A majority of Twitter Inc shareholders voted to sell the social media company for $44 billion to Elon Musk, sending the fate of the sale into a court showdown in October.
Musk told Twitter he would not go ahead with the acquisition, arguing that he had been misled about spam accounts on the platform and had not been notified of the company’s pay settlement with one of its top executives.
Shareholders were widely expected to vote in favor after a stock market slump made Musk’s $54.20-a-share deal for Twitter, signed in April, look expensive in the current environment. Twitter posts are now hovering around $41.
On Monday, Twitter said payments made to a whistleblower did not violate any terms of its sale to Musk, after the billionaire, who is currently the world’s richest person, made another attempt to cancel the deal.
Twitter’s lawyers said Musk’s reasons for wanting to back out of the deal were “false and false.”
Part of the whistleblower dispute
Last week, Musk’s lawyers said Twitter’s failure to obtain his consent before making the $7.75 million payment to whistleblower Peter Zatko and his attorney violated the merger agreement, which limits when Twitter can make such payments.
Zatko, who was sacked by Twitter in January as the company’s chief security officer, accused the social media company last month of falsely claiming it had a robust security plan and making misleading statements about its defenses against hackers and spam accounts.
The whistleblower spoke out about his allegations before the US Senate Judiciary Committee on Tuesday.
He said there was “at least one agent” from the Chinese intelligence service on Twitter’s payroll and that the company had deliberately allowed India to add agents to the company’s list as well, where they could access highly sensitive data on users around the world.
Zatko told lawmakers that the social media platform suffers from weak cyber defenses that make it vulnerable to exploitation by “teenagers, thieves and spies” and put the privacy of its users at risk.
“I’m here today because Twitter’s leadership is misleading the public, lawmakers, regulators, and even its board,” Zatko said as he began his sworn testimony.
“They don’t know what data they have, where you live and where it came from, so, unsurprisingly, they can’t protect it,” Zatko said. “It doesn’t matter who has keys if there are no locks.”
Profit over security
“Twitter’s leadership ignored its engineers,” he said, in part because their “executive incentives drove them to prioritize profit over security.”
Zatko’s letter echoed a letter he submitted to Congress against another social media giant last year. But unlike that Facebook whistleblower, Frances Hogan, Zatko did not bring in a raft of internal documents to back up his allegations.
One issue that did not come up at the hearing was the question of whether Twitter accurately counts its active users, an important metric for its advertisers.
Musk has argued without evidence that many of Twitter’s nearly 238 million daily users are fake or malicious accounts.
The trial of Twitter vs. Musk is scheduled to begin October 17 in Delaware Chancery Court.