Tesla CEO Elon Musk is asking Twitter co-founder Jack Dorsey to hand over documents tied to a legal fight that will determine whether Musk will have to buy the social media company for $44 billion.
On Monday, attorneys for Musk filed court documents showing they had issued a subpoena requiring Dorsey to share documents on Twitter’s fake accounts, an issue at the heart of Musk’s rationale for backing out of the $44 billion agreement to acquire the company.
In the filing, Musk’s lawyers ask for any documents or communications Dorsey has relating to “monetizable daily active users” or mDAU — a key metric in the fight between Musk and Twitter.Musk tried to terminate the deal on the grounds that he suspected Twitter suffered from a higher prevalence of fake accounts than the less than 5% of its mDAUs that it reported.Twitter sued Musk in an attempt to force the deal, contending that his purported concern over fake accounts was a pretext for backing out.
According to Musk, Twitter failed to turn over enough information about its fake accounts, also known as spam or spam bot accounts, and may have misrepresented the prevalence of those accounts in its regulatory filings.His lawyers characterize the bot data “fundamental to Twitter’s business and financial performance” and necessary to complete the deal.
MIAMI, FLORIDA – JUNE 04: Jack Dorsey creator, co-founder, and Chairman of Twitter and co-founder & CEO of Square speaks on stage at the Bitcoin 2021 Convention, a crypto-currency conference held at the Mana Convention Center in Wynwood on June 04, 2021 in Miami, Florida.The crypto conference is expected to draw 50,000 people and runs from Friday, June 4 through June 6th.(Photo by Joe Raedle/Getty Images) Twitter says it accurately stated those figures and was not required under the merger agreement to supply Musk with any additional details.
Specifically, Musk is asking Dorsey, Twitter’s former CEO, to turn over documents and communications concerning the effects of false or spam accounts on Twitter’s business and operations.
The Tesla CEO asks for more information related to Twitter’s use of mDAU as one of its “Key Metrics” in its SEC filings, such as the relationship between mDAU and Twitter’s present and future revenue projections, and for information explaining any ties between mDAU and executive or director compensation.
While Musk’s skepticism over mDAU numbers have been the focus of his defense and a counterclaim filed against Twitter, his lawyers also seek to have Dorsey disclose any documents and communications related to Twitter’s use of other metrics, such as daily active users, monthly active users, daily user engagement, monthly user engagement, and advertisement engagements.
Story continues Musk’s lawyers further target any methods that Twitter has used to detect and label accounts as spam or false.
Unless Twitter and Musk settle their dispute, the Delaware Chancery Court’s chief judge, Kathaleen McCormick, will be left to interpret the contract.A trial is set to begin Oct.17.
Alexis Keenan is a legal reporter for Yahoo Finance.
Follow Alexis on Twitter @alexiskweed .
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