Elon Musk won’t be buying Twitter after all, apparently. The Tesla and SpaceX CEO is calling off the $44-billion deal, accusing the company of "false and misleading representations." Twitter, meanwhile, says it plans to sue.
Musk's move was not a surprise to many based on his recent comments about the number of fake accounts on the social media platform. His team had tussled with Twitter over "spam bots" and threatened to walk away from the deal if the company couldn’t show that less than 5% of its daily active users are automated spam accounts.
Friday, in a letter sent to Twitter's board and filed with the SEC, Musk’s attorneys said Twitter had violated the terms of the blockbuster deal.
"For nearly two months, Mr. Musk has sought the data and information necessary to ‘make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform,’" the letter said, in part. "Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information."
Musk has argued that Twitter significantly underestimated the number of spam bots on its service. Last month, Twitter offered Musk access to its "firehose" of raw data on hundreds of millions of daily tweets, according to multiple reports at the time, though neither the company nor Musk confirmed this.
The Twitter logo is seen outside their headquarters on April 26, 2022 in downtown San Francisco, California. (AMY OSBORNE/AFP via Getty Images)
In a call with executives Thursday that aimed to shed more light on the company's fake and bot accounts, Twitter said it removes 1 million spam accounts each day, adding that the spam accounts represent well below 5% of its active user base each quarter.
Private data, which isn't available publicly and thus not in the data "firehose" that was given to Musk, includes IP addresses, phone numbers and location. Twitter said such private data helps avoid misidentifying real accounts as spam.
According to Friday's letter, Musk – without the full data he sought – believes Twitter's fake profiles account for "wildly" more than 5% of its total users.
"It appears that Twitter is dramatically understating the proportion of spam and false accounts represented in its [monetizable daily active users] count," the letter stated. "Preliminary analysis by Mr. Musk’s advisors of the information provided by Twitter to date causes Mr. Musk to strongly believe that the proportion of false and spam accounts included in the reported mDAU count is wildly higher than 5%."
The chair of Twitter's board, Bret Taylor, tweeted Friday that the board is "committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery."
Twitter could have pushed for a $1-billion breakup fee Musk agreed to pay under these circumstances. Instead, it looks ready to fight over the deal, which the company's board has approved and CEO Parag Agrawal has insisted he wants to consummate.
On Friday, shares of Twitter fell 5% to $36.81, well below the $54.20 that Musk had offered to pay. Shares of Tesla, meanwhile, climbed 2.5% to $752.29.
FOX Business reporter Bradford Betz and the Associated Press contributed to this report.