The Elon Musk-Twitter saga has reached an extremely weird and uncomfortable point. Literally every few hours, the deal to acquire the social platform switches between full steam ahead to a hold state.
If you’re an investor, user, or Twitter employee, it could be a really confusing time to understand where the company’s headed. I want to help you make sense of what’s happening with the deal, and try and understand if it’s going to go through. Here’s my best shot.
Elon, Twitter, and robots
Last week, Musk said the Twitter acquisition deal is on hold until the company can prove that less than 5% of its users are bots.
This was in response to the company’s SEC filing, which cited the figure.
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Since the Tesla CEO first showed interest in acquiring the company in April, removing spam bots has been his key transformation point for the platform.
Later, at a tech conference held in Miami, Musk claimed that at least 20% of Twitter users are bots. He even said that because of this issue, he might pay a lower price for the company.
On Twitter, he mentioned that his initial offer was based on Twitter’s SEC filings being accurate.
20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher.
My offer was based on Twitter’s SEC filings being accurate.
Yesterday, Twitter’s CEO publicly refused to show proof of <5%.
This deal cannot move forward until he does.
— Elon Musk (@elonmusk) May 17, 2022
However, in a proxy statement filed by Twitter, the firm said Musk didn’t carry out due diligence before finalizing the deal last month. A Reuters report suggested that because of this, he will now have to prove that the platform’s filings were wrong.
It also noted that because of a “specific performance” clause in the agreement deal, Twitter can force Musk to pay up the decided $44 billion for acquisition, or sue him.
The proxy statement emphasized that the company is determined to complete the deal this year at the agreed price of $54.20 per share. At the time of writing, Twitter shares were trading at $38.32 — almost 30% less than Musk’s proposed price.
Musk vs. Twitter employees
While Musk is flip-flopping on his desire to acquire Twitter every few days, he’s also been critical of Twitter employees.
Last month, the ex-PayPal CEO pointed fingers at Twitter’s top lawyer, Vijaya Gadde, for blocking a New York Post story about Hunter Biden’s laptop in 2020. After Musk’s accusations, an army of trolls attacked Gadde online.
After the incident, former Twitter CEO Dick Costolo questioned Musk about it, pointing out that he made an executive of the company he wants to acquire a target for harassment.
This week, current Twitter chief exec Parag Agrawal wrote a detailed thread explaining the platform’s bot situation, and how the company measures their presence. He added that the firm’s estimation process can’t be done by a third party because it needs both public and private data. To that, Musk’s response was a… poop emoji.
?
— Elon Musk (@elonmusk) May 16, 2022
He also asked Agrawal about how the platform informs advertisers about results they’re getting on the platform. The CEO didn’t reply to that tweet.
Wait, there’s more. Last night, Project Veritas, a far-right media group, published a video of an alleged Twitter exec who talked about Musk having “Asperger’s” and him having “Special needs.” He also talked about him not taking the Tesla CEO seriously.
We have asked Twitter for a response to this video, and we’ll update the story if we hear back.
So what’s next?
A report from The Guardian noted that Twitter’s agreement with Musk is elaborately detailed, and it’s going to be hard for him to drop it.
Experts noted that Musk’s argument about too many bots on the platform doesn’t hold up, as Twitter has mentioned a caveat in its quarterly earnings that the number of automated accounts could be higher than 5% estimate.
So it seems likely the deal will indeed go through. But if Musk refuses to comply, we might be looking at a lengthy and complex legal battle.
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