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Elon Musk’s legal team filed their official response to the lawsuit on Twitter

Elon Musk says on Twitter that he wants out of his deal to buy it
Written by boustamohamed31

In responding to Twitter’s complaint, which includes counterclaims against the company, Musk’s team is trying to refute the company’s claims that the Tesla CEO is dishonestly trying to get out of the deal. His team reiterates accusations that Twitter misreported the number of fake and spammy bot accounts on its platform — a central charge Musk made to justify ending the acquisition deal after initially citing a desire to “beat the spam bots” as a reason for buying the company.

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

Based on this analysis, Musk claims that in the first week of July, spambots accounted for 33% of visible accounts on the platform and about 10% of Twitter’s monetizable daily active users, or mDAU. (Twitter, for its part, consistently reports that spam and fake bot accounts make up less than 5% of its mDAU.)

Twitter has repeatedly denied Musk’s claims about the proliferation of spambots on the platform. Twitter Chairman Brett Taylor tweeted on Thursday evening a link to the company’s response to his response and counterclaims. (Musk’s team had filed a confidential version of the response last week to give Twitter (TWTR) time to review it for company information that needs to be redacted before making it publicly available on Friday.) Taylor called Musk’s claims “factually inaccurate, legally insufficient and commercially irrelevant.”

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

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 first agree to a settlement. A five-day trial is due to begin on October 17 after Twitter pushed to speed up the proceedings.

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

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 reports publicly to advertisers and shareholders to showcase its growth.

Musk claims his estimates show that only a small fraction of users that Twitter considers mDAUs actually generate significant revenue for the company by viewing and engaging with ads, arguing that the measure isn’t really that good of an indicator of future potential for revenue growth and long-term performance, as Twitter’s public filings suggest.

“Twitter also does not publish the methodology it follows to determine its mDAU count, or how it excludes accounts that cannot be monetized from that metric,” Musk’s response said. “Thus, it is extremely difficult for any third party to fully recreate Twitter’s mDAU calculations.”

Musk’s response claimed that Twitter management had incentives to report “high mDAU numbers to drive investor interest” and because the CEO’s compensation structure is based in part on mDAU.

The trial between Twitter and Elon Musk now has a date

In their response, Musk’s team explains that the billionaire is concerned about the spambot problem because “converting non-revenue users to more active users… is not an easy task.” Musk’s team adds: “A company focused on adding these active users would invest significant resources in trying to improve Twitter to maximize engagement, such as by effectively targeting spam or fake accounts.”

Twitter said in its response to Musk’s counterclaims that the mDAU number was never intended to show how many users are generating significant revenue by interacting with ads, but rather shows the number of actual users that can be monetized through impressions of advertisements. He also noted that Musk’s mDAU-related claims were not included in his original termination filing and “are a newly invented position for litigation.”

The company also continues to maintain that the bot issue is not and never was related to the closing of the acquisition deal. “Musk has received a massive amount of information from Twitter for months and has been unable to come up with a valid excuse to walk away from the contract,” Twitter’s response said.

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 redactions to Musk’s response, it chose not to. (Twitter had previously sent a letter to the judge overseeing the case, asking it to ensure that Musk’s team did not send the public response early, so that they would have enough time to review it for possible redactions.)

“We have chosen not to redact any information — we fully stand by 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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