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Elon Musk’s deal to buy Twitter is in grave danger, say three people familiar with the matter, as Musk’s camp concluded that Twitter figures on spam accounts are not verifiable.
Musk’s team has stopped participating in certain discussions over the financing of the $ 44 billion deal, including with a party named as the likely sponsor, one of the people said. People spoke on condition of anonymity because of the sensitivity of the ongoing discussions.
Conversations with investors have cooled in recent weeks as the Musk camp has raised doubts about recent “fire hose” data – a fund of data sold to corporate clients – that they have received from Twitter. Musk’s team’s doubts about spam figures indicate they believe they don’t have enough information to assess Twitter’s prospects as a business, people said.
Now that Musk’s team has concluded that it can’t verify Twitter figures on spam accounts, one of the people said, it is expected to take potentially drastic measures. The person said that a change of direction of Musk’s team would probably come soon, although they did not say exactly what they thought this change would be.
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Spam accounts aren’t the only reason Musk might try to get out of the deal. The price of Twitter shares has fallen sharply since its takeover bid in April, giving the impression that it is overpaying. And Musk also manages two other big companies, Tesla and SpaceX, along with some emerging companies.
But the terms of the deal mean it wouldn’t be easy for Musk to leave. Musk has agreed to complete it unless something important happens to the Twitter business, and legal experts doubt the bot’s problem will be met. Twitter, which initially fought Musk’s takeover bid, would be a weaker company if the deal is broken than when Musk first bought a stake, and experts expect Twitter to fight to get it. Twitter itself has said it intends to complete the deal. Even if Musk convinces a judge to let him go, he could still be pending the $ 1 billion rupture fee from the deal.
Twitter accepted a $ 44 billion takeover bid from Elon Musk on April 25th. Why did you want to buy the social media giant? (Video: Hadley Green, Julie Yoon / The Washington Post)
Twitter spokesman Brian Poliakoff declined to comment, but referred to a statement the company made in June.
“Twitter has shared and will continue to share information cooperatively with Mr. Musk to complete the transaction in accordance with the terms of the merger agreement,” Twitter said in the June statement. “We believe this agreement is in the best interests of all shareholders. We intend to close the transaction and enforce the merger agreement at the agreed price and conditions.”
Musk did not respond to a request for comment.
Instead, Twitter plans to meet Musk’s data demands
Musk shook the world of social media earlier this year with his unprecedented bid to take the company private, arguing it could grow Twitter and make it more open and, in his view, politically neutral. He said he would let former President Donald Trump return to service and argued that his content moderation practices violated freedom of speech. Musk relinquished his right to delve into the company’s finances when he signed the deal.
But soon after, questions arose as to whether he would really do so. A global sale of technology stocks profoundly reduced his personal net worth, which he had taken advantage of to get debt commitments he needed to buy Twitter.
At the Financial Times Future of the Car summit on May 10, the Tesla CEO said banning then-President Donald Trump on Twitter permanently was “stupid anyway.” (Video: Financial Times)
Musk’s enthusiasm for continuing with the deal has been questioned at least since May, when he said the deal was “pending” until he was able to check whether Twitter’s long-standing statement was less than 5 percent. of the accounts are robots or spam was accurate. . He accused Twitter of withholding information, while the company said it was acting in good faith and providing everything the terms of the agreement required.
“Twitter has not been cooperative,” said one person familiar with the discussions, speaking on condition of anonymity due to the sensitive nature of the conversations.
But focusing on robots plays into Musk’s hand, lowering the price of Twitter shares and potentially helping him force Twitter to renegotiate the deal at a lower price.
Musk probably understands the difficulty of stepping back at this stage, which led him to find legal reasons to justify an exit, according to Carl Tobias, a law professor at the University of Richmond.
After raising the bot issue, for example, Musk said the Twitter figures could constitute an “adverse material inaccuracy,” a likely reference to a contractual clause that gives him a chance to withdraw from the deal in case of a significant event that changes fundamentally. the business.
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“I think it’s an excuse,” Tobias said. “I don’t think a court finds it persuasive.” Tobias cited Musk’s resignation due diligence in his hasty acceptance of the deal. “It seems to me that it undermines a lot of arguments that I could try to do otherwise,” he said.
The debate over robots on Twitter is not new and has been an important part of the public conversation around the company for years. Musk often tweets his annoyance at the proliferation of spam and bot accounts on the site, and wrote in April that he intended to “defeat the spam bots or die in it!” through its Twitter offering. External researchers have sometimes said that the number of bots and spam accounts could be much higher than Twitter’s estimate. But because of the speed with which tactics change to create and hide the nature of fake accounts, it is difficult even for experts to make forceful statements about who is right.
Twitter has been advocating its process for measuring unwanted accounts, even at a press conference on Thursday morning.
Twitter said every three months a sample is taken of the “Monetizable Average Daily Users,” the user base that the company feels comfortable charging advertisers to reach. Analyze this sample by hand to determine if it is fake or not, including information such as IP addresses that you cannot publicly share. He said he has always been comfortable with the total being below the 5 percent threshold.
Twitter doesn’t ban all robots, which include accounts that post otter images at the right time or temperature in a specific place. Instead, look for indicators that suggest fake or coordinated spam activity, such as mass account creation or human-to-human coordination to artificially amplify a specific tweet, set of tweets, or topic. The terms of the briefing prevented any of the experts from being quoted directly or cited by name.
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Musk’s acquisition has plunged Twitter into chaos, creating fractures among employees and unease for executives. Some workers, who fear Musk will withdraw the guarantees Twitter has put in place to keep harmful content off-site, have begun looking for new jobs and have predicted an exodus of employees if the billionaire buys the company.
Musk has already confronted Twitter executives by pursuing company policies in their own place and expanding users who criticized the company’s top lawyer.
Even if the deal fails, Twitter has been dragged down by controversy, employee unrest and a rocky performance of shares for months. Your rebound will not be easy.
“Whatever happens: the company is at stake now,” a person familiar with the matter told The Post in May. “I don’t think it’s a situation where Elon is leaving and things can go back to normal.”
Rachel Lerman and Joseph Menn contributed to this report.