsuit

In the response to Twitter’s complaint, which includes counterclaims against the company, Musk’s team tries to refute the company’s accusations that the Tesla CEO is unfairly trying to get out of the deal. His team repeats accusations that Twitter has misrepresented the number of fake accounts and spam bots on its platform, a central accusation Musk has made to justify rescinding the acquisition deal after originally citing a desire to “defeat spam bots” as a reason for buying the company.

Musk’s response, which was released publicly on Friday, states that the billionaire’s team conducted an analysis of fake and spam accounts on the platform using data provided by Twitter’s “fire hose” of tweets and a public tool called Botometer. created by researchers at Indiana University. . He did not elaborate further on the process of that evaluation, adding that his analysis was “constrained” by Twitter’s lack of time and information.

Based on that analysis, Musk alleges that during the first week of July, spam bots accounted for 33% of visible accounts on the platform and about 10% of Twitter’s monetizable daily active users, or mDAUs. (Twitter, for its part, has consistently reported that spam and fake bot accounts account for less than 5% of its mDAU.)

Twitter has repeatedly denied Musk’s claims about the prevalence of spam bots on the platform. Twitter Chairman of the Board Bret Taylor tweeted on Thursday night a link to the company’s response to your response and counterclaims. (Musk’s team had submitted a confidential version of the response last week to give Twitter (TWTR) it’s time to review it for company information that needs to be redacted, before making it available to the public on Friday). Taylor called Musk’s claims “truly inaccurate, legally insufficient and commercially irrelevant.”

In its response, Twitter disagrees with Musk’s analysis of spam bots, saying that the “fire hose” of data he used “reflects many Twitter accounts that are not included in mDAU” and that the Botometer tool you used relies on a different process than the company to determine if an account may be a bot. He added that Botometer “earlier this year designed Musk himself as very likely to be a bot.”

The back and forth between Twitter and Musk offers a preview of the arguments each side will present when the case goes to trial, assuming they don’t settle first. A five-day trial is scheduled to begin on October 17, after Twitter pushed to speed up the process.

Musk moved last month to terminate his deal to buy Twitter, accusing the company of breaching the deal by making misleading claims about the number of bot accounts on its platform and withholding information he says could help him assess the problem. . Days later, Twitter filed a lawsuit against the billionaire, claiming he had violated the agreement and asking a court to enforce it.

In addition to doubling down on concerns about bot accounts, Musk’s responses also criticized Twitter’s use of monetizable daily active users, a metric that Twitter publicly reports to advertisers and shareholders to represent its growth.

Musk claims that his evaluations show that only a small portion of users Twitter considers mDAU to actually generate significant revenue for the company by viewing and interacting with ads, claiming that the measure is actually not such a good indicator of growth potential. of future and long-term income. performance as implied by public Twitter presentations.

“Twitter also does not publish the methodology it follows to determine its mDAU count, or how it excludes non-monetizable accounts from that metric,” Musk’s response states. “Therefore, it is extremely difficult for any third party to fully recreate Twitter’s mDAU calculations.”

Musk’s response alleges that Twitter’s leadership has an incentive to report “high mDAU figures to stoke investor interest” and because its executive compensation structure is based in part on mDAU.

The trial between Twitter and Elon Musk already has a date

In their response, Musk’s team explains that the billionaire is concerned about the spam bot issue because “transitioning users who don’t generate any revenue to more active users…is not an easy task.” Musk’s team adds: “A company focused on aggregating these active users would spend substantial resources trying to improve Twitter to maximize engagement, for example by effectively targeting spam or fake accounts.”

Twitter said in its response to Musk’s counterclaims that its mDAU count was never intended to show how many users generate significant revenue by interacting with ads, but instead shows the number of actual users who could be monetized by showing them ads. He also noted that Musk’s mDAU-related claims were not included in his initial termination filing and “are a newly invented litigation position.”

The company also goes on to state that the bot issue is not, and has never been, related to the completion of the acquisition deal. “Musk has received massive amounts of information from Twitter for months and has been unable to find a valid excuse to terminate the contract,” Twitter’s response reads.

In a letter to Twitter employees that was included in Friday’s regulatory filing, Twitter General Counsel Sean Edgett said that while Twitter had the opportunity to request redaction of Musk’s response, it chose not to. (Twitter had previously sent a letter to the judge overseeing the case asking him to ensure that Musk’s team did not file the public response early so they had enough time to review it for possible redactions.)

“We chose not to redact any disclosures: We fully support our filings with the SEC, the methodologies we use to calculate mDAU, and our statements about the percentage of spam accounts on our platform,” Edgett said in the letter.

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