the money game

Twitter Just Went Into Ludicrous Mode in Its Legal War Against Elon Musk

Photo: Jim Watson/AFP via Getty Images

When Twitter sued Elon Musk last month in Delaware Chancery Court, the 62-page poop-emoji-laden suit brought up Musk’s many requests for data that, the company claimed, were irrelevant except as a pretext for wrongfully blowing up the $44 billion deal. Musk initiated this takeover in April but has since been trying to get out of it, claiming there are more spambots than the company lets on in its public filings, which make it less valuable than the price he agreed to pay for it. Data about tweets, users, likes, retweets, and other digital interactions have been central to the Musk camp’s strategy that they can get out of this, either by finding something wrong with how Twitter is run or by pushing its board into an untenable position in which it is forced to breach a legal agreement. With a brisk 11 weeks to go before the suit hits the courtroom, it turns out that Musk’s strategy of burying his opponent in information requests is a pretty good one — but it may be better suited to his rival.

Over the weekend, Twitter sent subpoenas to 17 Wall Street bank entities that have helped Musk put together the deal. The Washington Post reported that the company then followed that on Monday with further requests to some of his closest allies — including those who are pledging money for the acquisition, and others whose involvement isn’t exactly clear — including venture capitalist Marc Andreessen, Jason Calacanis, Keith Rabois, and the so-called SPAC king Chamath Palihapitiya. One investor on the receiving end of a subpoena, Palantir co-founder Joe Lonsdale called the request a “giant harassing fishing expedition.” Another, David Sacks, suggested on Twitter he would fight it.

The volume of information requested is huge, as you may expect for a deal like this: every pertinent text message, email, voice-mail, DM, and whatever other way they may have communicated. The requests cover everything from basic discussions over debt financing to any conversations with Bob Swan, the former Intel CEO who was booted from Team Musk for not being “on the same wavelength.” To get a sense of the sprawl, the legal publication The Chancery Daily has been posting screengrabs of the requests, which is enormously helpful for the layperson (and a New York City–based reporter) forced to navigate the byzantine Delaware court docket system.

The Chancery Daily helpfully sent me the filings for Morgan Stanley’s subpoena, though Twitter is asking for similar information from all of the lenders. There are 21 different data requests, but the fifth has the most potential for damage. To cut through the legalese here, Twitter wants Morgan Stanley to hand over any communications it has had with Musk about two sections of the merger agreement that he has tried to use as a way to get out of the deal — the ones about information requests and financing. The filings hone these requests to include any analysis drawn from the more than 49 tebibytes of data that Twitter handed over from its so-called fire hose of data, which Musk had received in response to his attempts to root out the bots.

This is important because, essentially, Twitter is calling Musk’s bluff. Recall that Musk had previously dared Twitter to take him to court, threatening to reveal some hidden and terrible truth about the number of bots on the platform in some kind of QAnon-like Great Awakening reveal where the scales would fall from everyone’s eyes and we would finally see that it’s all fake. (Amazingly, Twitter claims in its lawsuit that it actually gave Musk a “detailed summary” of how it measures bots but that he later admitted to not even looking at it.) The thing is, while bots are obviously a problem on Twitter — something the company’s current CEO has posted about — Musk’s camp hasn’t publicly presented any evidence that it rises to the level of an issue that should blow up the deal. The Post story floats that the strategy behind the VCs getting subpoenas is to find out what positive things Musk had to say about Twitter before deciding that he didn’t want to go through with it anymore. And that gets at the heart of the legal drama so far, early in the second act though it may be. Musk has since filed a response to the suit, which remains under seal, so maybe he really does have some ace up his sleeve. But Twitter is betting its data will ultimately help it win the day.

This story was updated to include new information from the Washington Post about further subpoenas.

Twitter Went Into Ludicrous Mode in Elon Musk Suit