“If what Zatko claims is true, Twitter has violated the trust of its users and defrauded the Federal Trade Commission and its directors,” said Bot Sentinel’s Christopher Bouzy, whose access to Twitter data was threatened with deletion this week. As for the timing of that warning, which would restrict Bouzy from collecting data on deactivated and suspended accounts that hadn’t been a problem for the past four years, “I don’t think it’s a coincidence,” Bouzy says. Twitter spokesperson Lindsay McCallum-Rémy says the account referenced “has received a warning for violating our Developer Policy”, which was the result of a routine assessment.
Whether the allegations are true or not is the key question. McCallum-Rémy says Zatko was fired from his job in January 2022 “for ineffective leadership and poor performance”. Responding to the allegations, McCallum-Rémy said: “What we have seen so far is a false narrative about Twitter and our privacy and data security practices that is riddled with inconsistencies and inaccuracies and lacking important context. The allegations and opportunistic timing of Mr. Zatko seem designed to draw attention and harm Twitter, its customers and its shareholders.Security and privacy have long been and will remain company-wide priorities at Twitter.”
The fact that such claims have now surfaced should come as no great surprise, however significant the bomb may seem. “Allegations of concealment are a common ground for a fraud claim,” said Adam C. Pritchard, a law professor at the University of Michigan who specializes in corporate and securities law. “In this situation, it gives Musk an opening to claim that he would not have discovered the problem even with due diligence.”
The circumstances surrounding the revelations play into Musk’s hands, Pritchard believes. “That makes it easier for him to argue that it’s a material adverse change rather than an issue he waived when he waived due diligence,” he says. “As always, it’s all about negotiating leverage, and this gives Musk a little more leverage.”
It seems obvious to Bouzy. “I believe Elon Musk will use this latest revelation in court to prove that Twitter executives misled him,” he says. “I’m not a lawyer, but I don’t see a scenario where the court forces Musk to buy Twitter if the allegations are true.”
Paul Fisher, who teaches negotiation at Oxford University’s Saïd Business School, is also not a lawyer. But he thinks the takeover is now a foregone conclusion — and not the way Twitter wants it to be. “I think it can give Musk the way out he wants,” he says. “In any negotiation, especially when it comes to the sale or purchase of assets, transparency and getting all material information that could affect the price on the table is essential. In many cases, if the buyer determines that such statements were not true at the time of the deal, the buyer may have the right to rescind the contract or certainly demand substantial damages from the seller.”
McCallum-Rémy declined to comment on how the revelations would affect the Musk acquisition lawsuit, or how Twitter planned to respond.
“I think Twitter will just stick with their guns,” Dhar says. “But they have to start showing evidence that they were trying to do something about it, and the deal was done in good faith.”
