How Twitter’s whistleblower could boost Elon Musk’s legal battle
New whistleblower allegations of widespread security threats and spam concerns at Twitter may give Elon Musk ammunition in his fight to back out of a deal to buy the company.
On Tuesday, an 84-page complaint written by Twitter’s former security chief turned whistleblower, Peiter Zatko, alleged that Twitter prioritizes user growth over reducing spam, did not have a plan in place for major security issues, and that half the company’s servers were running out-of-date and vulnerable software.
The accusations come as the social media company battles Musk in court after he attempted to pull out of a $44bn deal to buy the company. In his decision to back out, Musk cited Twitter’s failure to provide details about the prevalence of bot and spam accounts, making the timing of Tuesday’s revelations “amazing” for his case, said Anat Alon-Beck, a law professor at Case Western Reserve University in Ohio.
“It’s almost like a script from the movies – this is very convenient for Musk,” she said. Musk’s lawyer, Alex Spiro with Quinn Emanuel Urquhart & Sullivan, said on Tuesday that a subpoena had been issued to Zatko for additional information.
Alon-Beck said it was not clear how Musk’s legal team will use the new developments in the case. In order to walk away from the deal with Twitter without paying a $1bn termination fee, Musk has to prove a “material adverse effect”: a clause that requires proving an event significantly reduces the longterm value of an acquisition.
Until now, Musk has relied on accusations that Twitter fraudulently misrepresented the true number of spam and bot accounts on its social media platform, which the company has estimated in corporate filings make up just 5% of accounts. Musk said he relied on those filings when he offered to buy the company. Twitter has alleged that the billionaire was overstating the scope of the issue as an excuse to back out of the deal, saying in a filing that his claims were based on “distortion, misrepresentation, and outright deception”.
But the new whistleblower allegations add another dimension to his argument, said Ann Lipton, a professor at Tulane Law School, as they include additional claims that Twitter failed to disclose weaknesses in its security and data privacy and provide “a different basis for fraud”.
Parag Agrawal, Twitter’s chief executive, told employees in a memo that the company is reviewing the claims. “What we have seen so far is a false narrative that is riddled with inconsistencies and inaccuracies, and presented without important context,” Agrawal said, according to a CNN report.
In a statement to the Guardian, Rebecca Hahn, Twitter’s global vicepresident of communications, said that Zatko’s account lacked “important context”.
“Mr. Zatko’s allegations and opportunistic timing appear designed to capture attention and inflict harm on Twitter, its customers and its shareholders. Security and privacy have long been company-wide priorities at Twitter and will continue to be,” Hahn added.
How, exactly, the report will impact the case will need to play out in court, said Eric Talley, a professor at Columbia Law School. He said the revelations introduce uncertainty to the case rather than dramatically transforming it.
“Volatility is helpful if you’re not playing a strong hand. It creates some possibility that something crazy might happen,” he said. “This doesn’t open a brand new battlefront, it’s adding texture to existing ones.”
The legal battle has continued ahead of a trial beginning in Delaware on 17 October, with both sides continuing to gather evidence. On Monday, Musk subpoenaed former executive Jack Dorsey for additional information.
Twitter has subpoenaed a number of high-profile witnesses as well, including the prominent venture capitalist Marc Andreessen and Paypal founding chief operating officer David Sacks.