By BARBARA ORTUTAY, TOM KRISHER and MATT O’BRIEN, Associated Press
Elon Musk announced Friday that he will drop his tumultuous $ 44 billion offer to buy Twitter after the company failed to provide enough information about the number of fake accounts. Twitter responded immediately, saying it would sue the Tesla CEO to keep the deal.
The likely outcome of the acquisition was just the latest twist in a saga between the world’s richest man and one of the most influential social media platforms, and it can bode well for a titanic legal battle ahead.
Twitter could have requested a $ 1 billion break rate that Musk agreed to pay in these circumstances. Instead, he seems willing to fight to complete the purchase, which the company’s board has approved and CEO Parag Agrawal has insisted he wants to consummate.
In a letter to the Twitter board, Musk’s lawyer, Mike Ringler, complained that his client had been looking for data for nearly two months to judge the prevalence of “fake or spam” accounts on the social media platform.
“Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes rejected them for seemingly unjustified reasons, and sometimes claimed to comply with them while giving to Mr. Musk incomplete or unusable information, “the letter said.
Musk also said the information is critical to Twitter’s economic and financial performance and is needed to end the merger.
In response, Twitter board chairman Bret Taylor tweeted that the board is “committed to closing the transaction on the price and terms agreed” with Musk and “plans to take legal action to enforce the merger agreement.” . We are confident that we will prevail in the Delaware Chancellery Court. “
The Delaware Court of First Instance often handles commercial disputes between many corporations, including Twitter, that get involved.
Former President Donald Trump spoke on his own social platform, Social Truth: “TWITTER AGREEMENT IS DEAD, LONG LIVE THE ‘TRUTH’.” Musk said in May that he would allow Trump, who was banned from Twitter after the January 6, 2021 riot at the U.S. Capitol, to return to the platform.
Much of the drama surrounding the deal has occurred on Twitter, with Musk, who has more than 100 million followers, lamenting that the company did not live up to its potential as a platform for freedom of movement. ‘expression.
On Friday, Twitter shares fell 5% to $ 36.81, well below the $ 54.20 Musk agreed to pay. Shares of Tesla, meanwhile, rose 2.5 percent to $ 752.29. After the market closed and Musk’s letter was published, Twitter shares continued to decline as Tesla rose.
“This is a disaster scenario for Twitter and its advice,” Wedbush analyst Dan Ives wrote in a note to investors. He predicted a long legal battle over Twitter to restore the deal or to get the $ 1 billion rupture fee.
On Thursday, Twitter tried to shed more light on how it counts spam accounts in an information session with journalists and company executives. Twitter said it deletes 1 million spam accounts every day. Accounts account for well below 5% of its active user base each quarter.
To calculate how many accounts are malicious spam, Twitter said it reviews “thousands of accounts” displayed at random, using both public and private data such as IP addresses, phone numbers, location and account behavior when active, to determine if an account is real. .
Last month, Twitter offered Musk access to its “fire hose” of raw data on hundreds of millions of tweets daily, according to several reports at the time, although neither the company nor Musk confirmed it.
One of the main reasons Musk gave his interest in taking Twitter private was his belief that it could add value to the business by getting rid of his spam bots, the same problem he now cites as a reason for end the deal.
“This whole process has been weird,” said Christopher Bouzy, founder of research firm Bot Sentinel, which tracks fake Twitter accounts used for misinformation or harassment. “He knew about this problem. It’s weird that he uses robots and trolls and unauthentic accounts as a way out of the deal.”
On the other hand, Bouzy said, Musk’s legal team letter makes some valid criticisms of Twitter’s lack of transparency, including its apparent refusal to provide Musk with the same level of internal data that some of its great customers.
“It looks like they’re hiding something,” said Bouzy, who also believes the number of fake Twitter accounts or spam is higher than the company has reported.
Musk’s attorney also alleged that Twitter broke the deal when he fired two senior executives and fired a third of his talent acquisition team.
The sale deal, he wrote, required Twitter to “seek and obtain consent” if it deviated from conducting normal business. Twitter was required to “keep substantially intact the material components of its current business organization,” the letter said.
Musk’s flirtation with the Twitter purchase appeared to begin in late March. That’s when Twitter said it contacted members of its board, including co-founder Jack Dorsey, and told them it was buying shares of the company and that it was interested in joining the board, taking Twitter private or create a competitor.
Then, on April 4, it revealed in a regulatory filing that it had become the company’s largest shareholder after acquiring a 9% stake worth about $ 3 billion.
At first, Twitter offered Musk a seat on his board. But six days later, Agrawal tweeted that Musk would not join the board after all. His offer to buy the company came together quickly after that.
When Musk agreed to buy Twitter for $ 54.20 per share, he inserted a “420” marijuana reference into its price. It sold approximately $ 8.5 billion in Tesla shares to help fund the purchase, and then bolstered its commitments of more than $ 7 billion from a diverse group of investors, including the Silicon Valley greats as the co-founder. of Oracle Larry Ellison.
Within Twitter, Musk’s bid was met with confusion and a drop in morale, especially after Musk publicly criticized one of Twitter’s top lawyers involved in content moderation decisions.
Groups that oppose taking control from the outset, including those advocating for women, minorities, and LGBTQ people, applauded Friday’s news.
“Despite what Musk may say, this deal is not ending because of Twitter bots or spam accounts. This deal is collapsing because of Elon Musk’s own erratic behavior, the embrace of extremists and bad business decisions, ”said Angelo Carusone, president of Media Matters, a left-wing nonprofit control group that has been critical of Musk’s Twitter bid.
Musk, he said, “made it clear that it would reverse the Twitter community’s security standards and guidelines, making the platform a feverish swamp of dangerous conspiracy theories, partisan tricks, and radicalization of white supremacy.”