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Elon Musk subpoenas Twitter whistleblower for bot and security info

Yahoo Finance tech editor Dan Howley details how Tesla CEO Elon Musk's legal team has issued more than 100 subpoenas in its ongoing lawsuit with Twitter.

Video Transcript

SEANA SMITH: Elon musk's legal team has subpoenaed former Twitter head of security and whistleblower Peter Zatko. Yahoo finance's Dan Howley has the details for us. Dan?

DAN HOWLEY: That's right, Seana. Elon Musk is trying to subpoena the information that the whistleblower has on Twitter, including information about bots as well as the security that the company had set in place and whether or not it complied with an FTC consent decree basically telling the company that it needed to put security in place at all and that it needed to ensure that its user data was protected.

Now, what we know about the bots so far is basically all that Twitter has been saying the whole time, that they claim that of monetizable daily active users, 5% or less are bots. Now, Elon Musk has repeatedly said that that's not true, and that it could be as high as 20% or more of those users.

Now, where we get into the weeds here is where the whistleblower says, Twitter has done a good job of getting rid of bots when it comes to monetizable daily active users but not when it comes to overall Twitter user numbers. And so there's two conversations kind of going on here, how many bots there are in general and how many bots there are in that monetizable daily active user pool. And so this is something that we're going to have to see go back and forth in court.

And whether or not it actually has any benefit for Musk really remains to be seen. Some experts have said that, look, this does shoot a hole in Twitter's argument that it is aware of how many bots are on the platform. Others have said Zatko, the whistleblower, says you know that they had no idea how many bots there are on the platform in general and that they had no real reason or desire to figure out how many they had because that could make them look bad in front of advertisers as well as other users.

So all of this information now is going to be going towards this big face-off that we have between Twitter and Elon Musk and whether or not he will eventually be forced to purchase the social network. Back to you guys.

DAVE BRIGGS: All right, Yahoo Finance tech reporter Dan Howley, thank you. Let's discuss more on this and what it means for Elon Musk as they prepare for that trial in Delaware, October 17 in that Chancery Court. It means not much, if I'm going to go ahead and play a lawyer here. Due diligence, the only two words that matter to me in this case, Seana, he waived due diligence.

And I know I've been beating that drum since the very beginning. But ultimately, what this whistleblower has said on paper and may say when they subpoena him, might even say it in court, has no bearing on what Elon Musk's issues are because he did not look deeper. He did not tie the number of bots to his purchase of this company. He was willingly accepting of their estimates. And their estimates were vague at best.

Their SEC filing, Twitter's SEC filing, was very vague and, even in the wording, acknowledged, we might not be correct on that. I think that judge is largely going to say, who cares unless they willingly and knowingly lied to the SEC. Now, that's a whole different animal, which we're not going to dive into, because we have no concept if that's the case. But it seems like, from the very beginning, Twitter has said, hey, this is just our guess here. We're not really sure to how to measure this. I don't think it has any bearing.

SEANA SMITH: Well, exactly. And that's Twitter's exact argument here. And that's what we heard from Twitter's attorney in the latest thing, saying that this is legally irrelevant. That was a direct quote from what he was saying. He's saying that we know that Twitter has always said that there are spam counts. Like you're saying, they have only always been estimates. They have said they have always been estimates, not binding representation.

So Rachelle, there are both sides. Now some are saying that this whistleblower coming out, making these claims that it does strengthens Elon Musk's argument, I have a tough time buying that. I mean, it definitely has us all talking about it and saying that maybe it's not as clear-cut as we initially thought it was a couple of weeks ago ahead of these revelations. But I'm not so sure that it actually materially will change the outcome of this when it heads to trial later this fall.

RACHELLE AKUFFO: I mean, I will say, it could depend what lies outside of due diligence. If there was something material that he wouldn't have been able to discover in the course of due diligence, there may be a bit of wiggle room there. But I mean, if you go into something this casually, you sort of tweet about the idea of buying a company, you want to spend that much money, you have to do the due diligence.

And I will say for Twitter, it does open a can of worms because congress wants to hear from this whistleblower because they're saying that there might be issues about the network misleading regulators about cyber defenses and efforts to control some of these things. There could be broader impacts. So he might win the sort of moral high ground when it comes to selling Twitter, look, I put you on blast. But he might get stuck with a very big bill if he has to purchase this company.

DAVE BRIGGS: I see no way around it. And look, when you have teams of lawyers and you are the richest man in the world, that does not buy you a lot of sympathy in that courtroom. Now, to your point, if this goes into a lawsuit phase down the road because Elon's not going to take that judgment quietly, discovery would be a whole different animal for both Twitter and Tesla and everyone involved in this. That is something no one wants here.