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Texas AG Strides into Twitter Takeover Drama to Bolster Musk

He is launching an investigation of Twitter for "potential false reporting" of bots.

Texas Attorney General Ken Paxton speaks in Washington on Jan. 6, 2021.
Texas Attorney General Ken Paxton speaks in Washington on Jan. 6, 2021.
AP Photo/Jacquelyn Martin, File

WASHINGTON (AP) — State officials across the nation have taken on Big Tech companies in the courts and state legislatures, and federal regulators have nipped at Twitter over alleged violations of users’ data privacy.

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%, 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% 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 U.S. 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% of all users are bots, when, Paxton asserts, “they may in fact comprise as much as 20% or more" of the 229 million total accounts. Musk contended in a May tweet, without providing evidence, that 20% 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 U.S. Sen. Ted Cruz has called Musk's move “the biggest development for free speech in decades."

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