Genuine concern or plain shithousery? How spam bots could derail Elon Musk's $44B Twitter takeover
Twitter and Elon Musk are once again in a tough spot as both parties are not willing to comply. Musk has now threatened to walk away from the $44 billion deal and Twitter has claimed that it will 'force through' the deal. The tension arose when the social media giant said it will consummate the transaction with Musk after he insulted its bosses in the latest SEC (Security of Exchange Commission) filing. Musk accused Twitter of breaching their contract by withholding information on the spam accounts and once again threatened to back out from the deal.
The billionaire took some serious shots at Twitter's Chief Legal Officer, Vijaya Gadde, threatening to flip the whole deal upside down. He claimed that he can crash the whole takeover if he wants to if they do not provide him with information on the fake accounts on the platform. Musk's attorney wrote a stern letter that explained that Twitter failed to provide information that would "facilitate his (Elon Musk) evaluation of spam and fake accounts on the company’s platform." His lawyers further argued that not providing the information which he has been asking for since May 9 is a clear breach of the merger agreement.
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They continued, "Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement. Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement." They continued, "At this point, Mr. Musk believes Twitter is transparently refusing to comply with its obligations under the merger agreement, which is causing further suspicion that the company is withholding the requested data due to concern for what Mr. Musk’s own analysis of that data will uncover."
Texas AG Ken Paxton dives into a Twitter investigation
If Musk was to walk away from the merger, he would have to deal with a $1 billion breakup fee, which doesn't sound like a big deal to the billionaire tech mogul. Moreover, Twitter shares closed at $39.56 on Monday, June 6, which is lower than the previous tag, i.e., $54.20 per share. This is another reason why investors are skeptical about the follow-through of this deal. However, this situation has taken a surprising turn as Texas Attorney General Ken Paxton has decided to launch an investigation into Twitter's bots and spam angle.
Ken Paxton's official website released a statement, saying, "Twitter has received intense scrutiny in recent weeks over claiming in its financial regulatory filings that fewer than 5% of all users are bots, when they may comprise as much as 20% or more. The difference could dramatically affect the cost to Texas consumers and businesses who transact with Twitter. To address this concern, Attorney General Paxton issued a Civil Investigative Demand (CID) to investigate whether Twitter’s reporting on real versus fake users is “false, misleading, or deceptive” under the Texas Deceptive Trade Practices Act."
Today I’m investigating Twitter for potentially misleading Texans on the number of its “bot” users. I have a duty to protect Texans if Twitter is misrepresenting how many accounts are fake to drive up their revenue.https://t.co/OZbwdV3pnY— Texas Attorney General (@TXAG) June 6, 2022
Now, Musk abandoning the Twitter deal is a billion-dollar question. If Twitter is masking up the percentage, and the investigation reveals the same, the social media platform will take a serious hit and the deal might not fall through, leaving the company high and dry. The SpaceX and Tesla owner is being criticized by Twitter for changing the original terms of the deal. A Twitter spokesperson told The NY Post, "We intend to close the transaction and enforce the merger agreement at the agreed price and terms."