Elon Musk warns Twitter deal stuck without fake account proof

Elon Musk handle and Twitter logo

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Elon Musk has said his $44bn deal to buy Twitter may be in jeopardy due to a disagreement over the number of fake accounts on the social media platform.

Mr Musk tweeted that the deal “cannot move forward” unless Twitter backs up its claims that less than 5% of accounts are fake or spam accounts.

Analysts have speculated that Mr Musk may be looking for ways to renegotiate the price of the deal or walk away.

On Monday, Mr Musk said he could seek a lower price for Twitter.

He agreed the $44bn (£34.5bn) deal to buy Twitter with its board in April, but last week Mr Musk said the deal was “on hold” while he sought details about fake accounts.

On Tuesday, Mr Musk tweeted that his offer for the firm was based on Twitter’s disclosures to regulators about fake accounts “being accurate”.

Mr Musk said Twitter boss Parag Agrawal had “publicly refused to show proof” that fewer than 5% of its accounts were fake, and said the deal “cannot move forward” until Mr Agrawal does show proof.

Mr Musk’s tweet then appeared to be deleted.

The billionaire, who also runs carmaker Tesla, has put the number of fake accounts at 20% or more.

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Analysis box by Zoe Kleinman, technology editor

Elon Musk has doubled down on his position that his deal to buy the social network is on ice while the actual amount of spambots and accounts operating on it is investigated.

Twitter chief executive Parag Agrawal has hit back, and tempers are flaring.

When the richest man in the world replies to one of your tweets with just one symbol, the poo emoji, well, I suppose at least you know you’ve got his attention.

I long ago gave up trying to read the mind of Elon Musk but let’s indulge in a moment of speculation.

He’s making a big deal about fake accounts. Is it a convenient peg on which to hang a renegotiation? His initial $44bn offer for the firm was considerably higher than its current stock suggests.

He moved swiftly and aggressively, perhaps even impulsively.

To fund it, he’s already had to sell a chunk of shares in one of his other companies, the electric car firm Tesla, and that in turn made a dent in the value of that company as it made other investors nervous.

If either party in the Twitter deal walks away now, there’s a $1bn termination fee.

That may sound like small change to a multi-billionaire – although Mr Musk maintains he is asset-rich rather than cash-rich – but it perhaps gives him leverage to successfully shave a few billion off the offer price, because $1bn is not small change to Twitter and its shareholders.

However, Mr Musk might be right to question Twitter’s worth.

If it really isn’t bloated with spam, then perhaps it has less potential to be made great again, a phrase that may sound familiar given that he has already indicated that he would like to re-instate former US President Donald Trump.

Mr Trump, by the way, has so far declined the invitation.

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Mr Musk and Mr Agrawal have been publicly debating the spambot figures on Twitter but relations appear to have soured.

On Monday, Mr Musk responded to Mr Agrawal’s defence of the the firm’s spam reporting with a poo emoji, later repeating his claim that Twitter was underestimating the figure.

Mr Musk has said he is concerned that advertisers on Twitter don’t know what they are paying for.

“So how do advertisers know what they’re getting for their money? This is fundamental to the financial health of Twitter,” he wrote.

After putting his offer on hold Mr Musk told a conference in Miami on Monday that “you can’t pay the same price for something that is much worse than they claimed”.

He said that a deal is “not out of the question” at a different price but added: “The more questions I ask, the more my concerns grow.”

Deal doubts

Mr Musk has called for tests of random samples of Twitter users to identify bots. He said “there is some chance it might be over 90% of daily active users”.

Researchers have estimated that anywhere from 4% to 20% or more of the millions of Twitter profiles are fake.

Twitter shares on Monday closed more than 8% down at $37.39, sowing doubts that Mr Musk would go ahead with his acquisition at the agreed price.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said that it “looks increasingly likely that Elon Musk is positioning to renegotiate a sharply lower price tag for Twitter or even try and pull the pin on the deal”.

She said that establishing the number of real users on Twitter is considered “vital to future revenue streams via advertising or paid for subscriptions on the site”.

“The volatility which has hit tech stocks and contributed to a sharp decline in Twitter’s valuation is also highly likely to be part of the equation,” Ms Streeter said, adding that Mr Musk is “clearly rueing the timing of his rash offer to pay $44bn for the social network”.


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