Elon Musk's Deal To Buy Twitter Comes To A Standstill

Uploaded on 2022-05-17 in TECHNOLOGY-Key Areas-Social Media, FREE TO VIEW

Elon Musk, the world's richest man, had said that one of his priorities would be to remove "spam bots" from Twitter and now he has disclosed that his $44bn (£35bn) deal to buy Twitter is on hold after he queried the number of fake or spam accounts on the social media platform.

In a tweet, he said he was waiting for information "supporting the calculation that spam/fake accounts do indeed represent less than 5% of users".

The initial stock market response was to send Twitter stock plunging 25%, as analysts speculated that Musk is trying to negotiate a lower price for the deal or pull out completely. The Tesla and Space-X founder is waiting to have the details supporting Twitter’s assertion that fake accounts accounted for fewer than 5% of its daily active users during the first three months of this year.

Musk has been widely reported for his criticisms of the way Twitter has been run and about the need to clean up fake accounts. Mr Musk has called for "defeating the spam bots" on Twitter as well as several other changes, including bringing back some banned accounts such as that of former US President Donald Trump. 

There is now some real doubt that the transaction will proceed, although Musk said in a subsequent tweet that he was “still committed to acquisition. 

Twitter says that in working out the percentage of spam accounts, "it applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts... The actual number of false or spam accounts could be higher than we have estimated. We are continually seeking to improve our ability to estimate the total number of spam accounts." 

Twitter had issues with automated, fake accounts being used to post misleading content for a long time and the company does admit there are false or spam accounts on the platform. It has carried out an internal review of a sample of accounts and estimated the average number of false or spam accounts during the first quarter of 2022. “The false or spam accounts for a period represents the average of false or spam accounts in the samples during each monthly analysis period during the quarter,” said Twitter in its First Quarter 2022 Results. 

Some commentators suggest that if Mr Musk does still decide to go ahead with the deal, a renegotiation of the price and other terms seems likely.

Other analysts questioned why Musk would suddenly express concern about Twitter's estimate that 5 percent of accounts are fake, an estimate that the company has included in regulatory filings for years. Under the terms of the deal, if either Twitter or Mr Musk walk away they must pay the other side a termination fee of $1bn. 

Elon Musk/Twitter:    Twitter:    Reuters:    NDTV:     BBC:    Guardian:    Daily Mail:      Independent:   

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