Elon Musk is demanding more research before completing his $44 billion deal with Twitter Inc. Unless the social media outlet can prove bots are fewer than 5% of the users on the platform, he says he won’t move forward. Demanding proof, Musk suspects the percentage is higher.
Many experts suspect Musk may change his offer or walk away from the deal if his demands are not met. The company’s potential sale has led to a variety of hiccups, including public arguments with the chief of Twitter Parag Agrawal.
The falling price of Twitter’s shares may be a cause for concern in the industry. In just two days, the shares fell over 11%. This change in value created about a 40% difference between Musk’s offer of $54.20 per share and the current trading price.
Despite this, Twitter seems determined to complete the sale, stating that they are “committed to completing the transaction.” This includes selling at the originally agreed-upon price and terms.
Other analysts suspect a revised deal could lead to a significantly lower price once negotiations are completed.
Although there are a number of arguing points, Musk’s greatest concern is over the number of bots on the site. He recently told attendees at a tech conference that at least 20% of all Twitter accounts are fake users. He suspects that number may range as high as 90%. Twitter, however, continues to stand its ground. In a recent statement, they report that bots or false accounts are “fewer than 5% of our monthly daily active users.” They also admitted they used “significant judgment” within their estimate and the actual number could be higher.
Musk is requesting that Twitter run tests to determine this number prior to the final sale of the company. In response to his request, Agrawal provided the company’s methodology through a long thread. Musk then responded by asking why Twitter users don’t verify their identity.
Currently, a $1 billion breakup fee applies to each party if the deal falls through. Musk would have to pay this to each party. It is not yet clear if a number of fake accounts greater than 5% would nullify the breakup fee.
Musk has notified users that his deal with Twitter is “currently on hold” as he continues to search for more information about Twitter’s fake accounts. Despite this, he reports being “still committed” to completing the deal.
Dil Bole Oberoi
