File Photo: Tesla CEO Elon Musk will attend the groundbreaking ceremony for the Tesla Shanghai Gigafactory on January 7, 2019 in Shanghai, China. REUTERS / Aly Song
Detroit: Elon Musk has threatened to escape the $ 44 billion bid to buy Twitter and has accused the company of refusing to provide information about spambot accounts.
Tesla and SpaceX CEO lawyers threatened in a letter to Twitter on Monday. The letter was included in a document submitted by Twitter to the Securities and Exchange Commission.
According to the letter, Musk has repeatedly asked for information since May 9, about a month after the company’s offer to buy, and was able to assess how many of the company’s 229 million accounts were fake.
Twitter Inc.’s share price fell more than 5% on Monday’s opening bell.
A message asking for comment from Twitter was left at the beginning of Monday.
The lawyer said in a letter that Twitter is only providing details on how the company tests. But they claim that it is “equivalent to rejecting Mr. Musk’s data request.” Musk wants the data so he can verify for himself what he says is Twitter’s loose methodology.
Lawyers say, based on Twitter’s latest communications, Musk believes the company is resisting and interfering with his rights to information under the April merger agreement.
“This is a clear and material breach of Twitter’s obligations under the merger agreement, and Mr. Musk reserves all rights arising from it, including the right not to complete the transaction and the right to terminate the merger agreement.” The letter states.
Twitter CEO Parag Agrawal says he consistently estimates that less than 5% of Twitter accounts are fake. Twitter has disclosed the bot’s quote to the US Securities and Exchange Commission for years, but also notes that the quote may be too low.
The bot issue also reflects Musk’s long-standing persistence, one of Twitter’s most active celebrity users. His name and portrait are often imitated by fake accounts promoting cryptocurrency fraud. Musk seems to think that such bots are a problem not only for most other Twitter users, but also for advertisers who advertise on the platform based on the number of people they actually plan to reach.
Experts said Musk couldn’t unilaterally put the deal on hold, but that didn’t prevent him from acting as if he could. If he leaves, he could pay a $ 1 billion dissolution fee.
Twitter’s sales agreement allows Mask to exit the transaction in the event of a “significant adverse effect” by the company. This is defined as a change that negatively impacts Twitter’s business or financial position.
In a letter, Musk’s lawyer Mike Ringler said in a June 1 letter from Twitter that the obligation to provide information was limited to facilitating the completion of the sale. Twitter states that it is obliged to provide data for reasonable business purposes necessary to complete the transaction.
Twitter also said that it must cooperate with Musk’s efforts to raise funds for the transaction, including providing information that Musk “reasonably requested”.
The letter argues that Musk does not have to explain why he requests the data or submit to “new conditions that the company sought to impose on contractual rights to the requested data.”
Musk claims he has the right to receive data about the core of Twitter’s business model, so he can prepare for the transition to his ownership.