Twitter shares slumped to $38 before erasing almost all losses, after Elon Musk’s increasingly desperate lawyers sent a termination letter to the social media company, citing the recent accusations from a Twitter whistle-blower as a new reason to end the $44 billion takeover of the social media platform.
In a filing early Tuesday, Musk’s law firm said the allegations by Zatko, including “egregious deficiencies” in the platform’s defenses against hackers and privacy issues, meant that Twitter had breached the conditions in the merger agreement.
— T(w)itter Takeover News (@TitterTakeover) August 30, 2022
Peiter Zatko, Twitter’s ex-head of security, claimed he raised questions about severe shortcomings in the social media company’s handling of users’ personal data, including running out-of-date software and that executives had withheld information about breaches and lack of protections for user data. Lawyers for both Musk and Twitter have subpoenaed Zatko, who said the social-media platform’s officials didn’t know or care to find out how many accounts were spam or robot accounts.
Musk has been scrambling for months to try and extract himself from the takeover of Twitter, initially leading with the claim that Twitter’s user figures are inflated by millions of robot accounts. The billionaire’s legal team has recently switched its attention to Zatko, who was fired from Twitter earlier this year.
Twitter shares fell as much as 5% in premarket trading on Tuesday before New York exchanges opened, to $38.00, far below Musk’s offer price of $54.20, before recovering most losses as traders realized that Musk’s latest gambit has little chance of overturning the deal.
Twitter, which has maintained that spam and bots make up fewer than 5% of accounts, sued Musk in July to force him to complete his proposed acquisition. Since then, more than 100 people, banks, funds and other firms have been subpoenaed in the Delaware suit, with a trial scheduled to begin Oct. 17.
As Bloomberg notes, the new findings add to Musk’s prior claims, showing that Twitter is in “material noncompliance” with obligations around data privacy and consumer protection laws and that the company is vulnerable to data center failures and malicious actors.