Elon Musk last month announced that his $44 billion deal for the privatization of Twitter is “temporarily on hold” pending more details on the proportion of fake accounts on the platform. The Tesla CEO has now threatened to back out of the deal unless he gets the details he wants. In an amended SEC filing Tuesday, Musk said Twitter’s refusal to provide the information that he has repeatedly requested is a “material breach” of the acquisition terms. As such, he is within his rights to terminate the agreement.
Twitter has claimed that less than five percent of its monetizable daily active users (mDAUs) are fake accounts. But Musk, who has already inked a deal that would take Twitter private, believes the information isn’t accurate. He says the actual number of fake or bot accounts is a lot more. The multi-billionaire CEO of Tesla suggests Twitter’s methodology of counting such accounts isn’t efficient. He has asked the social network to provide information on how it reached that number.
However, it seems Musk isn’t happy with Twitter’s response. He said the company is simply trying to “obfuscate and confuse” the issue. Musk claims he has “made it clear that he does not believe the company’s lax testing methodologies are adequate so he must conduct his own analysis. The data he has requested is necessary to do so.”
In the amended filing, Musk notes that Twitter is obligated to provide data and information that he requests in connection with the deal. This information will enable him to prepare for transaction financing. He does not explain his rationale for the request. But he says Twitter is refusing to comply with its obligations. This gives birth to suspicions that the company is hiding something. If the social network biggie is confident in its publicized fake account proportion, it should have allowed Musk to independently evaluate the number.
Twitter refuses and says it has cooperated with Musk
Following Musk’s amended SEC filing, Twitter has released a statement saying it has cooperated with Musk regarding this matter.
“Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement. We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement at the agreed price and terms,” Twitter told Engadget in a statement.
These developments suggest the high-profile privatization of Twitter isn’t anywhere near closing yet. The deal may still fall apart. Musk has even suggested a possible reduction of the $44 billion sale price if Twitter is found to be lying about the proportion of fake accounts. We’ll have to wait and see how things evolve from here.