File Photo: Tesla CEO Elon Musk will attend the groundbreaking ceremony for the Tesla Shanghai Gigafactory on January 7, 2019 in Shanghai, China. REUTERS / AlySong
Elon Musk announced on Friday that it would give up the turbulent $ 44 billion offer to buy Twitter because the company couldn’t provide enough information about the number of fake accounts. Twitter quickly rebounded and said it would appeal to Tesla’s CEO to support the deal.
The potential acquisition was unveiled with the latest twist in the story between the wealthiest men in the world and one of the most influential social media platforms, which heralds a huge court battle. There is a possibility.
Twitter may have requested a $ 1 billion split fee that Mask has agreed to pay under these circumstances. Instead, it looks like you’re ready to fight to complete your purchase. It has been approved by the company’s board of directors and claims to be completed by CEO Parag Agrawal.
In a letter to Twitter’s board, Musk’s lawyer Mike Ringler said his client had been asking for data for nearly two months to determine the prevalence of “fake or spam” accounts on social media platforms. I complained.
“Twitter failed or refused to provide this information. While Twitter ignored Mr. Musk’s request, refused it for reasons that seemed unreasonable, or provided Mr. Musk with incomplete or unusable information. They claimed to be compliant, “said the letter.
Musk also said this information is the basis of Twitter’s business and financial performance and is needed to complete the merger.
In response, Twitter’s board chairman, Bret Taylor, tweeted that the board “promises to complete the transaction at the agreed price and terms” with Musk, “implementing the merger agreement.” We plan to take legal action to win the case in the Chancery Court of Delaware. “
Delaware courts frequently handle business disputes between many companies, including Twitter.
Former President Donald Trump has joined Truth Social, his social platform. “Twitter deals are dead and the’truth’lives longer.” In 2021, a riot broke out at the US Capitol and returned to the platform.
Much of the drama surrounding the deal is on Twitter, lamenting that Mask, with more than 100 million followers, hasn’t fully realized its potential as a platform for free speech.
Twitter’s share on Friday was down 5% to $ 36.81, well below the $ 54.20 Musk agreed to pay. Meanwhile, Tesla’s share price rose 2.5% to $ 752.29. After the market closed and Mask’s letter was released, Twitter’s stock price continued to fall while Tesla rose.
“This is a disaster scenario for Twitter and its board,” Wedbush analyst Dan Ives wrote in a memo to investors.
On Thursday, Twitter sought to shed more light on how to count spam accounts in briefings with journalists and executives. According to Twitter, one million spam accounts are deleted every day. Accounts are well below 5% of the active user base every quarter.
Twitter randomly uses both public and private data, such as IP address, phone number, location, and account behavior when active, to calculate the number of accounts that are malicious spam. He said he would look at the sampled “thousands of accounts” and determine if the account was genuine. ..
Last month, Twitter provided Musk with access to a “fire hose” of raw data on hundreds of millions of daily tweets, according to reports at the time, but neither the company nor Musk confirmed it.
One of the main reasons Musk was interested in keeping Twitter private was his belief that removing spambots could add value to the business. This is the same issue that we are currently citing as a reason to close a transaction.
“The whole process was weird,” said Christopher Bousie, founder of research firm Bot Sentinel, which tracks fake Twitter accounts used for disinformation and harassment. It’s strange that he uses bots, trolls, and fraudulent accounts as a way to get out of a transaction. “
Meanwhile, according to Bougie, a letter from Musk’s legal team makes some legitimate criticisms of Twitter’s lack of transparency.
“They seem to be hiding something,” said Bougie, who believes that there are more fake or spam Twitter accounts than the company reports.
Musk’s lawyer also claimed that Twitter broke the deal when it fired two top managers and one-third of its talent acquisition team.
The sale agreement requires that Twitter “get for consent” if it deviates from doing its normal business, and Twitter “preserves the key components of the current business organization virtually intact. “I was asked to do that, the letter said.
Mask’s flirtation with Twitter purchases seems to have started in late March. At that time, Twitter contacted members of the board, including co-founder Jack Dorsey, to buy shares in the company and join the board, keep Twitter private, or make competitors. He said he was interested in launching.
Then, on April 4, he revealed in a regulatory filing that he became the company’s largest shareholder after acquiring a 9% stake worth about $ 3 billion.
Initially, Twitter provided Mask with a board seat. But six days later, Agrawal tweeted that Musk wouldn’t join the board after all. Shortly thereafter, his bid to buy the company came together.
When Musk agreed to buy Twitter for $ 54.20 per share, he inserted a “420” marijuana reference into the price. He sold about $ 8.5 billion worth of shares in Tesla to support the purchase, and subsequently strengthened his commitment to more than $ 7 billion. A diverse group of investors, including heavy hitters in Silicon Valley, such as Oracle co-founder Larry Ellison.
Inside Twitter, Mask’s offer was confused and demoralized, especially after Mask publicly criticized one of Twitter’s top lawyers involved in the content moderation decision.
From the beginning, groups opposed to the acquisition, including groups advocating women, minorities and LGBTQ people, supported the news on Friday.
“Despite what Musk may argue, the deal doesn’t end because of Twitter bots and spam accounts. The deal is Elon Musk’s own volatile behaviour, radical acceptance, and bad business. It’s collapsing because of the decision, “said Angelo Karsone, president of MediaMatters. , A left-handed non-profit watchdog group that was critical of Mask’s Twitter bid.
“We have made it clear that we will roll back Twitter’s community standards and safety guidelines, which will turn the platform into a dangerous conspiracy theory, an enthusiastic swamp of white supremacist intensification,” Musk said. Told.