Twitter is currently battling Musk in court over his attempt to cancel a previous offer to buy the social media platform for $44 billion. Lawyers representing Twitter have been attempting to compel the world’s richest man to provide messages from his Tesla and SpaceX accounts, which he had used to discuss the merger with advisers. Delaware Chancery Court Chancellor Kathaleen McCormick denied the attorneys’ request on the grounds that such an arrangement would violate attorney-client privilege.
“Musk had ‘unrestricted’ personal use of his Tesla email account, that ‘no one’ at Tesla can access those emails without Musk’s consent or ‘to the extent legally necessary,’ and that ‘nobody’ at SpaceX can access his email account without Musk’s express consent,” McCormick remarked based on affidavits from lawyers and information technology professionals at the two companies. “These additional facts make Musk’s expectation of privacy objectively reasonable. Twitter’s motion is denied.”
Email policies at SpaceX and Tesla, however, make clear that “employees have no privacy interest in their work emails” and note that the firms “reserve the right to monitor those emails,” according to McCormick. The rule that applies to Musk, therefore, appears to be an exception.
“A cynic might doubt that Musk-specific policies exist at SpaceX and Tesla. … Still, to this jurist, the evidence rings true,” McCormick continued. “The court has little doubt that neither SpaceX nor Tesla view him as on par with other employees, that he has the power to direct operational decisions, and that nobody at either company would access his information without first obtaining his approval.”
Musk’s desire to cancel the merger occurs as he claims that the actual share of fake accounts on the platform could range as high as 33% rather than the company’s reported 5%, with a lower number of monetizable daily active users potentially justifying a lower valuation.
Twitter attorneys contested Musk’s rationale for passing on the deal by producing text messages he sent to Michael Grimes, an executive at investment bank Morgan Stanley, indicating that he was concerned about macroeconomic conditions stemming from the Russian invasion of Ukraine. A trial to determine the status of the acquisition is scheduled for October 17.
A majority of Twitter shareholders voted on Tuesday to greenlight the $44 billion merger deal with Musk, who remains the company’s largest shareholder through his 9.6% stake. Beyond large asset management companies such as Vanguard and BlackRock, billionaire Saudi Arabian investor Alwaleed bin Talal and former Twitter CEO Jack Dorsey are also among the largest shareholders, with 3.9% and 2.4% stakes, respectively.
In another victory for Musk’s legal team, McCormick granted attorneys representing Musk permission last week to use the testimony of former Twitter executive Peiter Zatko, who claimed in a recent whistleblower report that his colleagues did not have the resources or motivation necessary to determine the number of fake accounts on the platform.
Zatko told members of the Senate Judiciary Committee on Tuesday that the company has a number of cybersecurity problems, as well as exposure to foreign intelligence agencies. He claimed that every engineer at the firm could potentially gain access to user data through their access to internal production systems.
“If they wanted to root around in the data and find it, they could, and some have,” Zatko alleged.