Elon Musk Threatens to Exit Twitter Deal as Row over Fake Users Escalates
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Elon Musk Threatens to Exit Twitter Deal as Row over Fake Users Escalates

Created 1yr ago, last updated 1yr ago

The billionaire's users allege that the social network has repeatedly refused to provide information about how it measures the number of spam and fake accounts on its platform.

Elon Musk Threatens to Exit Twitter Deal as Row over Fake Users Escalates

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Elon Musk is threatening to abandon his Twitter takeover — and has accused the social network of "thwarting" his attempts to learn more about the company.

In a new letter, the billionaire's lawyers claim that Twitter has repeatedly refused to provide information relating to spam and fake accounts — and specifically, how the platform measures the number of fake users.

Musk's legal team claims the tech giant's methods for detecting bots are "lax" — and while Twitter has insisted about 5% of its users fall into this category, Tesla's CEO previously argued the true figure could be much higher. The letter adds:

"As Twitter's prospective owner, Mr Musk is clearly entitled to the requested data to enable him to prepare for transitioning Twitter's business to his ownership and to facilitate his transaction financing. To do both, he must have a complete and accurate understanding of the very core of Twitter's business model — its active user base."

The actual thrust of Musk's argument makes sense. If Twitter says it has a particular number of daily active users, but a sizable chunk of them aren't real, this could affect the social network's ability to make money from advertising… and affect its overall valuation.

But critics are accusing the billionaire of trying to find an excuse to escape the deal after a sharp fall in Tesla's share price, where most of his wealth is locked up. Skeptics also point to the fact that Musk knew spam accounts were an issue on Twitter — after all, he's publicly said that this is one of the main reasons he's buying the company.

The letter, addressed to Twitter's chief legal officer Vijaya Gadde, goes on to warn that failing to disclose information about how fake users are calculated means Musk has the right to pull out of the transaction altogether.

Uncertain Times

Both sides have been going back and forth on this issue for some time now.

Back in the middle of May, Musk declared that he thinks the true number of fake or spam accounts on Twitter stands at 20% — four times higher than the social network's own estimates.

He went on to accuse Twitter's CEO, Parag Agrawal, of failing to provide proof that its data is accurate.

Twitter is determined to push ahead with the acquisition for the price of $54.20 a share that was previously agreed, but this is a generous premium on the current price of $39.56.

Musk may have to pay a $1 billion fee if he pulls out of the deal — and could also be sued — and all of this could be an attempt to create context.

Hargreaves Lansdown analyst Susanna Streeter says this letter is the surest sign yet that Musk is prepared to walk away from the deal — and the formal document marks a departure from his accusatory tweets. She added:

"Given the added volatility which has hit the tech sector since Mr Musk made his offer, it's highly likely he's after a cheaper price even if Twitter does provide the data requested in support of its initial analysis."

Elon Musk's takeover was meant to wrap up this year, but the toing and froing between both sides could mean that delays are inevitable.

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