Elon Musk Wins a Reprieve as Twitter’s Former Head of Security Alleges Chronic Mismanagement and the Propensity to Mislead Regulators at the Company

Elon Musk

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The ongoing legal dispute between Elon Musk and Twitter descended into a farcical game of one-upmanship quite a while back, with both parties launching suits and counter-suits against each other, replete with an entire repertoire of mud-slinging.

At the heart of this dispute lies Elon Musk's unwillingness to pay a hefty premium to acquire what many believe is an ailing company. In order to justify his decision to simply walk away from a formal agreement to acquire the social media giant, Musk continues to cast aspersions on Twitter's repeated claims that the quantum of bots or fake accounts that populate its platform constitute less than 5 percent of its monetizable Daily Active Users (mDAUs) metric. For its part, Twitter maintains that Musk had waived off due diligence during the negotiations phase, which precludes any further investigation into the issue of spam accounts at this stage. The social media giant, therefore, believes that there is no legal impediment to Musk's consummation of the takeover agreement and has taken a generally dim view of the CEO of Tesla's efforts to wriggle out of a legally binding agreement.

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The legal showdown between Elon Musk and Twitter is currently scheduled for October in the Delaware Court of Chancery. Meanwhile, Twitter has issued sweeping subpoenas against the CEO of Tesla's associates in the deal, including investors such as Chamath Palihapitiya, David Sacks, Steve Jurvetson, Marc Andreessen, Jason Calacanis, and Keith Rabois. The social media giant has also subpoenaed financial institutions that have been assisting Musk in the deal. For his part, Musk has countersued Twitter, asserting that he had a fiduciary duty toward Twitter's shareholders on the back of his 9.6 percent stake in the social media giant. Additionally, Elon Musk has also subpoenaed his friend and former CEO of Twitter, Jack Dorsey, in order to fish out additional information related to Twitter's real bot count.

This brings us to the crux of the matter. In a major boost to Elon Musk's argument that Twitter is chronically mismanaged, thereby necessitating a hefty discount to the agreed-upon takeover price, a bombshell whistleblower complaint by the social media giant's former chief security officer has now come to the fore. As per the reporting by Washington Post, the complaint was sent by Peiter "Mudge" Zatko to Congress and federal agencies back in July. Zatko alleges chronic mismanagement at Twitter, as evidenced by security lapses, technical shortcomings, and non-compliance with an already-signed privacy agreement with the Federal Trade Commission (FTC). According to Zatko, he was fired back in January after he repeatedly raised concerns on these counts.

In what might appear to be music to Elon Musk's ears, Zatko alleges that these security lapses constitute a threat not only to Twitter users' personal information but also to national security and democracy. Zatko also maintains that Twitter allows its staff too liberal of an access to private information, that too without adequate oversight. The former security tzar maintains that some of Twitter's senior-most executives have been trying to cover up serious security lapses at the company, including instances where foreign intelligence elements were able to gain access to private information at Twitter. Moreover, Zatko has alleged that Twitter does not adequately handle the data of deleted accounts, with the company even losing track of troves of data in some cases.

Finally, as a punchline, Zatko maintains that Twitter's executives have neither the resources nor the willingness to investigate the true quantum of bots that populate the social media platform.

All of these bombshell allegations play nicely with Elon Musk's overarching argument against Twitter – that the company does not deserve the agreed-upon premium in light of its chronic shortcomings. Twitter, however, does have an ace up its proverbial sleeves – the fact that Musk waived off due diligence during the negotiations phase. Meanwhile, the drama continues.

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