Musk Cites Whistleblower Complaints In New Filing Seeking To Cancel Twitter Deal

Topline

Billionaire and Tesla CEO Elon Musk in a filing on Tuesday cited complaints raised by a whistleblower about Twitter’s security problems as one of the reasons behind his attempt to scrap his planned $44 billion acquisition of the social media company, a week after the issues were first flagged by the company former head of cybersecurity Peiter Zatko.

Musk cited a recent whistleblower complaint by a former Twitter executive as one of the reasons … [+] behind him terminating the planned acquisition of the company.

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Key Facts

In a new SEC filing on Tuesday, Musk informed Twitter’s legal team about additional reasons behind his attempt to scrap the high-profile acquisition, pointing to “certain facts” that “have since come to light” following Musk’s initial move to terminate the deal—and pointing to the issues raised by Zatko and Twitter’s alleged refusal to deal with them.

In the filing, Musk also accuses Twitter of failing to comply with its 2011 consent decree with the Federal Trade Commission—where the company agreed to step up user privacy and security.

Musk also cites allegations made by Zatko about Twitter’s leadership ignoring its security issues, alleged infringement of third-party intellectual property and its purported decision to hand the Indian government unfettered access to its user data.

The filing claims if Zatko’s allegations are true, Twitter is in breach of the merger agreement it signed with Musk as they would pose “material, if not existential, consequences” to the company’s business.

What To Watch For

The latest filing comes a month and a half before Twitter’s lawsuit against Musk’s cancellation of the deal goes to trial before a court in Delaware. The five-day trial starting in October will determine if Musk will be able to walk away from the deal or be forced to acquire Twitter, as per the original agreement. The latest revelations by Zatko are likely to help Musk’s case as he has continued to accuse Twitter of failing to act against spam or fake accounts.

Key Background

Last week, Zatko accused Twitter of misleading its investors, users and regulators about the state of the platform’s security and the magnitude of its problem with spam or bot accounts. Zatko filed a complaint against the company with the Department of Justice, the SEC and the FTC alleging Twitter had misled the FTC about its user security and privacy measures—likely violating its 2011 deal with the agency. Zatko claims he was fired by Twitter CEO Parag Agrawal in January after clashing with him over the company’s alleged decision to ignore issues he had raised. Twitter has dismissed the allegation made by Zatko, calling them “foundationally, technically and historically inaccurate.” Zatko has been ordered to depose before the Senate Judiciary Committee in a hearing on September 13.