Are spam accounts really the reason behind Tesla CEO Elon Musk’s decision to back out of his cursed Twitter deal?
This week, Twitter sent a bunch of subpoenas to find out, pulling Musk’s close circle of friends and business associates into the chaotic trial. One subpoena includes more than two dozen document and communications requests for Tesla. The documents that Twitter seeks from Musk’s friends, advisors, banks, legal team, and investors include emails, text messages, and Twitter DMs.
It’s possible that just one email out of all the subpoenaed material could give Twitter enough information to convince the Delaware Chancery Court to force Musk to cough up $44 billion and actually buy the social network. By crawling documents from Musk’s inner circle, Twitter hopes to reveal what was happening behind Musk’s tweets through the negotiation. In their lawsuit, Twitter claims that Musk violated their merger agreement, and the subpoenas could help prove that he possibly never planned to follow through on the purchase.
“A single email could be decisive, increasing the chances of winning,” Stephen Gillers, a New York University School of Law professor, told The Wall Street Journal.
However, Musk is gathering more evidence against Twitter, too.
Not one to back down, Musk sent his own subpoenas to Twitter’s advisors in the deal, JPMorgan Chase and Goldman Sachs. In addition to examining documents and communications showing how Twitter was approaching negotiations with Musk, according to The Guardian, Musk also requested information on how Twitter planned to negotiate with any other purchasers.
As documents trade hands, Twitter’s legal team will likely try to prove that Musk intentionally worked to tank his financing on the deal, and Musk’s team may claim that Twitter breached the agreement by sharing misleading information on financial concerns—like the real number of Twitter spam accounts. Musk previously tried to push back the trial until 2023, but it looks like much will be revealed once the five-day trial starts on October 17.
Twitter, Tesla, and Musk’s legal team didn’t immediately respond to Ars’ requests for comment. Twitter declined comment to the WSJ on either the “subpoenas or its legal strategy.”
Some of Musk’s associates expressed frustrations with Twitter’s subpoenas for being too broad. Venture-capital investor Joe Lonsdale tweeted that subpoenas to Musk’s friends should be considered “a giant harassing fishing expedition.” He claims that his involvement in the deal amounts to “a few snarky comments.” (Lonsdale did not immediately respond to Ars’ request for comment.)
An expert on mergers and acquisitions at Boston College Law School, Brian Quinn, told the WSJ that it’s unusual to subpoena friends in a lawsuit like this. The reason why it’s happening now is because Musk purchased Twitter as an individual. That means his closest friends are “fair game as potential sources of information about his intentions.”
Musk can contend that the subpoenas are “overly broad or unduly burdensome”—if he can explain to the court why any particular request would yield only irrelevant documents or communications.
Musk already faces many hurdles if he wants to get out of the Twitter deal, and this recent onslaught of subpoenas has only lined up more potential hurdles. Meanwhile, Twitter continues to lose “billions in market value” since the day Musk announced his intentions to purchase it. The social media company’s biggest fear is that—as UConn School of Law professor Minor Myers told Reuters—Musk’s plan since signing the deal has been “to blow the whole thing up.”
By the end of tomorrow, Musk will publicly answer Twitter’s lawsuit and respond with any counterclaims.