A key Delaware hearing aired the best arguments from lawyers for Twitter ( NYSE: TWTR ) and presumptive acquirer Elon Musk over the data requests that have become the key pretrial fight between the two sides.
Chancellor Kathaleen McCormick, presiding over Twitter ( TWTR ) v. Musk , held the 90-minute hearing to get presentations from both sides over requests for information that Musk issued in an attempt to examine Twitter's internal data about users (and its estimates of fake or "bot" accounts), in the increasingly bitter fight over whether Musk will be forced to complete a $44B deal to buy Twitter.
She took the presentations under advisement, meaning a ruling is yet to come.
The hearing launched with Musk's attorneys arguing that "We're here today because defendants [Musk] have asked for certain data from Twitter regarding mDAU (monetizable daily active users) and bots. And they don't want to provide it."
Other Internet companies focus on monthly active users and/or daily active users, but Twitter "created its own metrics" to respond to what looked like stagnating users, Musk's team argued, adding that "the goalposts seem to move a little bit."
Musk's side further argued that the most engaged 7% of mDAU generate almost half of Twitter's revenue, and the top 30% of the group makes up 90% of the revenue; accordingly, the bottom 30% "don't see any ads at all ... these are their monetizable users, yet 30% of that group are not monetizable at all." Twitter was growing mDAU by removing protections against bot accounts, they argued.
Whistleblower Peiter Zatko would have been involved and able to offer information, Musk argued, but Twitter didn't make him available, "and we believe that that was because they didn't want to turn over their data. And they didn't want to answer these questions."
Twitter attorneys responded by refocusing the hearing on whether or not the company had provided all that was requested by Musk's side. The bot data disclosure in SEC filings (that fake account activity is 5% or less) has always been "explicitly" an estimate, they said, and as such, a form of opinion that's not been held by the Supreme Court to be material to exiting a deal like this.
Musk's team hasn't shown why the bot data is relevant to the deal, and wants a "do-over" to find a different number, Twitter's side argued.
Twitter's team also made it a bit more personal: "It's important to keep in mind the person to whom we're being asked to turn this data over to. This is someone who has publicly mocked Twitter for seeking to enforce a nondisclosure agreement. Who has insinuated that this litigation would be used as a vehicle for publicly disclosing Twitter's internal data. And who recently and publicly reaffirmed that if he is able to get out from the contract that he signed, his plan is to start a competing business: X.com."
Twitter stock ( TWTR ) rose through the course of the hearing; it was up 2% as it wrapped Wednesday afternoon.
On Tuesday, McCormick largely ruled for Twitter in a series of motions tied to discovery, saying the conduct of Musk's side was "suboptimal. "
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Twitter, Musk clash in hearing over data requests tied to acquisition deal