After taking the helm at Twitter, Elon Musk proceeded to clean house by ousting several executives and roughly half of its employees. Less than a year later, the move has resulted in millions in legal fees and may have helped Meta create a competing text-based social media platform.
Twitter, in a cease-and-desist sent to Meta CEO Mark Zuckerberg on Thursday, accused the company of hiring dozens of former employees to create a “copycat” app. It claimed Meta engaged in “systematic, willful, and unlawful misappropriation of Twitter’s trade secrets and other intellectual property.”
This followed Twitter suing Wachtell, Lipton, Rosen & Katz, the firm that represented the company in forcing Musk to follow through with his $44 billion acquisition of the platform. The complaint filed in San Francisco Superior Court on Wednesday claimed the firm took advantage of a client “left unprotected by lame duck fiduciaries who had lost their motivation to act in Twitter’s best interest pending its imminent sale.” Twitter seeks restitution for a $90 million bill.
After months of publicly disparaging Twitter and trying to wriggle out of the takeover, Musk in October closed a deal valued at $44 billion to buy the social media service. He immediately proceeded to clean house, starting with its chief executive, chief financial officer and legal chief. Roughly half of the company’s workforce, including key engineers, was forced out as Musk looked to slash costs to pay off nearly $13 billion in debt.
In a letter threatening to sue, Twitter said it has “serious concerns” that Meta stole trade secrets by selectively hiring former employees. It stressed that it intends to “strictly enforce its intellectual property rights,” wrote the company’s lawyer Alex Spiro. Additionally, Twitter warned Meta that it’s barred scraping any of its “followers or following data.”
Notably, several lawsuits from former employees claim that Twitter failed to pay them severance on their way out. Twitter on Monday was sued again for allegedly refusing to proceed with roughly 900 arbitration cases from ex-workers and not paying fees associated with the litigation despite requiring them to sign the contracts in exchange for the severance. JAMS, the arbitration firm handling the cases, said it won’t arbitrate the cases since the company has failed to pay the fees, according to the complaint.
Wednesday’s suit takes issue with former Twitter officers rubber-stamping the legal firm’s bill. After Musk’s takeover was completed, ex-chief legal officer Vijaya Gadde signed a new agreement that purported to award Wachtell a bloated “success fee” that was nearly six times its $15.6 million bill in hourly fees. Upon seeing the amount for approval, a former Twitter director exclaimed in an email to general counsel Sean Edgett “O My Freaking God.” Edgett allegedly expedited an $84 million payment to the firm 10 minutes before he was terminated, according to the suit.
“Fully aware that nobody with an economic interest in Twitter’s financial well-being was minding the store, Wachtell arranged to effectively line its pockets with funds from the company cash register while the keys were being handed over to the Musk Parties,” wrote Marc Dworsky of Reid Collins & Tsai in the complaint.
Instagram released Threads, billed as a “new, separate space for real-time updates and public conversations” on Wednesday evening to more than 30 million downloads overnight, Zuckerbeg said. On Friday, it passed 70 million sign-ups, becoming the fastest app to hit 10 million users. It still isn’t available in the European Union due to data privacy regulations.
