Now, one state attorney general with an outsize personality
and edge-skating stance nearly in the league of Elon Musk is striding into the
maelstrom of Musk's $44 billion now-tenuous bid for Twitter. He is launching an
investigation of Twitter for “potential false reporting” of bots on its
platform to bolster complaints Musk himself made this week in threatening to
walk away from the deal.
Texas Attorney General Ken Paxton announced his investigation
of Twitter on Monday just hours after Musk, the billionaire Tesla and SpaceX
CEO, accused Twitter of refusing to disclose the extent of its spam bot and
fake accounts.
The unexpected turn in the months-long drama of Musk and
Twitter sent that company's shares down 1.5 percent, likely angering
shareholders who had filed suit against Musk last month, accusing him of
deflating the stock price. Twitter's shares have tumbled more than 20 percent
in the last month. They closed at $40.13 Tuesday, up 57 cents.
Paxton's unusual move struck observers as singular and
possibly inappropriate, though he likely has the legal authority to pursue it.
In launching his investigation, Paxton suggested that Twitter might have
violated Texas' Deceptive Trade Practices Act.
The state attorney general's move against Twitter is far
different from the growing legal actions taken by groups of states that have
joined to target alleged anticompetitive practices by Google and Meta, for
example, or to investigate TikTok and its possible harmful effects on young
users' mental health.
Individual state attorneys general don't normally
investigate a major publicly traded company over its regulatory filings. In
Twitter's case, the data it submitted to the US Securities and Exchange
Commission involve complex federal law.
“The SEC has the resources and the expertise and the legal
remedies for this, and I doubt that Texas has any of these,” Marc Fagel, a
securities law expert who was the regional director of the SEC's San Francisco
office, said in an interview. “It's a headline-based investigation as far as I
can tell.”
Johnny Koremenos, a spokesman for the Republican Attorneys
General Association, told The Associated Press that he's unaware of any other
state attorney general who might be planning to launch a similar investigation
into Twitter.
James Tierney, a former Maine attorney general who teaches
at Harvard, was critical of Paxton's probe, which he sees as aiding Musk, whose
electric car maker Tesla recently opened a plant in Texas' capital of Austin.
“Consumer laws exist to protect consumers from real harm,”
Tierney said. “They do not exist to allow a government official to meddle in
ongoing corporate transactions on behalf of a constituent.”
Paxton notes that Twitter had said in its filings with the
SEC that fewer than 5 percent of all users are bots, when, Paxton asserts,
“they may in fact comprise as much as 20 percent or more" of the 229
million total accounts. Musk contended in a May tweet, without providing
evidence, that 20 percent or more are bogus.
Paxton demanded that Twitter turn over documents by June 27 to
show how it calculates and manages its user data.
“The difference could dramatically affect the cost to Texas
consumers and businesses who transact with Twitter,” such as advertisers,
Paxton contended in his announcement. He asserted that the disparity may
inflate the value of Twitter, now estimated at $30.5 billion, and raise the
costs of doing business with it.
Twitter spokespeople declined comment Tuesday on Paxton's
announcement. The company said in a statement Monday that it has been
cooperatively sharing information with Musk in accordance with the terms of the
merger agreement.
The Texas attorney general, who has long carved out a
distinctive public persona, isn't likely to mind any criticism.
A Republican currently running for a third term as the
state's top lawyer, Paxton has yet to have his day in court after being
indicted on securities fraud charges in 2015, and his career has upended what
it means to be a compromised officeholder in Texas.
His critics say Paxton has become an example of how powerful
public figures can drag out even normally career-threatening criminal charges
and defy predictions of their political demise.
Conservative Republicans, who accuse social media like
Twitter of anti-conservative bias and censoring views of those opposed to
abortion and others, have embraced Musk's bid for Twitter because of his
advocacy of free speech in place of the platform's content moderation.
Paxton's fellow Texan US Senator Ted Cruz has called Musk's
move “the biggest development for free speech in decades."