Musk Twitter Trial Nears End as Shareholders Seek Damages

Final arguments begin Tuesday in a San Francisco courtroom where Twitter investors accuse Elon Musk of misleading them during his 2022 acquisition attempt. The lawsuit centers on Musk's claims about fake accounts as he tried to abandon his $44 billion purchase deal.

SAN FRANCISCO — Final arguments begin Tuesday in a courtroom battle between Elon Musk and Twitter investors who allege the billionaire deliberately misled them while attempting to abandon his $44 billion acquisition of the social media company in 2022.

The class-action lawsuit was filed in San Francisco just before Musk completed his purchase of Twitter in October 2022, which he subsequently rebranded as X. The deal, valued at $54.20 per share, came six months after his initial agreement to acquire the struggling platform. The purchase amount represents a small fraction of the Tesla chief executive’s current estimated wealth of $839 billion.

Testimony during the trial has largely revolved around Musk’s assertions regarding automated accounts on Twitter. During his court appearance, Musk maintained his longstanding position that the platform harbored significantly more fake and spam profiles than the 5% figure reported in official company documents. He pointed to what he characterized as Twitter’s false representation of bogus account numbers as justification for attempting to withdraw from the acquisition.

Following Musk’s effort to abandon the purchase, Twitter pursued legal action in Delaware courts to compel him to complete the original transaction. Musk ultimately changed direction again and fulfilled his initial commitment just as that litigation was about to proceed to trial.

The issue of automated and fraudulent accounts on Twitter predated Musk’s acquisition negotiations. The company had previously paid $809.5 million in 2021 to resolve allegations that it had inflated growth metrics and monthly user statistics. Twitter had also regularly reported its bot calculations to the Securities and Exchange Commission for years while acknowledging that its estimates could be understated.

However, Musk argued the actual percentage was far higher, potentially reaching 20% based on some expert analysis. He described stating the bot percentage was at least this elevated as equivalent to “saying the grass is green or the sky is blue.”

Former Twitter Chief Financial Officer Ned Segal challenged this assertion during his testimony, stating the actual figure was approximately 1%.

When questioned whether Twitter had ever submitted inaccurate SEC documents regarding spam account numbers, Segal denied any wrongdoing. However, he acknowledged that the company had previously corrected its financial reports after discovering an error in how it calculated daily active users. In 2017, Twitter revealed it had mistakenly inflated its monthly user counts by including users from a third-party application that should have been excluded.

During Monday’s proceedings, both legal teams reviewed jury instructions with the court. Judge Charles R. Breyer observed that numerous potential jurors had expressed unfavorable opinions about Musk. Nevertheless, he emphasized that individuals who are “not universally liked” still merit fair legal proceedings and should not face discriminatory or biased treatment.