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Elon Musk has suffered a number of setbacks recently in his attempt to legally extricate himself from the Twitter takeover agreement. However, a new whistleblower might just cast enough aspersions on Twitter's bot-related claims to provide the CEO of Tesla with a graceful exit.
As per the reporting by NY Post, a second whistleblower is currently mulling over the implications of testifying at the upcoming legal showdown between Elon Musk and Twitter, scheduled to commence on the 17th of October at the Delaware Court of Chancery. The would-be whistleblower, should he decide to become a part of the trial, is likely to cite an internal study conducted by Twitter a few years back, which had found that bots or fake accounts constituted as much as 30 percent of the platform's daily active users. In an interview with NY Post, the second whistleblower recalled that Twitter executives had laughed when they were informed about the study's findings, and said:
"We have always had a bot problem."
Bear in mind that the first Twitter whistleblower, who goes by the name Pieter "Mudge" Zatko, was the social media giant's security tzar until January 2022, when he was fired for allegedly raising the issue of chronic mismanagement at Twitter, including security lapses, technical shortcomings, and non-compliance with an already-signed privacy agreement with the Federal Trade Commission (FTC). Mudge has alleged that Twitter's executives have neither the resources nor the willingness to investigate the true quantum of bots that populate the social media platform.
However, as we had noted in a recent post, Twitter has likely dotted all of the proverbial i's from a legal standpoint, creating significant hurdles for Elon Musk in the process. In order to justify his walking away from the agreement to acquire Twitter, Musk claims that the recent allegations by Mudge constitute a Material Adverse Effect – a materiality threshold to measure the negative effect of an event on the target business or a contract. Moreover, the CEO of Tesla also needs to show that Twitter made a fraudulent statement vis-à-vis the quantum of bots that populate its platform.
Elon Musk's stance, however, faces two major challenges. First, Twitter's legal team recently disclosed that the two independent experts appointed by Musk to gauge the quantum of bots or fake accounts that populate the social media platform actually negated the claims made by the CEO of Tesla, who at one point had claimed that as much as 90 percent of the engagements on Twitter might have been bot-driven. Specifically, Cyabra and CounterAction have now concluded that the quantum of fake accounts on Twitter was 11 percent and 5.3 percent, respectively, in early July.
Second, Twitter uses monetizable Daily Active Users (mDAUs) as its key criterion to gauge user growth, which is very fuzzily defined in Twitter's own documents. As an illustration, this metric includes anyone who can potentially see ads or paid Twitter products. Consequently, even if the second whistleblower's claims are found to hold water, the implications of this discovery on the platform's mDAUs metric remain unclear.
Nonetheless, the second whistleblower's formal allegations, should they materialize in court, will provide a sizable psychological boost to Elon Musk's overarching allegations against Twitter, which recently suffered a major blow from the disclosure of bot-related findings by Cyabra and CounterAction.
