Elon Musk Unable to Verify Twitter’s Bot Numbers, Deal in Jeopardy: Report
Three sources with knowledge of the proceedings told the publication that Musk and his team have been unable to verify Twitter’s claims about how many spam and fake accounts the platform has, despite the latter handing over all of the data Musk requested for the evaluation and then some.
According to one of the sources, Musk’s team has suspended certain discussions regarding funding with potential backers. Until now, Musk had been aggressively seeking investors to go in on the bid with him.
Talks with investors have cooled in recent weeks as Musk’s camp has raised doubts about the recent data “fire hose” — a trove of data sold to corporate customers — they received from Twitter. Musk’s team’s doubts about the spam figures signal they believe they do not have enough information to evaluate Twitter’s prospects as a business, the people said.
Twitter said in a filing earlier this year that bot accounts, by its calculations, accounted for less than 5% of its monetizable daily active users during the first quarter of this year.
Musk, however, believes that number is closer to 20% (and could even be higher). The celebrity billionaire asked Twitter for proprietary data to conduct an independent analysis of bot accounts on the platform, and even threatened to walk away from the deal if Twitter hadn’t complied.
With Musk’s team concluding it cannot verify Twitter’s estimates, however, the deal is at risk of falling apart. One of the sources said Musk and his team are now likely to make a drastic change in direction. They did not say what that change would be, though.
There’s more than just the issue of bot accounts giving Musk second thoughts. Twitter’s share price has taken a beating since Musk made his offer public in April. As has Tesla’s stock, which comprises the majority of Musk’s wealth is tied.
If Musk pulls out of the deal, he will owe Twitter $1 billion for backing out. That said, the breakup fee may just be cheaper than buying the financial dumpster fire that is Twitter.
The social media giant, meanwhile, is committed to closing the deal. Since the takeover cleared the federal antitrust waiting period last month, Twitter is gearing up to put the offer up for a vote at its next shareholders’ meeting. Twitter may actually try to legally force Musk to keep up his side of the agreement if he tries to get out of it.