Twitter investors back Musk bid as whistleblower testifies

Saudi Prince al-Waleed bin Talal, who had previously agreed to roll his stake into Musk’s deal, also voted yes as Peiter Zatko echoed his ‘profits over security’ claims against Twitter.

Peiter Zatko, former head of security at Twitter, testifies before the Senate Judiciary Committee on data security at Twitter. Picture: Kevin Dietsch/Getty Images

Twitter investors backed Elon Musk’s $US44bn bid that the billionaire is trying to abandon on the day a whistleblower who levelled charges of widespread security failures at the social-media company testified at a Senate hearing.

Former Twitter security executive Peiter Zatko, who was fired by the company in January, told the Senate Judiciary Committee overnight that Twitter executives’ “incentives led them to prioritise profits over security”, echoing his whistleblower complaint.

Twitter has pushed back against his charges, and said he was making misleading statements. He has been called before the committee to provide more information on his assertions.

Democrats and Republicans have raised concerns about social-media companies in recent years over how they use and protect customer data.

“Twitter is an immensely powerful platform that cannot afford gaping security vulnerabilities,” Senator Dick Durbin, chairman of the Judiciary Committee and a Democrat from Illinois, said in opening remarks at the hearing.

“The whistleblower disclosures paint a very disturbing picture of a company that’s solely focused on profits at any expense, including at the expense of the safety and security of its users,” Senator Chuck Grassley, from Iowa and the committee’s top Republican, said.

Mr Grassley said Twitter chief executive Parag Agrawal declined to answer questions at the hearing, citing the ongoing litigation over Mr Musk’s takeover bid of the company.

The senator added the allegations raised questions about the CEO’s leadership.

Democrats and Republicans raised concerns about user data potentially being exposed to foreign intelligence agencies.

Mr Zatko at the hearing reiterated his claims that foreign agents working for Chinese and other governments may be employed at the company.

Last month, a former Twitter employee was found guilty of spying for Saudi Arabia by accessing private user information in exchange for money.

Twitter’s security team “had been contacted and told that there was at least one agent of the MSS, which is one of China’s intelligence services, on the payroll inside Twitter,” Mr Zatko said.

The Chinese Embassy in Washington didn’t immediately respond to a request for comment.

Twitter said the hearing showed Mr Zatko’s allegations were “riddled with inconsistencies and inaccuracies,” a company spokeswoman said.

Tesla chief executive Elon Musk’s fight with Twitter over a withdrawn takeover bid next month will also reference Zatko’s claims. Picture: Odd Andersen/AFP

She added Twitter’s hiring process is independent of any foreign interference and that it undertakes measures such as background checks, access controls and monitoring systems to safeguard data.

Mr Zatko has become a factor in the legal drama unfolding over Mr Musk’s effort to walk away from the Twitter takeover.

Twitter sued Mr Musk in July over his attempt to renege on the deal.

Mr Musk filed a countersuit, accusing the company of misrepresenting the condition of its business and key metrics about the users on its platform.

Twitter has argued Mr Musk got cold feet after market conditions deteriorated.

Last week, Mr Musk got court approval to amend his suit to include aspects of Mr Zatko’s assertions.

Even as he expressed concerns about the platform, Mr Zatko, at the hearing, called Twitter “a hugely valuable service.”

The case is being fought out in Delaware Chancery Court, with a five-day nonjury trial set to start October 17.

Twitter shareholders approved the takeover offer based on a preliminary tally of votes, the company said after polling closed on Tuesday.

Investors were poised to approve the deal, which is for $US54.20 per share, by a wide margin based on early voting, The Wall Street Journal first reported on Monday.

Saudi Prince al-Waleed bin Talal, who agreed to roll his nearly 5 per cent stake into the deal before Mr Musk’s change of heart, voted his shares in favour of the deal, according to a person familiar with the matter.

While his vote wasn’t crucial with the largest shareholders including index-fund managers supporting the deal, it is notable because he has been aligned with Mr Musk as one of the 19 investors who agreed to help him finance the deal.

Representatives for Mr Musk didn’t immediately respond to a request for comment on the outcome of the vote.

The billionaire overnight said on Twitter his tweets were being suppressed, without providing evidence.

Twitter didn’t immediately respond to a request for comment on Mr Musk’s assertion.

If the judge were to force Mr Musk to consummate the transaction, he could be on the hook for more than $US33bn in equity financing, according to a regulatory filing.

The Tesla boss in August sold roughly $US7bn worth of the electric-vehicle maker’s stock, according to regulatory disclosures, and suggested he did so in case he is forced to buy Twitter.

Mr Zatko filed his complaint with the Securities and Exchange Commission, the Federal Trade Commission and the Justice Department, which are expected to investigate.

Mr Zatko was hired by Twitter in 2020 after an embarrassing hack of some high-profile users’ accounts, including then-presidential candidate Joe Biden and former President Barack Obama, as well as Amazon.com founder Jeff Bezos and Mr Musk.

Mr Zatko said he was fired after clashing repeatedly with top executives over the depth of the company’s security problems and appropriate solutions.

Twitter has said Mr Zatko was fired “for ineffective leadership and poor performance” and that his whistleblower complaint “is riddled with inconsistencies and inaccuracies and lacks important context.”

With John D McKinnon and Cara Lombardo

– The Wall Street Journal