Elon Musk Threatens To Call Off Deal If Twitter Fails To Share Data On Fake Accounts
Musk’s latest letter is his clearest statement that he may try to abandon the deal, potentially spurring what could be a protracted legal battle between the two sides.
Elon Musk has threatened to terminate his deal to buy Twitter in a letter accusing the company of not complying with his request for data on the number of spam and fake accounts on the social media platform.
Musk said Twitter has refused to provide the data necessary for him to facilitate his own evaluation of the number of spam and fake accounts. In April, Twitter accepted Musk’s $44 billion bid to take over the company and go private.
In a letter to Twitter chief legal officer Vijaya Gadde that was disclosed in a regulatory filing on Monday, Musk’s lawyer Mike Ringler said Musk is entitled to the requested data, in part so that he can facilitate the financing of the deal.
“This is a clear material breach of Twitter’s obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement,” Ringler wrote.
A Twitter spokesman said the company “will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement.” He added: “We intend to close the transaction and enforce the merger agreement at the agreed price and terms.”
Shares of Twitter fell around 1.5 per cent to $39.57 on Monday; the all-cash deal is priced at $54.20 a share.
Also on Monday, Texas Attorney General Ken Paxton launched an investigation into Twitter, saying the company may have falsely reported its fake bot accounts in violation of the Texas Deceptive Trade Practices Act. Paxton’s office ordered Twitter to produce documents on how it calculates and manages its user data and how that information relates to its advertising businesses. Paxton’s office said Twitter has until 27 June to respond to its demands.
“Texans rely on Twitter’s public statements that nearly all its users are real people,” said Paxton, a Republican. “It matters not only for regular Twitter users, but also Texas businesses and advertisers who use Twitter for their livelihoods.”
Musk last year moved the headquarters for his automotive company, Tesla, to Texas from California. The rocket company he runs, Space Exploration Technologies Corporation, has large operations in Texas as well.
Paxton and Twitter have clashed in the past. Last month, a federal appeals court ruled that Texas for now can enforce a law prohibiting the Internet’s biggest social media platforms, including Twitter, from suppressing users’ content based on the viewpoint of their speech. Paxton responded to the ruling with a tweet saying he supported the law and that the Fifth Circuit “made the right call here”.
Musk’s latest letter is his clearest statement that he may try to abandon the deal, potentially spurring what could be a protracted legal battle between the two sides. As part of the deal, both sides agreed to pay each other a $1 billion breakup fee if they cause the deal not to happen for certain reasons. Twitter could also sue to force Musk to go through with the transaction.
There are only specific scenarios under which Musk would be able to simply pay the termination fee to walk away from the transaction, including if regulators try to block the deal or the debt financing falls through.
For years, Twitter had publicly disclosed its own estimate of how many of its daily active users represent false or spam accounts, putting the percentage at fewer than 5 per cent of its monetisable daily active users. Musk has pegged the figure at least four times as high at 20 per cent of Twitter’s accounts.
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