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Twitter plans to comply with Elon Musk’s demand for internal data on spam bots and fake accounts after threatening to walk away from the deal, The Washington Post reported on Wednesday. Citing a person familiar with the state of negotiations, the report says the company will offer access to the so-called “firehouse” of data comprising a real-time record of more than 500 million tweets posted daily and information about the accounts and devices from which the posts are sent.
The agreement is intended to advance Musk’s stalled $44 billion deal to buy Twitter. The billionaire on Monday formally threatened to pull out of the purchase, accusing the company of lying about the portion of users that are bots by withholding internal data. The move is widely perceived as pretext to lower the price of the deal as Twitter’s shares have plummeted from the valuation at which Musk proposed buying the company. Some analysts have speculated that he plans to renege altogether because he committed more than $33 billion of his own money, mostly tied up in sinking Tesla shares, to buy Twitter.
“Twitter has, in fact, refused to provide the information that Mr. Musk has repeatedly requested since May 9, 2022 to facilitate his evaluation of spam and fake accounts on the company’s platform,” wrote Musk’s lawyers in a letter to Twitter that was disclosed in a filing to the Securities and Exchange Commission. “Twitter’s latest offer to simply provide additional details regarding the company’s own testing methodologies, whether through written materials or verbal explanations, is tantamount to refusing Mr. Musk’s data requests.”
Twitter has repeatedly said that it will enforce the deal.
Twitter’s reversal comes a day after shareholder John Solak sued the company in Delaware Chancery Court seeking to force the social media platform to share internal documents about the information Musk seeks. He accused Twitter of failing to properly disclose the number of bots that make up its 230 million users in violation of its duty to investors.
While the firehouse data can hypothetically give a wealth of information about the amount of spam and bot activity, it’s unknown how Musk’s team will utilize or parse through the voluminous data. It may be difficult for Musk to walk away from the deal by arguing that Twitter made a material misrepresentation that he relied on since the company has qualified in securities filings that its estimate of spam accounting for less than five percent of its monetizable daily active users may be too low.
“In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated,” an SEC filing reads.
Further dampening Musk’s chances at renegotiating the purchase, there is no industry standard on calculating monetizable daily active users. Estimating the figure is based on internal definitions. Twitter has qualified in securities filings that its measurements may differ from estimates by third parties.
Musk’s proposed takeover of Twitter includes a $1 billion breakup fee but also features a provision allowing the company to force him to follow through on the deal. If either side sues, a court may order Musk to consummate the purchase.
After unilaterally putting his plan to buy Twitter on hold, Musk has caused the company’s shares to plummet amid constant criticism and uncertainty over whether he will assume control of the social media platform. Twitter in May was sued by a Florida pension fund seeking to block the deal.
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