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

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In the response to Twitter’s complaint, which includes counterclaims against the company, Musk’s team attempts to refute the company’s allegations that Tesla’s CEO is unfairly trying to walk away from the deal. His team repeats allegations that Twitter misreported the number of fake bot and spam accounts on its platform — a central accusation Musk made to justify terminating the acquisition deal after originally citing a desire to “defeat spambots” as a reason to buy the company.

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

Based on this analysis, Musk alleges that in the first week of July, spambots made up 33% of visible accounts on the platform and about 10% of Twitter’s monetizable daily active users, or mDAU. (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 spambots on the platform. Chairman of Twitter’s Board of Directors, Bret Taylor tweeted Thursday evening a link to the company’s response to its response and counterclaims. (Musk’s team had filed a confidential version of the response last week to give Twitter (TWTR) it’s time to review it to find information about the company that should be redacted, before going public on Friday.) Taylor called Musk’s claims “factually inaccurate, legally insufficient and commercially irrelevant.”

In its response, Twitter disputes Musk’s analysis of spambots, saying the “firehose” of data he used “reflects many Twitter accounts that are not included in mDAU” and that the Botometer tool that he used relies on a different process than the company to determine if an account might be a bot. He added that Botometer “earlier this year framed Musk himself as very likely to be a bot.”

The back and forth between Twitter and Musk provides an overview of the arguments each side will make when the case goes to trial, assuming they don’t agree to a settlement first. A five-day trial is set to begin on October 17, after Twitter pushed to speed up the proceedings.

Musk last month proposed to end his deal to buy Twitter, accusing the company of violating 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, alleging he violated the agreement and asking a court to hold him to the agreement.

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 says his ratings show only a small portion of users that Twitter considers mDAU actually generates significant revenue for the company by viewing and interacting with ads, alleging that the metric isn’t actually as big of a deal. good indicator of future and long-term revenue growth potential. performance as implied by Twitter’s public documents.

“Twitter also does not publish the methodology it follows to determine its mDAU count, or how it excludes non-monetizable accounts from this metric,” Musk’s response reads. “Thus, it is extremely difficult for a third party to completely recreate Twitter’s mDAU calculations.”

Musk’s response alleges that Twitter management has an incentive to report “a high number of mDAUs to generate investor interest” and because its executive compensation structure is based in part on the mDAU.

Lawsuit between Twitter and Elon Musk now has a date

In its response, Musk’s team explains that the billionaire is concerned about the spambot problem because “the transition from users who do not generate any income to more active users… is not an easy task”. Musk’s team adds, “A company that is focused on adding these active users would invest substantial resources trying to improve Twitter to maximize engagement, such as effectively targeting spam or fake accounts. “

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

The company also continues to assert that the bot issue is not, and never was, related to the conclusion of the acquisition agreement. “Musk has received massive amounts of information from Twitter, for months, and has been unable to come up with a valid excuse to back out of the contract,” Twitter’s response reads.

In a letter to Twitter employees included in Friday’s regulatory filing, Twitter General Counsel Sean Edgett said that while Twitter had the opportunity to request redactions in Musk’s response, it chose not to. not do it. (Twitter previously sent a letter to the judge handling the case asking him to make sure Musk’s team doesn’t file the public response sooner so they have enough time to review it for possible redactions.)

“We have chosen not to remove any information – we fully support our SEC filings, the methodologies we use to calculate mDAU, and our statements regarding the percentage of spam accounts on our platform,” Edgett said in the letter.

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