Twitter Investors Back Musk’s Takeover Bid After Whistleblower Testifies in Congress

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,” Sen. 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,” Sen.

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.

Twitter didn’t respond to a request for comment.

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.

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 Oct. 17.

Twitter shareholders approved the takeover offer based on a preliminary tally of votes, the company said after polling closed Tuesday. Investors were poised to approve the deal, which is for $54.20 per share, by a wide margin based on early voting, The Wall Street Journal first reported Monday.

Twitter shares rose around 2% in Tuesday afternoon trading.

Saudi Prince al-Waleed bin Talal, who agreed to roll his nearly 5% stake into the deal before Mr. Musk’s change of heart, voted his shares in favor 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.

If the judge were to force Mr. Musk to consummate the transaction, he could be on the hook for more than $33 billion in equity financing, according to a regulatory filing. The

Tesla Inc.

boss in August sold roughly $7 billion 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 Inc.

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.”

—John D. McKinnon and Cara Lombardo contributed to this article.

Write to Alexa Corse at alexa.corse@wsj.com and Sarah E. Needleman at sarah.needleman@wsj.com