How does the Twitter whistle-blower affect Musk’s takeover deal?

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Peiter Zatko – the former Chief of Security at Twitter Inc (NYSE: TWTR) says the social networking company has lied to Elon Musk about the number of bots on its platform. Shares are down over 5.0% on Tuesday.

What does it mean for the Twitter-Musk deal?

In his complaint (SEC, FTC, and DOJ), the cybersecurity expert known broadly as “Mudge” accused Twitter of using “outdated” scripts to detect and combat spam accounts. He says the San Francisco-headquartered firm is nowhere near as rigorous in dealing with bots as it claims.

Explaining what the explosive whistle-blower complaint could mean for the $44 billion Twitter deal, LightShed Partners’ Rich Greenfield said on CNBC’s “Squawk Box”:

The agreement that Musk signed never actually talks about the bots or the percentage of bots. It basically says it’s relying on Twitter’s public SEC filings for its view of bots or its view of users.

Twitter stock is down more than 20% versus its year-to-date high.

Zatko started working on these disclosures in March

Twitter and Musk are scheduled for a five-day trial in October.

Zatko, however, says his disclosures have nothing to do with the court battle and that he’d been working on these submissions since March 2022 – way before the billionaire had shown interest in buying Twitter.

Twitter says less than 5.0% of the accounts on its social networking platform are “spam”. Interestingly, though, its filings clearly acknowledge that the number could be higher since it’s rather difficult to make an accurate calculation on that front. Greenfield added:

You’d have to believe that Twitter’s senior executives have been knowingly filing false SEC documents for years to get advertisers Nothing is impossible, but it seems a little hard to fathom.

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