netflix

Netflix Will Start Charging Users for Password Sharing in March

Netflix will stop subscribers from sharing passwords with members living outside their homes as early as March this year. The streaming giant claims that the widespread sharing of passwords affects its ability to evolve the platform.

In a letter to shareholders late last week, the company said it would “roll out paid sharing more broadly” late in the first quarter of 2023.

“Today’s widespread account sharing (100 million + households) undermines our long-term ability to invest in and improve Netflix and build our business. While our terms of use limit the use of Netflix to a household, we recognize this is a change for members who share their accounts more broadly. So we’ve worked hard to build additional new features that improve the Netflix experience.”

Members will still “have the option to pay extra if they want to share Netflix with people they don’t live with.” Otherwise, subscribers can transfer an existing user profile to a new account, allowing viewing history, recommendations, the “my list” feature and other data to be copied over.

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Netflix previously hinted at discontinuing its password-sharing feature back in July 2022. The company described last year as “tough.” In the first quarter, it suffered its first subscriber loss in over a decade, losing 200,000 users.

The company has not disclosed the fee it will charge for password sharing nor stated how they plan to enforce the new pricing structure. Currently, Netflix can tell when users log in outside their primary household based on their IP address, device IDs, and other information.

In March 2022, Netflix rolled out paid sharing in Costa Rica, Chile, and Peru, charging users a fee to add two “subaccounts” to a primary account. Users found the policy confusing, and many could still share their passwords without repercussions. 

An anonymous Netflix customer service representative told Rest of World that “she was instructed that if a subscriber called arguing that someone from their household was just using the account from another location, she should inquire further and tell the subscriber that they could use their account without extra charge via a verification code.” Many of the representatives still needed more clarification about the policy.

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Other users in those countries canceled their subscriptions after receiving news of the oncoming fee. The shareholder letter stated that Netflix expects engagement to fall in the short term but will pick back up soon after.

“As we work through this transition – and as some borrowers stop watching either because they don’t convert to extra members or full paying accounts – near-term engagement, as measured by third parties like Nielsen’s The Gauge, could be negatively impacted. However, we believe the pattern will be similar to what we’ve seen in Latin America, with engagement growing over time as we continue to deliver a great slate of programming and borrowers sign-up for their own accounts.”

The anticipated sharing fee comes on the heels of a new subscription tier that Netflix started offering in November, which provides customers with a cheaper “Basic With Ads” subscription option. In exchange for $3 off a monthly subscription, viewers are served up to five ads an hour. Netflix claims that rolling out the new option led to member growth.

“Engagement, which is consistent with members on comparable ad-free plans, is better than what we had expected, and we believe the lower price point is driving incremental membership growth. Also, as expected, we’ve seen very little switching from other plans. Overall the reaction to this launch from both consumers and advertisers has confirmed our belief that our ad-supported plan has strong unit economics (at minimum, in-line with or better than the comparable ad-free plan) and will generate incremental revenue and profit, though the impact on 2023 will be modest given that this will build slowly over time.”

Tweet

Elon Musk Among Witnesses Expected to Take the Stand This Week in Tesla Tweet Trial

Elon Musk is among the expected witnesses to appear this week in the ongoing federal trial accusing him of deceptively driving up the price of Tesla stock by tweeting about taking the company private, which never happened.

The August 2018 tweet in question stated that Musk had “secured” funding to take Tesla private at $420 per share. The company’s stock was slumping at the time due to production problems.

Tesla shareholders filed a class-action lawsuit suing Musk for billions of dollars in damages for money investors say they lost after the tweet inflated share price. The trial, taking place in San Francisco, is expected to last for three weeks. 

Investor Glen Littleton from Kansas City, Missouri, is seeking damages on behalf of shareholders who traded the company’s stock in the days after Musk’s tweet. 

Littleton had purchased Tesla investments with hopes that the automaker’s stock would eventually be worth far more than $420. Upon seeing Musk’s tweet, he felt compelled to sell his Tesla stock options since he knew the completed deal would have rendered them worthless. 

He stated he sold off most of his Tesla positions to try and limit his losses, but even after doing so, the value of his Tesla portfolio plunged by 75%.

“The damage was done. I was in a state of shock.”

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The case’s outcome may depend on whether Musk knowingly raised Tesla’s stock price by tweeting that he had secured money for a $72 billion takeover of the business. The stock plummeted in value when it became apparent that he lacked the funding to complete the deal a week later. 

On Wednesday, Nicholas Porritt, lead attorney for the investors, told the trial’s jury of nine that “millions of dollars were lost when his lies were exposed.” 

“Why are we here? We are here because Elon Musk, chairman and chief executive of Tesla, lied. His lies caused regular people like Glen Littleton to lose millions and millions of dollars.” 

Porritt also pointed out that not only did Musk’s tweet cause investors to lose money, but it also affected pension funds and other organizations that owned Tesla stock.

The trial’s presiding judge, U.S. District Judge Edward Chen, has already ruled that Musk’s tweet was false and reckless. 

Porritt took advantage of the judge’s verdict and told the jury they should presume Musk’s tweet was false, which the judge permitted.

“When the CEO of a public company like Tesla lies about his company and hurts investors, it’s critical that he is held accountable for that harm that he causes.”

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In his opening statements, Musk’s attorney Alex Spiro insisted that Musk was “serious” about the buyout when he tweeted about securing funding.

“You will come to learn very soon that this was not fraud, not even close.”

Spiro argued that the rise in Tesla’s stock price after the tweet was due to investors’ faith in Musk’s capabilities and reputation as a visionary.

“Mr. Musk tries to do things that have never been done before. Everyone knows that.”

According to Spiro, Musk and representatives from the Public Investment Fund of Saudi Arabia had already discussed taking Tesla private.

“He didn’t plan to tweet this. It was a split-second decision.”

Spiro said Musk used the “wrong words” in a rush to be transparent about the potential deal with the Saudi fund.

Musk is on the witness list for both sides of the case. Porritt told The Associated Press that Musk is expected to take the stand when the trial resumes on Friday, if time permits, or on Monday.

tesla

Tesla Vehicles Are Becoming Cheaper, What This Means For The Company 

Tesla has recently cut their prices on some of their top-selling models, including the Model Y SUV and Model 3, by up to 20% across the US and Europe. The changes were revealed on Tesla’s website last Thursday. 

While the vehicles are still relatively expensive, the drop is significant when compared to its previous premium pricing. Many are speculating that these decreases are a sign of Tesla backing away from the months they spend gradually raising the prices of the electric vehicles. 

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Tesla has also experienced the impact of the economy in recent months, missing market estimates for sales last year, shifting its market capitalization from $1 trillion to less than $400 billion, according to reports from Business Insider.

Company owner Elon Musk has recently bought and taken over the popular social media platform Twitter, where he’s made it clear that rising interest rates in general have been taking a toll on the electric vehicle company. 

“Fed needs to cut interest rates immediately, they are massively maplifting the probability of a severe recession,” Musk tweeted in November. 

Interest rate increases have had a major impact on the costs of financing Tesla vehicles, making it even more difficult for consumers to become a Tesla owner. 

Dan Ives, senior equity research analyst at Wedbush Securities, said “it’s no secret that demand for Tesla is starting to see some cracks as a global slowdown of the economy that started in 2022 continues into 2023.”

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“A softening demand for the global EV market is a bigger driver of price cuts than interest rate hikes. When it comes to demand, backlog orders have come down significantly for Tesla, making price cuts is a good way to increase the immediate- and medium-term sales pipeline,” said Simon Moores, CEO of Benchmark Mineral Intelligence, a price reporting agency for the EV supply chain, to Insider. 

Traditional automakers have also entered the electric vehicle market, providing cheaper alternatives to Tesla, which has dominated the EV market since its launch. 

According to data from an Experian report, from January to September 2022, Tesla accounted for 65.4% of new electric vehicle registrations in the US. This percentage marks a significant decrease from the two previous years: 68.2% in 2021 and 79.4% in 2020. 

The cuts to Tesla pricing will likely welcome more consumers to purchase the vehicles. Ives stated that he estimated the price cuts could definitely increase demand by around 12-15% globally in 2023. 

“This is a clear shot across the bow at European automakers and US stalwarts (GM and Ford) that Tesla is not going to play nice in the sandbox with an EV price war now underway,” he said.

goldman sachs

Goldman Sachs Gearing Up To Lay Off Up To 3,200 Employees This Week 

According to reports from an individual involved in Goldman Sachs, the company will be laying off up to 3,200 employees this week as a means of saving on costs. 

The source who spoke with CNN stated that more than a third of the projected layoffs will come from the firm’s trading and banking units. These cuts are a result of uncertain economic and market conditions, as Goldman Sachs has recently been feeling the impacts of a decrease in global dealmaking. Many companies are leaning away from mergers and raised capital with the firm. 

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As reported by Bloomberg, hiring for roles in other departments will continue into the new year, and a new class of analysts are also expected to start working for the firm later this year. 

At the end of the third quarter Goldman Sachs reported having around 49,100 employees after adding thousands of positions during their recovery from the pandemic; which many financial markets have also done. 

Overall, the Federal Reserve and other major banking firms have begun to raise their borrowing costs as a means of combating inflation rates throughout the nation. 

Many companies are working on saving money by any means necessary to prepare for a possible recession that would occur as a result of rising interest rates. The rate of mergers and acquisitions have overall been on the decline as well. 

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Goldman Sachs is one of the most well known firms that’s involved in these mergers and acquisitions as well. So with the recent decline in transactional activity, the firm experienced a 12% drop in revenue in the third quarter of 2022 when compared to one year ago. 

Investment banking revenue overall has decreased by 57% yearly, according to reports

This past October Goldman Sachs announced part of its plan to streamline operations by combining their trading and investment banking divisions, as well as combining its digital consumer bank, known as Marcus, with its wealth management sector. 

Reports indicate that shares of Goldman Sachs were up less than 1% in premarket trading as of this week. 

Goldman Sachs isn’t the only massive company planning on implementing layoffs in their 2023 plans. Amazon stated earlier this month that they plan on laying off more than 18,000 employees while Morgan Stanely have already begun layoffs in the new year.

twitter

Twitter CEO Elon Musk Makes Drastic Cuts Within Company: Fires Janitorial Staff 

According to a recent report from The New York Times, Twitter CEO tech billionaire Elon Musk has been making drastic cuts within the company ever since he purchased the platform for $44 billion. 

One of the most recent and seemingly random cuts from the company involved firing the entire janitorial staff, as well as forcing employees to bring their own toilet paper to work every day. 

“Early on Christmas Eve, members of the billionaire’s staff flew to Sacramento — the site of one Twitter’s three main computing storage facilities — to disconnect servers that had kept the social network running smoothly,” the NYT reported

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“Some employees were worried that losing those servers could cause problems, but saving money was the priority, according to two people who were familiar with the move but not authorized to talk about it.”

“The data center shutdown was one of many drastic steps Mr. Musk has undertaken to stabilize Twitter’s finances,” said the report. 

“Over the past few weeks, Twitter had stopped paying millions of dollars in rent and services, and Mr. Musk had told his subordinates to renegotiate those agreements or simply end them. 

The company has stopped paying rent at its Seattle office, leading it to face eviction, two people familiar with the matter said. Janitorial and security services have been cut, and in some cases employees have resorted to bringing their own toilet paper to the office.”

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Musk has also made numerous changes to the platform itself within the time he’s been active CEO, many of which have received backlash from users. 

He’s banned several journalists from covering news regarding himself, including reporters who pointed out his hypocrisy in some of the policy decision making. Specifically his choice to ban a user from tracking the movements of his private jet and an account that covers issues at Musk’s company Tesla, which are public reports. 

All of the “bans” have been partially reversed, however, due to the intense backlash from users. 

Reports are also stating that Musk is in the process of looking for a new CEO to run Twitter for him. He stated he would step down from the position once he finds someone “foolish enough” to take on the role. 

google

Texas Sues Google Over Facial Data Collection

The state of Texas is suing Google for illegally collecting Texans’ facial and voice recognition information without their consent, according to a statement issued by the state attorney general’s office on Thursday.

For over a decade, a Texas consumer protection law has barred companies from collecting data on Texans’ faces, voices or other biometric identifiers without receiving prior informed consent. Ken Paxton, the state’s attorney general, said Google violated this law by recording identifiers such as “a retina or iris scan, fingerprint, voiceprint, or record of hand or face geometry.

“In blatant defiance of that law, Google has, since at least 2015, collected biometric data from innumerable Texans and used their faces and their voices to serve Google’s commercial ends. Indeed, all across the state, everyday Texans have become unwitting cash cows being milked by Google for profits.”

The law imposes a $25,000 fine for every violation. According to reports, millions of users in Texas had their information stored. The complaint explicitly references the Google Photos app, Google’s Nest camera, and Google Assistant as means of collection.

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A spokesman for Google, José Castañeda, accused Paxton of “mischaracterizing” products in “another breathless lawsuit.”

“For example, Google Photos helps you organize pictures of people by grouping similar faces, so you can easily find old photos. Of course, this is only visible to you, and you can easily turn off this feature if you choose and we do not use photos or videos in Google Photos for advertising purposes. The same is true for Voice Match and Face Match on Nest Hub Max, which are off-by-default features that give users the option to let Google Assistant recognize their voice or face to show their information. We will set the record straight in court.”

This lawsuit is the latest in a string of major cases brought against the company. Earlier this month, Arizona settled a privacy suit against Google for $85 million. Indiana, Washington and the District of Columbia also sued Google in January over privacy invasions related to location tracking.

In a much larger antitrust case, 36 states filed a lawsuit against Google in July over its control of the Android app store.

Paxton has gone after large technology corporations in the past for their privacy and monopolizing practices. In 2020, his office joined nine other states in filing an antitrust lawsuit against Google, which accused it of “working with Facebook Inc. in an unlawful manner that violated antitrust law to boost its already-dominant online advertising business.”

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After the Jan. 6 insurrection, Paxton demanded Twitter, Amazon, Apple, Facebook and Google to be transparent about their content moderation procedures. This year, he also opened an investigation into Twitter over its reported percentage of fake accounts, saying that the company may be disingenuous about its numbers to inflate its value and raise its revenue.

In February, Paxton sued Meta for facial recognition software it provided users to help tag photos. The lawsuit is ongoing. However, Instagram is now required to ask for permission to analyze Texans’ facial features to properly use facial filters.

“Google’s indiscriminate collection of the personal information of Texans, including very sensitive information like biometric identifiers, will not be tolerated. I will continue to fight Big Tech to ensure the privacy and security of all Texans.”

In 2009, Texas revealed its privacy law, which covered biometric identifiers. Other states were implementing similar laws around the country during this same time. Texas was unique in that in the case of violations, the state of Texas would have to sue on behalf of the consumers.

uber

Labor Department Proposes Rule To Grant Gig Workers Employee Status

On Tuesday, the Labor Department revealed a new proposal that would make it harder for companies to classify workers as independent contractors rather than employees. This rule would impact the on-demand economy, which includes companies like Uber and Lyft.

Workers granted employee status qualify for benefits and protections like paid leave, minimum wage and overtime pay. Employers would also have to contribute to a portion of worker Social Security taxes and unemployment insurance.

Labor Secretary Marty Walsh spoke about the significance of the proposed rule in a prepared statement.

“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers. Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages. The Department of Labor remains committed to addressing the issue of misclassification.”

Labor Unions have long urged the Biden administration to scrutinize industries that rely on contractors, including app-based ride services, food delivery services or freelance task platforms like Handy, which connects customers with house cleaners and other home-improvement specialists.

Fair labor advocates stress that gig economy workers face more barriers to unionizing and cannot take advantage of essential benefits afforded to workers classified as employees.

The Labor Department said this misclassification is rampant in several industries, including home care, janitorial services, delivery, trucking and construction services. The misclassification also makes it difficult for businesses to compete with those that misclassify workers as contractors by promoting wage theft.

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The proposed rule is a test that determines whether a worker who is economically dependent on a company should have contractor or employee status. It takes into account factors such as the level of control workers have over how they do their jobs or how many new opportunities they have to increase their earnings by offering new services. Workers who have limited control over either are deemed employees. The rule also requires employers to consider if an employee’s work is an integral part of their business.

It is important to note that the rule is interpretive and does not have the legal force of a congressionally approved regulation. It also only applies to laws the Department of Labor enforces, such as the federal minimum wage. State agencies and other federal agencies like the IRS would still be able to use their own criteria for employment status.

However, employers and regulators will likely consider the proposed rule as guidance for deciding on how to classify workers. Judges will also likely look to the test as a guide.

Patricia Campos-Medina, executive director of the Worker Institute at Cornell University’s School of Industrial and Labor Relations, considers this new move from the Biden administration a big step.

“This is a long-awaited determination that will empower essential workers to assert their basic wage and hour, health and safety and compensation rights. All workers are entitled to these rights, but employers easily avoid them by making arbitrary decisions on independent contractor rules.”

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The Biden administration’s rule would replace the Trump administration’s guidance on worker classification. The previous administration’s guidance made it easier for companies to misclassify workers as contractors. The new proposal will likely face opposition from businesses and organizations that supported the previous rule.

According to The Hill, Uber and Lyft stocks fell around 14% after the announcement. The new proposal could also increase labor costs for gig-based companies by about 30%.

CR Wooters, head of federal affairs at Uber, claimed this does not imply an inevitable negative outcome for the company.

“Today’s proposed rule takes a measured approach, essentially returning us to the Obama era, during which our industry grew exponentially.”

dollar

Surging US Dollar Wreaks Havoc on Global Economy

The U.S. dollar is the strongest it has been in the last 20 years. The rising value of a dollar has worldwide ramifications, with international currencies plummeting in comparative value and foreign central banks hiking up interest rates to protect price stability.

The dollar continues to strengthen as the U.S. Federal Reserve continues its aggressive monetary policy, raising interest rates to bring down inflation in the U.S. economy. The Dollar Index, which measures the U.S. dollar against an average of six major global currencies, including the euro, Swiss franc, Japanese yen, Canadian dollar, British pound and Swedish krona, has risen 15% in 2022.

A stronger dollar can purchase more foreign currency. The British pound plummeted to a record low on Sept. 26, reaching $1.03 against the dollar in a near historic dollar-to-pound parity. Historically, the pound has always been valued higher than a dollar, usually upward of $1.20 against the dollar.

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The effects of a strengthening dollar reverberate throughout the global financial system since the dollar is the currency used in most international transactions. Recent shocks to the global economy, such as the war in Ukraine, supply chain disruptions and the pandemic, push up the dollar’s value even higher since companies and other countries stow their reserves in dollars during economic volatility.

The dollar is traditionally seen as a symbol of “stability and security” in terms of crisis. Moreover, despite ongoing inflation, the U.S. economy is still more stable than other nations’ economies. Consumer spending is still strong, and unemployment is still low.

George Saravelos, Deutsche Bank’s head of foreign exchange research, noted the building tension in the global economy.

“The dollar is experiencing its largest valuation overshoot since the 1980s. Amid extreme volatility, a global chorus of discomfort is slowly building.”

American tourists and U.S. consumers benefit from a stronger dollar since goods and services produced in other countries and sold in the U.S. become less expensive to purchase. A stronger dollar also helps U.S. companies import goods at lower prices. Tourists traveling abroad can also buy goods at lower prices since the dollar has stronger buying power.

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However, American businesses that export goods struggle under a strengthening dollar since goods made in the U.S. become more costly and less attractive to buyers in other countries. Multinational businesses that operate in other countries also make less profit when they convert revenue in foreign currency to U.S. dollars.

Smaller emerging economies worldwide especially struggle with the rising cost of the dollar since international companies borrow and trade money in dollars. The world’s commodities, like oil, industrial metals, wheat and soybeans, are priced in dollars and increasingly more expensive to import. Petrol now costs more in several countries worldwide. Countries with debt denominated in dollars will also see higher interest payments, no matter the initial exchange rate.

As reported by the NYTimes, Mr.Obstfeld, a U.C. Berkeley economist, spoke on the far-reaching impact of the Fed’s monetary policy.

“Central banks have purely domestic mandates, but financial and trade globalization have made economies more interdependent than they have ever been and so closer cooperation is needed. I don’t think central banks can have the luxury of not thinking about what’s happening abroad.”

At the same time, the consequences may be even worse for the global economy if the Fed does not bring down historical inflation rates in the U.S.

Central banks around the world are trying to raise the value of their currencies by increasing interest rates, similar to what the Fed is doing in the U.S. The U.K. increased its rate by 2%, and analysts predict they may raise it to as high as 6%. The European central bank has increased its interest rate by 1.25 percentage points. These rising rates may push many countries into a recession if raised too high by decreasing borrowing and spending and reducing economic activity.

dow

Dow Tumbles More Than 1200 Points After Inflation Data

US stocks plummeted Tuesday after the latest Consumer Price Index report showed inflation rates are still at a 40-year high. The Dow fell more than 1200 points on its worst day since June 2020.

The report revealed that monthly consumer prices rose more than expected in August. History shows that low unemployment and rising inflation often precede a recession. High inflation rates erode consumer purchasing power. They also decrease companies’ profits due to rising material costs, causing stocks to fall and economic activity to slow down.

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Matt Peron, director of research at Janus Henderson Investors, agreed with most analysts that the Federal Reserve will likely increase the federal funds rate higher to cool off the market.

 “The CPI report was an unequivocal negative for equity markets. The hotter than expected report means we will get continued pressure from Fed policy via rate hikes.”

The Fed responds to rising inflation by increasing the federal funds rate. In the wake of the pandemic, the rate sat at near zero in an attempt to stimulate the economy. The Fed then hiked rates from a range of 0.25% to 0.50% in March 2022 to a range of 2.25% to 2.5% in July 2022. The rate of increase in borrowing costs was the fastest since the 1980s.

When the Fed raises the federal funds rate, the cost of credit throughout the economy increases and loans become more expensive for businesses and consumers, since interest payments are higher. At the same time, people with savings in banks earn more interest on their deposits. Together, this drops the amount of money in circulation, bringing down the inflation rate. However, if the Fed increases the federal funds rate too high, it may also trigger a recession by slowing economic activity too much.

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The Fed is expected to keep hiking the federal funds rate until a sustained drop in consumer price inflation. Investors hoped that the Fed would keep its interest rate increases at a slower speed, with analysts predicting a federal funds rate of 3.4% at the end of the year. Brian Jacobsen, a senior investment strategist at Allspring Global Investments, told Reuters his concerns.

“The big risk is that next week, the Fed tries to convince the markets that they’re not going to just try to go for 4% with the Fed funds rate, but that they could push it to something closer to four and a half percent.”

All three major US stock indexes — S&P 500, the Dow, and Nasdaq had their most significant one-day percentage drops in over two years. The CBOE volatility index, which measures the market’s expectations for volatility over the next 30 days, rose to 25.74 points.

The next Federal Reserve meeting is scheduled for Sept. 20.

 

twitter

Judge Rules Elon Musk Can Use Whistleblower Claims in Twitter Lawsuit

Twitter paid $7 million to former security chief Peiter Zatko before he filed a whistleblower complaint against the company. A judge has ruled that Zatko’s allegations can be part of Elon Musk’s defense in his legal battle with Twitter.

Zatko alleges the social media giant covered up known security issues and used weak safeguarding measures to protect its users’ sensitive data.

The settlement between Zatko and Twitter occurred before Zatko filed his whistleblower complaint in July and concerned Zatko’s lost compensation after being fired from the company in January. It contained a nondisclosure agreement restricting him from speaking poorly about the company or releasing information about his time as cybersecurity head at Twitter.

The settlement contained a clause that allows him to speak at congressional hearings and governmental whistleblower complaints, as many NDAs do.

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On Tuesday, Zatko will testify before the U.S. Senate Judiciary Committee about his knowledge of the security flaws in Twitter’s infrastructure. Zatko claims that he “uncovered extreme, egregious deficiencies by Twitter in every area of his mandate.”

Employees had access to integral company software, which led to the “commandeering of accounts” held by high-profile figures. Several heads of state, government officials and well-known celebrities have long used the website to communicate with the public.

Since July, Musk has been trying to back out of his deal to buy the company for $44 billion. Twitter has begun a legal battle against him, citing Musk’s bad faith in breaching his contract with the company. In a 62-page legal document, Twitter documented Musk’s behavior throughout the ordeal with colorful language and photos of his many tweets regarding the acquisition.

“Having mounted a public spectacle to put Twitter in play and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he—unlike every other party subject to Delaware contract law—is free to change his mind, trash the company, disrupt its operations, destroy stockholder value and walk away.”

Musk’s lawyers plan to use the information Zatko divulged about Twitter’s security vulnerabilities as a central part of their case. Twitter’s shareholders will also cast votes on Musk’s takeover of the company Tuesday.

Musk’s defense to back out of the acquisition is that the company did not disclose the number of bots its userbase contains, tweeting, “Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.”

The timeline of Musk’s tech deal with Twitter is erratic and turbulent. The lawsuit document cites many of Musk’s posted memes and tweets, which Twitter’s legal team will use to show how Musk treated the process as an “elaborate joke.” At one point, he responded to a Twitter thread by Twitter’s CEO Parag Agarwal, which explains Twitter’s handling of spam accounts, with a “poop emoji.”

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On April 4, Musk was revealed to be Twitter’s largest shareholder at 9% of the company’s shares.

On April 5, CEO Parag Agarwal announced that Musk would join Twitter’s board of directors with the agreement that Musk could not acquire more than 15% of shares before 2024. Musk had been purchasing shares since January.

On April 10, Agarwal revealed that Musk would no longer be joining the board.

On April 14, Musk offered to buy the remaining Twitter shares for $41.4 billion. In response to this, Twitter adopted a “poison-pill strategy,” which allows other shareholders to buy more shares at a discounted rate if a person or entity purchases more than a certain percentage of common stock without the board’s approval. It is used to prevent a company takeover by a hostile buyer.

On April 25, Twitter agreed to sell itself to Musk for $44 billion.

On May 13, Musk tweeted that the deal was temporarily on hold, citing his concerns about spam accounts. Shares of the company immediately plummeted.

On July 8, Musk tried to terminate the acquisition agreement.

On July 12, Twitter sued Musk for failing to meet contractual obligations.

Zatko’s complaint supports Musk’s allegations about the percentage of bots the website’s user base contains.

“There are many millions of active accounts that are not considered “mDAU,” either because they are spam bots or because Twitter does not believe it can monetize them. These millions of non-mDAU accounts are part of the median user’s experience on the platform. And for this vast set of non-mDAU active accounts, Musk is correct: Twitter executives have little or no personal incentive to accurately “detect” or measure the prevalence of spam bots.”

Twitter believes that Musk started to back out of the deal when Tesla stocks began to decline due to stock market trends. Most of Musk’s wealth is not liquid, and he was planning to finance most of the deal with Twitter using Tesla stock.