Yahoo News Elon Musk Subpoenas Ex-Twitter CEO Jack Dorsey as Takeover Duel Heats Up
On the day Twitter accepted a $44 billion takeover offer in April, former CEO Jack Dorsey said Elon Musk is the “singular solution I trust” for the company’s future.
The endorsement may come back to haunt Dorsey after Musk subpoenaed him on Monday to further a bid to walk away from the deal. The request for documents and communications relating to the number of fake accounts on the platform aim to bolster Musk’s arguments at the heart of the legal duel that he doesn’t have to complete the acquisition he proposed because Twitter misrepresented its user data.
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Dorsey stepped down in November from his perch as head of the company he cofounded as he fielded escalating calls — and criticism — from Republican lawmakers who complained of the suppression of conservative voices on social media. He supported Musk’s acquisition of Twitter, noting that the Tesla mogul’s “goal of creating a platform that is maximally trusted and broadly inclusive is the right one.”
In the subpoena, Musk demanded information relating to the merger going back to January 2019. He mostly seeks documents “reflecting, referring to, or relating to the impact or effect of false or spam accounts on Twitter’s business and operations.” This includes communications reflecting business plans for achieving monetizable daily active user targets, how Twitter calculates the metric and whether the company has used any other metric.
In a countersuit, Musk argues that Twitter committed fraud by stonewalling his attempts in violation of the merger agreement to verify the company’s estimate that fake accounts make up less than 5 percent of its monetizable daily active users. He claims he relied on the alleged misrepresentation when he agreed to purchase Twitter, calling on the Securities and Exchange Commission to investigate the company over the issue.
Twitter maintains that its SEC filings were accurate and that Musk is looking for an excuse to wriggle out of the deal.
As part of the subpoena, Musk seeks information from Dorsey over how Twitter detects fake accounts and whether his compensation is affected by the number of daily active users. He also served notices of subpoena on Kayvon Beykpour, former head of consumer product at Twitter, and Bruce Falck, former head of product revenue.
With a five-day trial set to start on Oct. 17, the case is quickly heating up. Delaware Chancery Court Judge Kathaleen St. J. McCormick ordered Twitter on Aug. 15 to produce documents from Beykpour on spam and bot accounts. She refused to force the company to hand over files from 21 other people that Musk claimed were key witnesses on the issue of fake accounts. In filings this month, Musk accuses Twitter of hiding the names of executives knowledgeable about the issue.
Both sides have issued a flurry of subpoenas to investments firms, banks and executives for information and communications about the deal. The list includes Silicon Valley venture capitalists Chamath Palihapitiya, David Sacks, Steve Jurvetson, Marc Andreessen, Jason Calacanis and Keith Rabois, among others.
