Friday, January 27, 2023 | Back issues
Courthouse News Service Courthouse News Service

Elon Musk threatens to ‘terminate’ Twitter deal over fake accounts

Musk wants Twitter to turn over information to help him investigate the number of fake/spam accounts, and says the company is dragging its feet.

(CN) — Tesla and SpaceX CEO Elon Musk is threatening to walk away from his deal to buy Twitter for $44 billion, citing his concerns about the number of "fake" or "spam" accounts.

In a letter dated Monday filed with the Securities and Exchange Commission, Musk's attorney accused Twitter of refusing to provide information to Musk "to facilitate his evaluation of spam and fake accounts on the company’s platform."

"Mr. Musk has made it clear that he does not believe the company’s lax testing methodologies are adequate so he must conduct his own analysis," the letter reads. "The data he has requested is necessary to do so."

The letter goes on to claim the supposed obfuscation is a "clear material breach of Twitter’s obligations under the merger agreement," which gives Musk the right "not to consummate the transaction" and to "terminate the merger agreement."

A Twitter spokesperson said in a written statement that the company "has and will continue to cooperatively share information with Mr. Musk," adding, "We intend to close the transaction and enforce the merger agreement at the agreed price and terms."

Musk, who is currently the richest person in the world with a net worth of roughly $218 billion, agreed to buy Twitter in April for $54.20-per-share, a deal which would take the now-publicly traded company private.

“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” he said in a statement after the deal was announced. “Twitter has tremendous potential — I look forward to working with the company and the community of users to unlock it.”

Musk has said he wants to make Twitter more politically neutral and maintain it as a platform for free speech. Among other things, he has said he would allow Donald Trump's account to be reactivated. The former president was permanently banned from the platform after the Jan. 6 uprising in the Capitol building.

Since the deal was announced, Musk, who has 96.8 million Twitter followers, has become a prolific tweeter. Though most of his posts range from internet memes to SpaceX and Tesla promotion to somewhat awkward attempts at inspiration, some of his tweets have addressed the future of the social media platform. Not since Trump was running for office has one person's tweets triggered so many news stories. In mid-May, he tweeted that the Twitter deal was on hold, pending "details supporting calculation that spam/fake accounts do indeed represent less than 5% of users."

Twitter CEO Parag Agrawal responded to Musk with a long and nuanced tweet thread (a series of tweets that can be read as one long statement), addressing the challenges of identifying and removing spam accounts.

"Our actual internal estimates for the last four quarters were all well under 5%," he said.

Musk responded to Agrawal by tweeting a poop emoji.

Just why Musk cares so much about fake accounts — that is, accounts controlled by computer programs — has been the subject of some speculation. Some have said that he is genuinely bothered by accounts using his name or picture to promote cryptocurrency schemes. Others have wondered if Musk is getting cold feet, and is trying to slink away from the deal, or perhaps if he simply wants to renegotiate.

If Musk does try to walk away from the deal, Twitter could sue him and force him to go through with the sale. He could also be forced to pay a $1 billion fee.

In order to finance the Twitter acquisition, Musk sold nearly ten million shares of Tesla stock for more than $8 billion. Since April, Tesla's stock has plummeted more than 30%, down from more than $1,100 a share to just over $700.

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.