Elon Musk : Twitter Deal On Hold Over Clarity On Fake Accounts

Elon Musk

Billionaire Elon Musk said Tuesday that his purchase of Twitter would not go ahead unless he was given assurances on the bots he says plague the platform, further complicating his acrimonious bid for the social media giant.

The chief of SpaceX as well as Tesla, Musk is currently listed by Forbes as the world’s wealthiest person, with a fortune of about $230 billion, much of it in Tesla stock.

Seen by his champions as an iconoclastic genius and by his critics as erratic and power-hungry, Musk surprised many investors in April with news that he wanted to purchase Twitter.

But his $44 billion bid for the company is now “temporarily on hold,” pending questions over its estimates of the number of fake accounts, or bots.

“Yesterday, Twitter’s CEO publicly refused to show proof of <5%,” tweeted Musk, who has almost 94 million followers on the social network.  “This deal cannot move forward until he does.” Twitter chief executive Parag Agrawal has said the platform suspends more than a half-million seemingly bogus accounts daily, usually before they are even seen, and locks millions more weekly that fail checks to make sure they are controlled by humans and not by software. Internal measures show that fewer than five percent of accounts active on any given day at Twitter are spam, but that analysis cannot be replicated externally due to the need to keep user data private, Agrawal contended. Musk — who posted that the real number of bots may be four times what Twitter claims and “could be *much* higher,” and has said he would make getting rid of them a priority if he owned the platform — responded to that tweet by Agrawal with a poo emoji. “So how do advertisers know what they’re getting for their money?” Musk tweeted in a subsequent response about the need to prove Twitter users are real people. “This is fundamental to the financial health of Twitter.” – ‘Under pressure’ –
The process used to estimate how many accounts are bots has been shared with Musk, Agrawal insisted.

According to an estimate published Friday by software firm SparkToro, 19.42 percent of Twitter accounts are fake or spam, but the company acknowledges its methodology for determining bots is likely different from that used by Twitter. 

SparkToro has a tool on its website that shows more than 70 percent of Musk’s followers are fake accounts.

“It appears the spam/bot issue is cascading and clearly making the Twitter deal a confusing one,” Wedbush analyst Dan Ives said in a note to investors.

“The bot issue at the end of the day was known by the New York City cab driver and feels more to us like the ‘dog ate the homework’ excuse to bail on the Twitter deal or talk down a lower price.”

Twitter shares “will be under pressure this morning again as the chances of a deal ultimately getting done is not looking good now,” Ives said, adding it is “likely a 60%+ chance from our view Musk ultimately walks from the deal and pays the breakup fee.”

Shares of Twitter were down roughly 2.4 percent early Tuesday in pre-market trading.

Meanwhile, in a filing to Wall Street regulator the Securities and Exchange Commission, Twitter urged its shareholders to vote in favor of Musk’s buyout for $54.20 per share in cash, at an upcoming special meeting.

Musk has described his motivation as stemming from a desire to ensure freedom of speech on the platform and to boost monetization of a website that is massively influential but has struggled to attain profitable growth.

He has also said he favored lifting the ban on Donald Trump, who was kicked off the platform in January 2021 shortly after the then-US president’s efforts to overturn his election defeat led to the January 6 assault on the US Capitol.