Elon Musk announced Friday that he would abandon his tumultuous $44 billion bid to buy Twitter after the company failed to provide enough information about the number of fake accounts. Twitter immediately hit back, saying it would sue Tesla’s CEO to keep the deal. The potential takeover revelation was just the latest twist in a saga between the world’s richest man and one of the most influential social media platforms, and may foreshadow a titanic legal battle ahead. Twitter could have pushed for a $1 billion breakup fee that Musk agreed to pay under those circumstances. Instead, it appears poised to scramble to complete the purchase, which the company’s board has approved and chief executive Parag Agrawal has insisted he wants to complete. In a letter to Twitter’s board, Musk’s lawyer, Mike Ringler, complained that his client had been seeking data for nearly two months to judge the prevalence of “fake or spam” accounts on the social media platform. “Twitter failed or refused to provide this information. “Twitter has sometimes ignored Mr. Musk’s requests, sometimes denied them for what appear to be unjustified reasons, and sometimes claimed to comply by giving Mr. Musk incomplete or unused information,” the letter states. Musk also said the information is fundamental to Twitter’s business and financial performance and is necessary to complete the merger. In response, Twitter chairman Bret Taylor tweeted that the board is “committed to closing the transaction based on the price and terms agreed upon” with Musk and “plans to take legal action to enforcement of the merger agreement. We are confident that we will prevail in the Delaware Court of First Instance.” The court in Delaware often handles business disputes between the many companies, including Twitter, incorporated there. Former President Donald Trump took to his own social media platform, Truth Social: “THE TWITTER DEAL IS DEAD, I DEMAND THE ‘TRUTH’.” Musk said in May that he would allow Trump, who was banned from Twitter after the January 6, 2021 riot at the US Capitol, to return to the platform. Much of the drama surrounding the deal has played out on Twitter, with Musk — who has more than 100 million followers — lamenting that the company has failed to live up to its potential as a platform for free speech. On Friday, Twitter shares fell 5% to $36.81, well below the $54.20 Musk agreed to pay. Tesla shares, meanwhile, rose 2.5% to $752.29. After the market closed and Musk’s letter was published, Twitter stock continued to decline while Tesla climbed higher. “This is a doomsday scenario for Twitter and its board,” Wedbush analyst Dan Ives wrote in a note to investors. He predicted a lengthy legal battle by Twitter to either reinstate the deal or pay the $1 billion breakup fee. On Thursday, Twitter sought to shed more light on how it counts spam accounts in a briefing with reporters and company executives. Twitter said it removes 1 million spam accounts every day. The accounts account for well under 5% of the active user base each quarter. To estimate how many accounts are malicious spam, Twitter said it checks “thousands of randomly sampled accounts” using public and private data such as IP addresses, phone numbers, location and account behavior when active to determine whether an account is real . . Last month, Twitter offered Musk access to the “firehose” of raw data of hundreds of millions of daily tweets, according to multiple reports at the time, though neither the company nor Musk confirmed this. One of the main reasons Musk gave for his interest in taking Twitter private was his belief that he could add value to the business by getting rid of spam bots — the same problem he now cites as a reason to quit the agreement. “This whole process has been weird,” said Christopher Bouzy, founder of research firm Bot Sentinel, which monitors fake Twitter accounts used for disinformation or harassment. “He knew about this problem. It’s strange that he would use bots and trolls and non-authentic accounts as a way to get out of the deal.” On the other hand, Bouzy said, the letter from Musk’s legal team makes some valid criticisms of Twitter’s lack of transparency, including its apparent refusal to provide Musk with the same level of internal data it offers some of its big customers. of. “It just seems like they’re hiding something,” said Bouzy, who also believes the number of fake or spam Twitter accounts is higher than the company has reported. Musk’s lawyer also claimed that Twitter broke the deal when it fired two top managers and laid off a third of its talent acquisition team. The sale agreement, he wrote, required Twitter to “seek and obtain its consent” if it deviated from the conduct of normal business. Twitter had to “maintain substantially intact the material elements of its current business organization,” the letter said. Musk’s flirtation with buying Twitter 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 in the company and that it was interested in either joining the board, taking Twitter private or starting 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 its board of directors. But six days later, Agrawal tweeted that Musk would not be joining the board after all. His attempt 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 his price. He sold about $8.5 billion worth of Tesla stock to help finance the buyout, then stepped up his commitments to more than $7 billion from a diverse group of investors, including Silicon Valley heavy hitters like the Oracle co-founder , Larry Ellison. Inside Twitter, Musk’s offer was met with confusion and falling morale, especially after Musk publicly criticized one of Twitter’s top lawyers involved in content moderation decisions. Groups opposed to the takeover from the start — including those advocating for women, minorities and LGBTQ people — cheered Friday’s news. “Despite what Musk may claim, this deal is not ending because of Twitter bots or spam accounts. This deal is falling apart because of Elon Musk’s own erratic behavior, embrace of extremists and bad business decisions,” Angelo Carusone, president of Media Matters, a left-leaning nonprofit watchdog group critical of Musk’s bid, said on Twitter. . Musk, he said, “has made it clear that he will roll back Twitter’s community standards and security guidelines, which will turn the platform into a fever swamp of dangerous conspiracy theories, partisan gerrymandering and white supremacist radicalization.”
