Elon Musk and Twitter subpoena whistleblower as $44bn buyout dispute drags on

Peiter Zatko, Twitter’s former head of security, said last week that the platform had 'egregious deficiencies' in its defences against hackers

Elon Musk's twitter account is seen on a smartphone in front of the Twitter logo. Reuters
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Lawyers for both Elon Musk and Twitter subpoenaed a whistleblower who said the social media platform’s executives did not know or care to find out how many accounts were spam or robot accounts as the billionaire seeks to cancel a $44 billion buyout of the company.

Peiter Zatko, Twitter’s former head of security, said in a whistleblower complaint last week that the company had “egregious deficiencies” in its defences against hackers and lacked concern for privacy issues.

Mr Zatko also said he raised his concerns about the number of bots in the system and claimed those apprehensions were ignored the company's executives.

Mr Musk is seeking evidence from Mr Zatko to bolster his legal argument so that he can walk away from the Twitter deal over the bot issue.

Twitter sued Mr Musk in July to force him to complete his proposed acquisition. Since then, more than 100 people, banks, funds and other companies have been subpoenaed in the Delaware suit, with a trial scheduled to begin on October 17.

The billionaire filed a court document Monday saying he had subpoenaed Mr Zatko, followed later in the day with a similar filing by Twitter.

Mr Zatko is also scheduled to give evidence before a US Senate committee on September 13 about his allegations.

A Twitter representative declined to comment on Monday. Last week, the company called Mr Zatko’s complaint “a false narrative about Twitter and our privacy and data security practices that is riddled with inconsistencies and inaccuracies and lacks important context”.

Whistleblower Aid, the group representing Mr Zatko, did not immediately respond to a request for comment.

The subpoenas are aimed at getting Mr Zatko to hand over documents about his bot concerns and anything else he knows about Twitter’s metrics for evaluating customers that can be “monetised” for advertising purposes.

The information demand also focuses on what Mr Zatko knows about Twitter’s securities filings, particularly its statements about bots making up about 5 per cent of its customer base, according to court documents.

Mr Musk’s lawyers said last week they had already subpoenaed Mr Zatko. However, no record of the information demand was on the court docket until Monday.

In the complaint, Mr Zatko said Twitter’s “Integrity Team” was reluctant to dig deeply into how many bot accounts were included in the platform’s customer base.

That left the former security executive thinking “the company had no appetite to properly measure the prevalence of bots, in part because if the true number became public, it could harm the company’s value and image”.

Elon Musk's legal team is demanding to hear from a whistleblowing former Twitter executive who could help bolster Musk's case for backing out of a $44bn deal to buy Twitter. AP

Mr Musk has argued that Twitter’s regulatory disclosures putting spam and bot accounts at no more than 5 per cent of its customer base were misleading.

The Tesla chief executive has made public some of his analysis of the issue, which holds that a full third of Twitter’s more than 230 million users may fall into the bot category.

If that is the case, Mr Musk contends it creates a material adverse event that justifies the move to cancel his $54.20-a-share deal under Delaware law.

The state is the corporate home of more than half of US public companies, including Twitter and Tesla, along with more than 60 per cent of Fortune 500 businesses. Its chancery court judges are business law experts who hear cases on a fast-track basis.

Also on Monday, depositions were set for Patrick O’Malley and Kristen Salen, two advisers of Mr Musk on the Twitter deal, for later this week.

Updated: August 30, 2022, 8:01 AM
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