On the morning of September 23, Beijing time, it was reported that the “litigation battle” between Tesla boss Elon Musk and Twitter took a new turn. Twitter previously paid a whistleblower $7.8 million in severance compensation, and a judge said Thursday that Musk could use problems with the severance package as part of his exit from Twitter’s $44 billion takeover deal a reason.
After Twitter sued Musk, Musk quickly countersued. On Thursday, Delaware Judge Kathaleen St. J. McCormick, who oversees the case, ruled that Musk could amend the counterclaim to add information about Twitter’s severance pay to whistleblower Peiter Zatko.
Musk alleges that Twitter paid Zatko his severance package without his approval, a move that violated the acquisition agreement signed by the two parties.
In July, Twitter took Musk to court, hoping the court would compel Musk to buy the company for $54.2 a share. The lawsuit will go to trial on October 17 for a five-day trial.
According to reports, the judge’s ruling is quite favorable for Musk’s side. The lawsuit battle has drawn public attention, and the court has issued a series of subpoenas, including one from Musk’s lawyers against Twitter co-founder and former CEO Jack Dorsey. Previously, Dorsey strongly supported Musk’s acquisition of Twitter.
“Whistleblower” Zatko previously served as Twitter’s head of information security. He recently reported many security issues within Twitter to the U.S. government. The number of accounts raised questions, but was ignored by management.
Zatko, who participated in a hearing before the U.S. Senate Judiciary Committee this month, said the cybersecurity issues within Twitter are so serious that they have even threatened U.S. national security.
In response to Zatko’s report, Twitter said the person had been fired earlier this year for performance issues. In addition, Zatko’s report on Twitter is full of “false descriptions” about the company, personal privacy protection and data security regimes, lacks important background information, and contains many inaccuracies and inconsistencies.
Twitter officials have yet to comment on the judge’s ruling on Thursday. Twitter’s lawyers did not object to Musk’s request to add Zatko’s severance package to the content of the counterclaim.
On Thursday, Judge McCormick said that Delaware law allows free modification of the indictment as long as it is a trial in favor of the lawsuit, as long as there is a factual basis.
Musk originally planned to buy Twitter for $44 billion, but later changed his mind. He believes that there are a large number of bot accounts and fake accounts among Twitter’s 230 million total users, but Twitter has not provided him with accurate information. Twitter countered that it was nothing more than an excuse for Musk, who is now starting to “regret” after signing the deal.
Earlier this month, Judge McCormick allowed Musk to amend the complaint to add the Twitter security issues Zatko mentioned, such as those about computer security, personal privacy protections and bot accounts. However, Musk had also hoped that the court would delay the trial so that more whistleblowers could be mined, but this request was not supported by the judge.
Zatko’s whistleblower was also mentioned at a Senate Judiciary Committee hearing on Tuesday. Federal Trade Commission (FTC) Chair Lena Khan said she was alarmed by Zatko’s report that Twitter had signed an agreement with the FTC in 2011 to strengthen the platform’s security and respect user privacy, but whether it By complying with this agreement, Twitter misled regulators.
Lena said some companies are taking the FTC’s order as advice, which is a serious problem, and now the FTC has a plan in place for tougher measures. She also said that the agreement signed by Twitter and the FTC in 2011 is already a legacy issue, and the FTC team is preparing to gradually abandon the agreement and develop a clearer regulatory system that defines the detailed boundaries of the company’s behavior.
Analyst Sheng said that Lena’s testimony before the U.S. Congress is not conducive to Musk, and Musk cannot use Twitter’s non-compliance with the security agreement with the FTC as a reason to cancel the acquisition agreement. The analyst said Lena’s rhetoric made it difficult for the presiding judge to say that “subsequent FTC penalties will be a material adverse effect on the acquisition agreement.”
In this case, Musk went to great lengths to emphasize that Twitter had not been transparent about bot accounts and fake accounts, and that Twitter also had cybersecurity chaos reported by Zatko, and that these issues were enough to be a “material adverse effect” of changing the acquisition agreement. Under Delaware law, Musk has the right to walk away from the deal.
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