A judge has reportedly dismissed a shareholder class-action lawsuit against former Twitter owner Jack Dorsey and his company Block over the acquisition of Tidal from Jay-Z.
On Tuesday (May 9), Chancellor Kathaleen McCormick threw out the case in Delaware Chancery Court, according to Reuters. The lawsuit, brought forth by the City of Coral Springs Police Officers’ Pension Plan, charged that Block, formerly known as Square, should be held responsible for the bad deal. In March of 2021, Block agreed to pay $306 million to Jay-Z for an 87.5% stake in Tidal. Following adjustments, it paid $237.3 million for an 86.2% stake.
The lawsuit accuses Block and its board of making a deal knowing Tidal was hemorrhaging money, had lost major contracts and faced a criminal probe in Norway into its streaming numbers. The company had also reportedly accepted a $50 million loan from Jay-Z to keep it afloat. The suit also accuses Dorsey of buying the platform from Jay-Z because they were friends.
Chancellor McCormick concluded that Block, Dorsey and the company’s directors should not be held liable but she reportedly referred to the deal as a “terrible business decision.”
Jay-Z purchased Tidal, formerly known as Apiro in 2015, to go up against platforms like Spotify, Pandora, SoundCloud and Apple Music. He reportedly paid $56 million for the company, which he billed as artist owned. He sold the company to Square and Dorsey six years later.
“I said from the beginning that Tidal was about more than just streaming music, and six years later, it has remained a platform that supports artists at every point in their careers,” Jay-Z tweeted about the deal at the time. “Artists deserve better tools to assist them in their creative journey.”
He added, “Jack is one of the greatest minds of our times, and our many discussions about Tidal’s endless possibilities have made me even more inspired about its future. This shared vision makes me even more excited to join the Square board. This partnership will be a game-changer for many. I look forward to all this new chapter has to offer!”
XXL has reached out to Block for comment.