Elon Musk Cites Shock Twitter Whistleblower Claims as New Reason to Back Out of Takeover Deal

Elon Musk has written to Twitter to cite a whistleblower’s recent accusations as a new reason to scrap his takeover of the social-media platform, a Securities & Exchange Commission filing shows.

The Tesla boss, who is attempting to back out of his unsolicited $44 billion takeover deal, had already subpoenaed the site’s former head of security, Peiter Zatko, after his damning complaint about Twitter’s vulnerabilities last week.

Zatko has claimed Twitter is mishandling users’ personal data and that the company’s senior-most executives had been misleading about the site’s security. In a filing Tuesday, Musk’s lawyers cited the litany of allegations made by Zatko as “additional and distinct bases to terminate” the merger agreement between Musk and Twitter.

Five Takeaways from the Twitter Whistleblower ComplaintANOTHER TWIST

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In July, Musk said Twitter’s inability to show how many spam accounts and bots were on the platform was cause to withdraw from the agreed takeover deal, alleging that Twitter was in “material breach” for making “false and misleading statements” about the problem. In Tuesday’s filing, Musk’s lawyers claimed the allegations in Zatko’s 84-page complaint showed Twitter is in “material noncompliance” with data privacy and consumer protection laws, and that “Twitter is uniquely vulnerable to systemic disruption resulting from data center failures or malicious actors, a fact which Twitter leadership (including its CEO) have ignored and sought to obfuscate.”

“These allegations, if true, demonstrate that Twitter has breached the following provisions of the Merger Agreement,” the statement argues.

It remains to be seen how much Zatko’s allegations will bolster Musk’s case in dropping his Twitter deal, which is set to go to trial in Delaware in October if the two parties don’t agree to a settlement sooner. Legal experts cited by the Washington Post—one of the outlets that first published Zatko’s accusations—noted the complaint had “limited hard documentary evidence” relating to spam accounts and bots on Twitter.

And last Thursday, a judge dismissed some of Musk’s requests for Twitter user data as “absurdly broad,” effectively amounting to trillions of data points that “no one in their right mind has ever tried to undertake such an effort,” Reuters reports. Chancellor Kathaleen McCormick of Delaware’s Court of Chancery added that Musk had enough data and documents to pursue his case.

Last week, a Twitter spokesperson replied to Zatko’s complaint by describing it as “a false narrative about Twitter and our privacy and data security practices that is riddled with inconsistencies and inaccuracies and lacks important context.”

Zatko—known in cybersecurity circles by the alias “Mudge”—built a reputation as an “ethical hacker” before joining Twitter after the site suffered an embarrassing hack masterminded by a Florida teenager. Zatko was fired from his senior executive role at the company this year “for ineffective leadership and poor performance,” according to a Twitter spokesperson. A lawyer for Zatko said his client had not coordinated his explosive leak with Musk or his affiliates.