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Twitter shareholders approve Elon Musk’s takeover deal

Sept. 13, 2022 Updated Tue., Sept. 13, 2022 at 11:39 a.m.

Peiter “Mudge” Zatko, former head of security for Twitter, is sworn in Tuesday before he testified before the U.S. Senate.  (Tom Brenner/Washington Post)
Peiter “Mudge” Zatko, former head of security for Twitter, is sworn in Tuesday before he testified before the U.S. Senate. (Tom Brenner/Washington Post)
Washington Post

WASHINGTON — Twitter shareholders voted Tuesday to approve Elon Musk’s $44 billion offer to take over the company, a formal step in finalizing the disputed deal that is headed to court in October.

The vote followed Twitter whistleblower Peiter “Mudge” Zatko’s testimony Tuesday morning before the Senate, adding to his allegations of widespread security vulnerabilities that have ignited new political head winds and legal challenges for the social network.

Senate Judiciary Committee lawmakers subpoenaed Zatko to appear after they received copies of his SEC complaint, which alleges the company misled federal regulators and its own board about its weak defenses against hackers, efforts to fight spam and foreign influence operations on its platform.

Zatko’s allegations, first reported by The Washington Post and CNN, immediately reverberated on Capitol Hill, where lawmakers promised investigations and wrote letters calling the Federal Trade Commission to open a probe.

Twitter has said Zatko’s allegations appeared to be “riddled with inaccuracies” and that security and privacy are priorities at the company.

Shareholders gave their assent to the deal Tuesday, according to a preliminary count of a vote, the company said.

The vote took place during a short virtual meeting after brief remarks by Twitter CEO Parag Agrawal.

The result came as little surprise to those closely following the matter. Musk’s offer of $54.20 per share was substantially higher than Twitter’s current trading price, below $42.

The move by shareholders was a formal step toward finalizing the deal that heads to court in October, as Musk tries to back out. The disputed takeover heads to Delaware Chancery Court.

Shareholders were also expected consider a measure to approve payouts tied to the merger for Twitter executives, though an affirmative vote is not required to complete the deal.

Musk himself is the largest individual shareholder in Twitter at just under 10 percent, but investment firms such as Vanguard, Morgan Stanley and Blackrock hold substantial stakes in the company.

Musk has tried to back out of the deal – citing concerns over Twitter’s representations on spam and bots accounts and its statements to regulators.

Meanwhile, top Senate lawmakers repeatedly vented at the hearing that Twitter CEO Parag Agrawal would not appear before the panel but declined to say after the session whether they planned to issue a subpoena to compel him to appear.

Sens. Richard J. Durbin (D-Ill.) and Charles E. Grassley (R-Iowa), the chair and ranking member of the Senate Judiciary Committee, each told reporters they needed to consult with each other on the matter.

Asked whether he planned to hold an additional hearing on the whistleblower claims, Durbin replied: “It’s possible. I’ll talk that over with Senator Grassley.”

Grassley, who earlier said Twitter cited its legal battle with Musk as the reason Agrawal did not appear, took a jab at Agrawal after the session.

“He’s hiding behind some suit going on in Delaware. What’s that got to do with what we want to know from him?” he told The Washington Post.

Asked why as head of security he was unable to get Twitter to meet basic security standards, Peiter Zatko said his attempts were frustrated by a culture that dissuaded employees from reporting negative information.

Zatko alleged in his whistleblower complaint that executives touted internally and to the board that more than 90 percent of the company’s laptops had security software installed, while omitting the fact that the software showed that 30 percent of the machines had settings that prevented software updates from being installed automatically.

In answering questions at the hearing, Zatko said it took him more than a month to find out what the security software’s monitoring had reported.

“There was an internal culture of only reporting good results up,” Zatko alleged.

Zatko alleged that due to Twitter’s lack of internal controls, company engineers had wide system access that would allow them to tweet as other users – including U.S. senators.

Zatko said he was not specifically aware of this occurring, but the example underscored how he was grounding his claims in anecdotal examples that senators could find relatable.

In responding to lawmakers, Zatko has sought to ground his highly technical allegations by illustrating the real-world risks and harms of the company’s alleged lack of security controls.

He alleged he was aware of “numerous” situations where Twitter’s 4,000 engineers had access to sensitive personal data that could be abused, or the ability to tweet from accounts.

Sen. Lindsey O. Graham (R-S.C.) says he is working with Sen. Elizabeth Warren (D-Mass.) to create a tech regulatory regime “with teeth” that would be similar to the system in Europe, where policymakers have sought to aggressively regulate American tech giants.

“Your testimony today has legitimized what most of us feel is a process out of control, that the regulatory environment is insufficient to the task,” Graham said. “It’s time to up our game in this country.”

Graham and Warren are odd bedfellows on opposite ends of the political spectrum, underscoring how there is increasing bipartisan momentum behind efforts to regulate the tech industry.

Graham’s call for the U.S. to be more like Europe show how drastically the Republicans’ position on tech regulation has evolved in recent years, as the party historically favored a less stringent regulatory environment for businesses.

Zatko’s allegations to lawmakers in the hearing’s first 90 minutes painted a portrait of a company that has placed financial gains over establishing basic security protections that would allow it to track vast troves of sensitive data and who is accessing it.

Zatko’s answers to lawmakers have gone beyond what he disclosed in his 84-page complaint to the SEC and other regulators, revealing new details about his allegations of foreign influence from China and India on the platform.

The senators’ line of questioning has underscored that the blame does not lie on the company alone – but also on Congress and U.S. regulators who have not taken action to address the national security and privacy risks tech companies have allegedly created.

Sen. Richard Blumenthal (D-Conn.) floated the idea of creating a new tech enforcer to address data security and national security risks, and Sen. Amy Klobuchar (D-Minn.) criticized the Senate for hosting many hearings on tech policy but not passing any comprehensive legislation.

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