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The gist of Elon Musk’s counter-trial against Twitter

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Elon Musk, as you’re sure by now, backed out of his $44 billion offer to buy Twitter in July, much to the delight of corporate lawyers everywhere. Days after Musk’s admitted withdrawal, the social media company filed a lawsuit against Musk to force him to complete the acquisition. And this week, Musk filed a fiery, 127-page indictment — the… entire text which Twitter accuses several “sins” and just went public.

The document is long and full of legal texts, but essentially Musk’s legal team seems to be betting on one argument to win: that Twitter has deliberately artificially inflated its revenue-generating user base by more than 10 times its actual size, and so his offer to buy Twitter was based on erroneous data.

Musk’s argument sounds familiar simply because it is. Bloated users are a point he planted in some from his earliest musings explaining why he would try to take over the company: that Twitter’s actual user base isn’t as strong as Twitter claims it is, he claims, because bots and various spam accounts are considered humans.

User stats are at the heart of Musk’s argument

Twitter claims to factor in bots in its go-to, self-reported metric called mDAUs, which stands for monetizing daily active users worldwide. These are people who use Twitter, see ads or pay for the service and earn Twitter money. But Musk is trying to invalidate Twitter’s mDAUs through a series of claims presented as a combination of his own research and information Twitter shared with his team.

“Twitter’s own disclosures to the Musk parties show that while Twitter has 238 million “money-to-money daily active users,” those users who actually see ads (and thus reasonably “money-to-be”) are about 65 million lower than what Twitter represents,” the counterpart reads. “In fact, the majority of ads are served to fewer than 16 million users — just a fraction of the 238 million mDAU figure that Twitter is misleadingly marketing.”

The counterpart then goes on to call mDAUs a “made-up” metric that Twitter invented after three-quarters of Twitter’s declining users in 2020 — claiming that Twitter created the mDAU only as a way to protect executive bonuses.

“In 2020, Twitter based its executives’ cash bonus pool on revenue, operating income and adjusted EBITDA. After Twitter missed those targets in 2020 and funded only 32% of the cash bonus pool, Twitter decided that mDAU (a highly manipulable number) should be considered when determining whether executives received these bonuses,” the lawsuit reads. “After that change, 100% of this executive bonus was funded in 2021.”

Twitter claims Musk’s numbers are bullshit

On their own, Musk’s arguments seem damning. While the public sees Musk’s counter-charge for the first time, Twitter’s lawyers have already authorized — and they shared a reply yesterday.

You can read Twitter’s full response herebut as Elizabeth Lopatto Broken the company is an argument for The edge, Twitter’s answer is that it has no idea what Musk is talking about, with his bot counts or mDAUs.

Musk doesn’t measure the same as Twitter or even use the same data as Twitter, the suit writes, noting that much of his research analysis was born from an app called Botometer. Twitter also took the opportunity to imply that Musk’s own critical discourse amounted to a poop emoji.

Of course Twitter announced that last April it miscounted its own users for three yearsoverestimating the number by nearly two million people per quarter between 2019 and 2021. But Musk still claims that, when it comes to the Twitter users who actually make the company money, Twitter reports tens to hundreds of millions of people are wrong, rather than just a few.

The case will go to court on October 17.


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