Twitter sued Tesla CEO Elon Musk on Tuesday, trying to force him to complete his $44 billion takeover of the social media company by accusing him of “outlandish” and “bad faith” actions that have caused the platform irreparable harm and “wreaked havoc” on its stock price. Back in April, Musk pledged to pay $54.20 a share for Twitter, which agreed to those terms after reversing its initial opposition to the deal. But the two sides have been bracing for a legal fight since the billionaire said Friday that he was backing away from his agreement to buy the company. Twitter’s lawsuit opens with a sharply-worded accusation: “Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.” “Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” the suit stated. Twitter filed its lawsuit in the Delaware Court of Chancery, which frequently handles business disputes among the many corporations, including Twitter, that are incorporated there. As part of the April deal, Musk and Twitter had agreed to pay each other a $1 billion breakup fee if either was responsible for the deal falling through. The company could have pushed Musk to pay the hefty fee but is going farther than that, trying to force him to complete the full $44 billion purchase approved by the company’s board. Read: Elon Musk's $44 billion Twitter deal gets board endorsement “Oh the irony lol,” Musk tweeted after Twitter filed the lawsuit, without explanation. The arguments and evidence laid out by Twitter are compelling and likely to get a receptive ear in the Delaware court, which doesn’t look kindly on sophisticated buyers with highly-paid legal advisers backing off of deals, said Brian Quinn, a law professor at Boston College. “They make a very strong argument that this is just buyer’s remorse,” Quinn said. “You have to eat your mistakes in the Delaware Chancery Court. That’s going to work very favorably for Twitter.” Musk alleged Friday that Twitter has failed to provide enough information about the number of fake accounts on its service. Twitter said last month that it was making available to Musk a ″fire hose” of raw data on hundreds of millions of daily tweets. Also read: Looming Musk-Twitter legal battle hammers company shares The company has said for years in regulatory filings that it believes about 5% of the accounts on the platform are fake. Musk is also alleging that Twitter broke the acquisition agreement when it fired two top managers and laid off a third of its talent-acquisition team. Twitter’s suit repeatedly emphasizes Musk’s contemplation of starting a Twitter competitor -- an alternative option he sometimes aired publicly and sometimes privately to Twitter’s executives and board members. While the company has said it cooperated in providing the data he requested on fake “spam bot” accounts, the lawsuit suggests Twitter was concerned that disclosing too much “highly sensitive information” could expose the company to competitive harm if shared. The biggest surprise for Quinn was how much evidence Twitter has -- for instance, communications with Musk about whether to retain or lay off employees, as well as the billionaire’s own public tweets -- to reject his arguments for backing out. “They are marshaling many of Musk’s own tweets to hoist him on his own petard,” he said. In a joint press release announcing the acquisition deal, Musk pledged to “unlock” the social media company’s potential by loosening restrictions on speech and rooting out fake accounts. Among his most attention-grabbing promises was to let former President Donald Trump back onto the platform. Musk argued that Twitter’s ban of Trump following the Jan. 6, 2021 insurrection at the U.S. Capitol was “morally bad” and “foolish in the extreme.” But his confidence didn’t last long. Tesla’s stock — Musk’s primary source of wealth — plummeted amid a broader stock market selloff in May, and Musk soon seemed less enthusiastic about owning Twitter. “For Musk, the best case is he pays the $1 billion breakup fee but that appears very unlikely,” said Wedbush Securities analyst Daniel Ives. “The irony is that Twitter as a fiduciary is clearly looking to enforce a deal that Musk doesn’t want to get done. It’s like buying a house you don’t want.” Twitter’s suit calls Musk’s tactics “a model of hypocrisy,” noting that he had emphasized plans to take Twitter private in order to rid it of spam accounts. Once the market declined, Twitter said, “Musk shifted his narrative, suddenly demanding ‘verification’ that spam was not a serious problem on Twitter’s platform, and claiming a burning need to conduct ‘diligence’ he had expressly forsworn.” Similarly, the company charges that Musk operated in bad faith, accusing him of requesting company information in order to accuse Twitter of providing “misrepresentations” about its business to regulators and investors. Musk “has been acting against this deal since the market started turning, and has breached the merger agreement repeatedly in the process,” the suit charged. “He has purported to put the deal on ‘hold’ pending satisfaction of imaginary conditions, breached his financing efforts obligations in the process, violated his obligations to treat requests for consent reasonably and to provide information about financing status, violated his non-disparagement obligation, misused confidential information, and otherwise failed to employ required efforts to consummate the acquisition.”  

Tesla CEO Elon Musk gave the strongest hint yet Monday that he would like to pay less for Twitter than his $44 billion offer made last month. Musk told a Miami technology conference that a viable deal at a lower price would not be out of the question, according to a report by Bloomberg News, which said it viewed a livestream video of the conference posted by a Twitter user. Also at the All In Summit, Musk estimated that at least 20% of Twitter's 229 million accounts are spam bots, percentage he said was at the low end of his assessment, according to the report. The appearance came a few hours after Musk began trolling Twitter CEO Paraj Agrawal, who posted a series of tweets explaining his company's effort to fight bots and how it has consistently estimated that less than 5% of Twitter accounts are fake. Also read: Elon Musk says Twitter deal ‘temporarily on hold’ In all, the day's events bolstered theories from analysts that Musk either wants out of the deal or is seeking a lower price, largely due to a huge decline in value of Tesla stock, some of which he has pledged to finance the Twitter acquisition. Twitter shares closed Monday down just over 8% at $37.39, below where the stock was just before Musk disclosed that he was Twitter's largest shareholder. Musk made the offer to buy Twitter for $54.20 per share on April 14. On Friday Musk tweeted that his plan to buy Twitter was placed on temporary hold as he tried to pinpoint the number of fake accounts on the social media platform. The Tesla and SpaceX CEO said the hold was pending details of Twitter's calculation that fake accounts are less than 5% of its users. In tweets on Monday, Agrawal acknowledged Twitter isn't perfect at catching spam. He wrote that every quarter, the company has made the estimate of less than 5% spam. “Our estimate is based on multiple human reviews of thousands of accounts that are sampled at random, consistently over time,” Agrawal wrote. Estimates for the last four quarters were all well under 5%, he wrote. “The error margins on our estimates give us confidence in our public statements each quarter.” Musk, using his favorite platform, responded with a smiling emoji of poop, then asked how Twitter's advertisers know what they're getting for their money. Tesla shares closed Monday down nearly 6% at $724.37. They have lost about one-third of their value since the trading day before Musk disclosed his Twitter stake. Also read: Musk gets $7B backing for Twitter bid from tech heavyweights Musk did not immediately return messages seeking comment. The All In Summit said in an email that it would post the video of Musk's appearance in the coming days.

In 10 days, Tesla CEO Elon Musk has gone from popular Twitter contributor and critic to the company's largest individual shareholder to a would-be owner of the social platform — a whirlwind of activity that could change the service dramatically given the sometimes whimsical billionaire's self-identification as a free-speech absolutist. Twitter revealed in a securities filing Thursday that Musk has offered to buy the company outright for more than $43 billion, saying the social media platform “needs to be transformed as a private company" in order to build trust with its users. “I believe free speech is a societal imperative for a functioning democracy,” Musk said in the filing. “I now realize the company will neither thrive nor serve this societal imperative in its current form.” Also read: Elon Musk accused of breaking law while buying Twitter stock Later in the day, during an onstage interview at the TED 2022 conference, he went even broader: “Having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization." Since it burst onto the scene in 2006, Twitter has been home to flourishing social and political commentary, shared news, scandal gossip, cat memes and dress color arguments. But it has also provided a platform for viral misinformation and lies, bullying and hate speech and gangs of trolls who can shout down posters they disagree with by unleashing tidal waves of vile images, threats and similar acts of online aggression. Twitter has devoted a substantial amount of effort to stanching the latter while preserving the former — though not always in ways that satisfy most users. Like other platforms, it has established restrictions on tweets that threaten violence, incite hatred, bully others and spread misinformation. Such rules drove Twitter's decision to ban former President Donald Trump following the 2021 Capitol insurrection. Twitter has also become a destination for brands and advertisers, many of whom prefer stronger content restrictions, and a megaphone for high-profile figures like Trump and Musk, who’s used it to rally supporters and promote business ventures. Musk, who described Twitter as a “de facto town square,” detailed some specific potential changes Thursday — like favoring temporary rather than permanent bans — but has mostly described his aim in broad and abstract terms. He said he wanted to open up the “black box” of artificial intelligence technology driving Twitter’s feed so that people would have more transparency about why some tweets might go viral and others might disappear. “I wouldn’t personally be in there editing tweets," he said, “but you would know if something was done to promote, demote or otherwise affect a tweet.” The billionaire has been a vocal critic of Twitter, mostly over his stated belief that it falls short on free-speech principles. The social media platform has angered followers of Trump and other right-wing political figures who’ve had their accounts suspended for violating its content standards on violence, hate or harmful misinformation. Musk has described himself as a “free-speech absolutist” but is also known for blocking other Twitter users who question or disagree with him. While Twitter's user base remains much smaller than those of rivals such as Facebook and TikTok, the service is popular with celebrities, world leaders, journalists and intellectuals. Musk himself has more than 81 million followers, rivaling pop stars such as Lady Gaga. Twitter shares closed at $45.08, down just under 2%, well below Musk's offer of $54.20 per share. That's generally a sign that some investors doubt the deal will go through. The stock remains down from its 52-week high of about $73. Also read: Elon Musk no longer joining Twitter's board of directors Musk called that price his final offer, although he provided no details on financing. The offer is non-binding and subject to financing and other conditions. Twitter said it will decide whether accepting the offer is in the best interests of shareholders. It's unclear, though, just how Twitter’s board will react after evaluating the offer. It likely will negotiate, seeking a higher price per share, or it may want provisions to ensure that the board remains independent of Musk, said John Coffee, a professor at Columbia University’s law school and head of its corporate governance center. The board could adopt “poison pill” provisions to offer more shares and dilute the value of Musk’s holdings, if Musk’s stake grows to 10% or 15%, Coffee said. Even then, Musk could still take over the company with a proxy fight by voting out the current directors. At the TED conference, Musk said he has the money. “I could technically afford it,” he said to laughs. Should Musk go through with his takeover attempt, he likely could raise the roughly $43 billion he needs, possibly by borrowing billions using his stakes in Tesla and SpaceX as collateral. Most of Musk’s fortune, estimated by Forbes to be nearly $265 billion, is tied up in shares of Tesla. The company allows executive officers to use shares as collateral for loans, but limits the borrowing to 25% of the value of the pledged shares. Data provider FactSet says Musk owns 172.6 million shares worth $176.47 billion. Just over 51% of his stake already is pledged as collateral, according to a Tesla proxy statement. That means Musk could use the remaining stake to borrow about $21.5 billion. He also could borrow on his stake in privately held SpaceX. Musk revealed in regulatory filings over recent weeks that he’d been buying Twitter shares in almost daily batches starting Jan. 31, ending up with a stake of about 9%. Only Vanguard Group controls more Twitter shares. A lawsuit filed Tuesday in New York federal court alleged Musk illegally delayed disclosing his stake in the social media company so he could buy more shares at lower prices. The U.S. Securities and Exchange Commission could punish Musk for hurting other investors by taking too long to disclose his buying up of Twitter shares, but it’s unlikely that it will do anything to stop a takeover, said Chester Spatt, a former SEC chief economist. “This is going to play out reasonably quickly,” said Spatt, now a finance professor at Carnegie Mellon University. Jacob Frenkel, a former SEC enforcement attorney now with the Dickinson Wright law firm in Washington, said it is difficult to prove an investor’s intent in disclosure cases. “The mere fact of the violation around the disclosure does not mean that there was fraud,” Frenkel said. However, there is “plenty of fodder for an investigation” into whether anyone with knowledge of Musk’s share purchases traded in the stock before Musk’s public disclosures, Frenkel said. After Musk announced his stake, Twitter quickly offered him a seat on its board on the condition that he not own more than 14.9% of the company’s outstanding stock. But the company said five days later that he’d declined. The decision coincided with a barrage of now-deleted and not-always-serious tweets from Musk proposing major changes to the company, such as dropping ads — its chief source of revenue — and transforming its San Francisco headquarters into a homeless shelter. The turnabout led CEO Parag Agrawal to warn employees earlier this week that “there will be distractions ahead” and to “tune out the noise and stay focused on the work.” Twitter hasn't done as well as its social media rivals and lost money last year. The company reported a net loss of $221 million for 2021 largely tied to the settlement of a lawsuit by shareholders who said the company misled investors about how much its user base was growing and how much users interacted with its platform. Its co-founder Jack Dorsey resigned as CEO in late November and was replaced by Agrawal. “I’m not saying I have all the answers here, but I do think that we want to be just very reluctant to delete things and just be very cautious with permanent bans,” Musk said. “It won’t be perfect," he said, but there should be a perception and reality that speech is “as free as reasonably possible.”