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Twitter Gets Fast-Tracked Elon Musk Trial Over $44 Billion Deal; Delay Threatens Irreparable Harm, Judge Says

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Tesla CEO Elon Musk lost his fight to delay Twitter’s lawsuit against him as a Delaware judge on Tuesday set an October trial, citing the “cloud of uncertainty” over the social media company after the billionaire backed out of a deal to buy it. “Delay threatens irreparable harm,” said Chancellor Kathaleen St. Jude McCormick, the head judge of Delaware’s Court of Chancery, which handles many high-profile business disputes. “The longer the delay, the greater the risk.”

Twitter had asked for an expedited trial in September, while Musk’s team called for waiting until early next year because of the complexity of the case. McCormick said Musk’s team underestimated the Delaware court’s ability to “quickly process complex litigation.”

Twitter is trying to force the billionaire to make good on his April promise to buy the social media giant for $44 billion (roughly Rs. 3,51,800 crore)— and the company wants it to happen quickly because it says the ongoing dispute is harming its business.

“It’s a very favorable ruling for Twitter in terms of moving things along,” said Carl Tobias, a law professor at the University of Richmond. “She seemed very concerned about the argument that delay would seriously harm the company, and I think that’s true.”

Musk, the world’s richest man, pledged to pay $54.20 (roughly Rs. 4,300) a share for Twitter, but informed the company in July that he wants to back out of the agreement.

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“It’s attempted sabotage. He’s doing his best to run Twitter down,” said attorney William Savitt, representing Twitter before McCormick on Tuesday. The hearing was held virtually after McCormick said she tested positive for COVID-19.

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Musk has claimed the company has failed to provide adequate information about the number of fake, or “spam bot,” Twitter accounts, and that it has breached its obligations under the deal by firing top managers and laying off a significant number of employees. Musk’s team expects more information about the bot numbers to be revealed in the trial court discovery process, when both sides must hand over evidence.

Twitter argues that Musk’s reasons for backing out are just a cover for buyer’s remorse after agreeing to pay 38 percent above Twitter’s stock price shortly before the stock market stumbled and shares of the electric-car maker Tesla, where most of Musk’s personal wealth resides, lost more than $100 billion (roughly Rs. 8,00,000 crore) of their value.

Savitt said the contested merger agreement and Musk’s tweets disparaging the company were inflicting harm on the business and questioned Musk’s request for a delayed trial, asking “whether the real plan is to run out the clock.”

“He’s banking on wriggling out of the deal he signed,” Savitt said.

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But the idea the Tesla CEO is trying to damage Twitter is “preposterous. He has no interest in damaging the company,” said Musk attorney Andrew Rossman, noting he is Twitter’s second largest shareholder with a “far larger stake” than the company’s entire board of directors.

Savitt emphasized the importance of an expedited trial starting in September for Twitter to be able to make important business decisions affecting everything from employee retention to relationships with suppliers and customers.

Rossman said more time is needed because it is “one of the largest take-private deals in history” involving a “company that has a massive amount of data that has to be analyzed. Billions of actions on their platform have to be analyzed.”

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Tobias said it’s still possible that Musk and Twitter will settle the case before it goes to trial, since both might find a drawn-out fight or the judge’s final decisions costly to their businesses and reputations. One option is that Musk could pay the $1 billion (roughly Rs. 8,000 crore) breakup fee both he and Twitter agreed to if either was deemed responsible for the deal falling through. Or Twitter could push for him to pay more to make up for damages – just not the full $44 billion (roughly Rs. 3,51,800 crore) acquisition.

“Does Musk really want to run that company? Do they really want Musk to run that company?” Tobias said. “They could always settle somewhere in between.”

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WhatsApp Reveals Critical Vulnerabilities in Older App Versions That Let Attacker Exploit Phones via Video Call

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WhatsApp, Meta’s instant messaging and calling service, has published details of a ‘critical’ vulnerability that has been patched in a newer version of the app but might still affect older installed versions that have not been updated.

The details regarding the vulnerability were revealed in a September update of WhatsApp‘s page on security advisories affecting the app and came to light on September 23.

WhatsApp, in the update, shared a detailed issue related to vulnerability CVE-2022-36934, according to which “an integer overflow in WhatsApp for Android prior to v2.22.16.12, Business for Android prior to v2.22.16.12, iOS prior to v2.22.16.12, Business for iOS prior to v2.22.16.12 could result in remote code execution in an established video call.”

According to the details, the bug would let an attacker exploit integer overflow, after which they can get access to execute their own code on a victim’s smartphone through a specially crafted video call.

This vulnerability has been given a severity score of 9.8 out of 10 on the CVE scale.

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In the same security advisory update, WhatsApp also explained another vulnerability, CVE-2022-27492. According to the social media company, “an integer underflow in WhatsApp for Android prior to v2.22.16.2, WhatsApp for iOS v2.22.15.9 could have caused remote code execution when receiving a crafted video file.”

This said, the bug would let attackers execute the code on the victim’s smartphone using a malicious video file. The vulnerability was scored 7.8 out of 10.

In an India-related development for the social media platform, the head of WhatsApp’s India payment business, Manesh Mahatme, has quit after more than a year with the Meta Platforms-owned company to join Amazon India, a source told Reuters on Thursday.

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Mahatme’s exit comes at a critical time for WhatsApp, which is seeking to ramp up its payments service in a highly competitive market and lock horns with more established players such as Alphabet’s Google Pay, Ant Group-backed Paytm and Walmart’s PhonePe.

During his stint at WhatsApp Pay, the company won regulatory approval to more than double its payments offering to 100 million users in India, its biggest market with more than half a billion users overall.

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Elon Musk Seeks to End Pre-Approval of His Tweets, Calls SEC Mandate “Government-Imposed Muzzle”

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Elon Musk’s lawyers urged a federal appeals court to throw out a provision in his 2018 consent decree with the US Securities and Exchange Commission (SEC) requiring a Tesla lawyer to vet some of his posts on Twitter.

In a brief filed late on Tuesday with the 2nd US Circuit Court of Appeals in Manhattan, lawyers for Musk called the pre-approval mandate a “government-imposed muzzle” that inhibited and chilled his lawful speech on a broad range of topics.

They also said the requirement violated the US Constitution, and undermined public policy by running “contrary to the American principles of free speech and open debate.”

The SEC did not immediately respond to a request for comment outside market hours. It is expected to file its own brief with the appeals court.

Musk wants to overturn part of an April 27 decision by US District Judge Lewis Liman that rejected his bid to throw out the consent decree altogether.

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Liman said Musk’s arguments amounted to a “bemoaning” of requirements he no longer wanted to adhere to now that “his company has become, in his estimation, all but invincible.”

Musk, 51, is worth $259.8 billion (roughly Rs. 21,25,878 crore), nearly twice as much as anyone else, Forbes magazine said on Wednesday.

The decree resolved a lawsuit accusing Musk of defrauding investors with an August 7, 2018 tweet that he had “funding secured” to take his electric car company private, though a buyout was not close. Musk has said the tweet was truthful.

In settling, Musk agreed to let a Tesla lawyer screen tweets that might contain material information about the company.

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He and Tesla each also paid $20 million (roughly Rs. 163 crore) in civil fines, and Musk gave up his role as Tesla chairman.

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But the SEC later opened a probe and subpoenaed documents concerning Musk’s and Tesla’s compliance, after Musk asked his followers in a November 6, 2021 tweet whether he should sell 10 percent of his Tesla stake to cover tax bills on stock options.

In Tuesday’s filing, Musk’s lawyers said it was time to rein in the SEC.

“Under the shadow of the consent decree, the SEC has increasingly surveilled, policed, and attempted to curb Mr. Musk’s protected speech that does not touch upon the federal securities laws,” the lawyers wrote. “Any objective served by the pre-approval provision has been served.”

Musk is separately trying to abandon his April agreement to buy Twitter for $44 billion (roughly Rs. 3,37,465 crore), saying the company misled him by downplaying the number of fake accounts.

Twitter has sued Musk to force him to complete the merger at the agreed-upon price, which is 23 percent higher than where its shares closed on Tuesday. An October 17 nonjury trial is scheduled in Delaware Chancery Court.

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The case is Musk v SEC, 2nd US Circuit Court of Appeals, No. 22-1291.


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Meta Disrupts Chinese Propaganda Operation Across Facebook, Instagram Ahead of US Midterm Elections

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Meta Platforms said on Tuesday it disrupted the first known China-based influence operation focused on targeting users in the United States with political content ahead of the midterm elections in November.

The network maintained fake accounts across Meta’s social media platforms Facebook and Instagram, as well as competitor service Twitter, but was small and did not attract much of a following, Meta said in a report summarising its findings.

Still, the report noted, the discovery was significant because it suggested a shift toward more direct interference in US domestic politics compared with previous known Chinese propaganda efforts.

“The Chinese operations we’ve taken down before talked primarily about America to the world, primarily in South Asia, not to Americans about themselves,” Meta global threat intelligence lead Ben Nimmo told a press briefing.

“Essentially the message was ‘America bad, China good,’” he said of those operations, while the new operation pushed messages aimed at Americans on both sides of divisive issues like abortion and gun rights.

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Another Meta executive at the briefing said the company did not have enough evidence to say who in China was behind the activity.

Asked about Meta’s findings at a news conference, US Attorney General Merrick Garland said his office was “very concerned” about intelligence reports of election interference by foreign governments “starting back some time ago and continuing all the way into the present.”

A Twitter spokesperson said the company was aware of the information in Meta’s report and also took down the accounts.

According to Meta’s report, the Chinese fake accounts posed as liberal and conservative Americans in different states. They posted political memes and lurked in the comments of public figures’ posts since November 2021.

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A sample screenshot showed one account commenting on a Facebook post by Republican Senator Marco Rubio, asking him to stop gun violence and using the hashtag #RubioChildrenKiller.

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The same network also set up fake accounts that posed as people in the Czech Republic criticizing the Czech government over its approach to China, according to the report.

Meta also said it had intercepted the largest and most complex Russian-based operation since the war in Ukraine began, describing it as a sprawling network of more than 60 websites impersonating legitimate news organisations, along with about 4,000 social media accounts and petitions on sites like US-based campaign group Avaaz.

That operation primarily targeted users in Germany, as well as France, Italy, Ukraine and the United Kingdom, and spent more than $100,000 (roughly Rs. 81.8 lakh) on advertisements promoting pro-Russian messages.

On a few occasions, Russian embassies in Europe and Asia amplified the content.

The Russian embassy in Washington said Meta’s move follows “the instructions of the US authorities” and is a violation of freedom of speech.

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“This suggests that American tech giants, who own the most popular Internet resources, have become servants of the US administration’s policy of suppressing dissent,” the embassy said on its Telegram channel.

© Thomson Reuters 2022


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