SEC Probes Twitter Over Spam Accounts — Court Orders the Social Media Giant to Provide Additional Data to Elon Musk
Twitter Inc. has been ordered to provide additional data relating to spam and bot accounts to Elon Musk. The social media giant has sued the Tesla CEO for terminating his $44 billion offer to buy the social media platform. The U.S. Securities and Exchange Commission (SEC) has also questioned Twitter about the number of spam accounts.
Court Orders Twitter to Give Additional Data to Elon Musk
Chancellor Kathaleen St. J. McCormick, a judge on the Delaware Court of Chancery, signed an order Thursday requiring Twitter Inc. (NYSE: TWTR) to provide additional data to Tesla and Spacex CEO Elon Musk. Plaintiff Twitter has sued defendants Musk and his two companies, X Holdings I and X Holdings II, for terminating the $44 billion deal to buy the social media platform. Musk has countersued Twitter.
Judge McCormick stated in her order:
Defendants’ data requests are absolutely abroad.
She added: “Read literally, Defendants’ documents request would require Plaintiff to produce trillions upon trillions of data points reflecting all of the data Twitter might possibly store for each of the approximately 200 million accounts included in its mDAU count every day on every three years.”
The social media company defines monetizable daily active users (mDAU) as “Twitter users who logged in and accessed Twitter on any given day through Twitter.com or Twitter applications that are able to show ads.”
The order further reads:
Plaintiff is ordered to produce a subset of what Defendants have requested: the 9,000 accounts reviewed in connection with Plaintiff’s Q4 2021 audit, which the parties refer to as the ‘historical snapshot.’
“Plaintiff represented that, with considerable effort, these documents could be produced in under two weeks, and Plaintiff shall strive to meet that timeline. In addition, Plaintiff must produce documents sufficient to show how those 9,000 accounts were selected for review,” the order details.
Meanwhile, the U.S. Securities and Exchange Commission (SEC) has probed Twitter over its method of identifying spam accounts, according to a new regulatory filing made public Wednesday.
In a letter dated June 15, the SEC asked Twitter CEO Parag Agrawal to provide some information regarding how the company calculates the number of bot accounts. “We note your estimate that the average number of false or spam accounts during fiscal 2021 continues to represent fewer than 5% of mDAU,” the SEC wrote, adding:
To the extent material, please disclose the methodology used in calculating these figures and the underlying judgements and assumptions used by management.
Twitter responded to the SEC inquiry with a standard description of the methodology on June 22. The social media giant informed the securities regulator that it has “adequately” disclosed the methodology that it uses, noting that it randomly selects thousands of accounts to be reviewed by people each quarter.
The SEC sent another letter to Twitter on July 27 stating: “We have completed our review of your filings. We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.”
Earlier this month, Musk sold nearly 8 million Tesla shares. The Tesla boss said that in the event that Twitter forces the buyout deal to close and some equity partners do not come through, it is important to avoid an emergency sale of Tesla stock.
Do you think the court will force Elon Musk to go through with the deal to buy Twitter? Let us know in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. krakow3d.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.