If the information on the genuine user accounts for the social media site can be verified, Elon Musk’s acquisition of Twitter command still go through.
Musk is curious about the ratio of “spam bots” versus actual people.
Tesla CEO Elon Musk, a multibillionaire, agreed to buy Twitter in April for $44 billion but has been attempting to back out of the agreement ever since, claiming that Twitter misled his team about the size of its user base and other issues that amounted to fraud and contract breach.
Last month, Twitter sued him to complete the transaction, and Musk responded by suing back.
A trial between the two sides is scheduled to begin in a Delaware court in October.
Early on Saturday, Musk tweeted, “If Twitter just discloses their method of sampling 100 accounts and how they’re proven to be real, the purchase should proceed on original terms.” However, if their SEC filings turn out to be materially inaccurate, then they shouldn’t.
Good summary of the problem.
If Twitter simply provides their method of sampling 100 accounts and how they’re confirmed to be real, the deal should proceed on original terms.
However, if it turns out that their SEC filings are materially false, then it should not.
— Elon Musk (@elonmusk) August 6, 2022
Musk, who has more than 100 million followers on Twitter, then urged a “public conversation about the Twitter bot proportion” with Twitter CEO Parag Agrawal.
On Saturday, Twitter declined to respond. Less than 5% of user accounts, with a caveat that this number could be higher, are believed to be false or spam, according to the company’s estimates, which it has routinely provided to the Securities and Exchange Commission. When Musk agreed to the April merger agreement, he gave up his right to additional due diligence.
Musk is claiming in his countersuit that Twitter “miscounted” the number of spam accounts it hosts on purpose in order to inflate its user numbers as part of a plot to deceive investors about the company’s prospects.
Additionally, he argues that Twitter’s reliance on the indicator of monetizable daily active users (MDA) as a foundation for revenue is deceptive in and of itself.
Twitter responded by labeling Musk’s justification “a fabrication, invented in an effort to escape a merger deal that Musk no longer deemed desirable” in a document filed in Delaware Chancery Court.
