Elon Musk And Twitter Set A Date For Their Courtroom Showdown
The ongoing legal tussle between Twitter and Elon Musk is set to enter an interesting new phase later this year after a Delaware Chancery Court judge ruled that a trial will begin October 17. Earlier this month, Twitter took legal recourse to compel Musk to complete his proposed $44 billion acquisition of the social media website. This happened days after Musk announced his decision to terminate the much-publicized buyout deal in which Musk would have paid $54.20 per share for a majority stake in the company.
Shortly after bidding for Twitter, Musk expressed concerns about the true scale of bot accounts on the platform. Through his own Twitter account Musk also claimed that Twitter's problems with fake accounts and spam were far worse than what Twitter had publicly revealed. In one instance, Musk claimed he performed a random test and found that one-fifth of all Twitter accounts were spam or fake accounts. Citing all these reasons, which he referred to as "misleading representations" made by Twitter executives, Musk suggested he had decided to pull out of the deal in early July.
Twitter legally challenged this decision with a demand that Musk completes the deal as agreed. In its recent earnings report, Twitter also blamed the looming uncertainty over Musk's takeover bid as one of the reasons for its revenue shortfall.
What happens next?
The Honorable Kathaleen St. Jude McCormick, the chief judge at Delaware Chancery Court, ruled on Twitter's request for a four-day trial in September. In the ruling, the judge confirmed October 17, 2022, as the date for the trial. In contrast, Musk's lawyers wanted the trial to be pushed to mid-February, 2023.
While Twitter could not convince the judge for a September trial, they should be reasonably happy with today's ruling, given that their timeline has only been extended by a month. Twitter's lawyers had argued that the delay in the trial would only add to the looming uncertainty over the future of the deal and would affect Twitter's future revenues.
Judge Mc Cormick seems to largely agree with Twitter's argument that the longer the transaction remains in limbo, the greater the chance of irreparable damage to the company. The judge also noted that Musk's lawyers seemed to have underestimated the court's ability to quickly process this complicated legal tussle.
In his defense, Musk's lawyer Andrew Rossman argued that his client pushed for a February trial to have enough time to verify Twitter's claim about less than 5% of its users being fake or spam accounts. He also asserted that Musk had more at stake than Twitter, given the possibility that the billionaire may be forced to buy the company.