Elon Musk says $44bn Twitter deal is ‘temporarily on hold’

6 days ago

Elon Musk in 2018. Image: Daniel Oberhaus (CC BY 2.0)

Musk said he wants to see Twitter’s calculations about the estimated number of fake accounts on the platform.

Billionaire Elon Musk has said today (13 May) that his $44bn deal to acquire Twitter is “temporarily on hold”, due to a recent claim by Twitter that spam and fake accounts represent less than 5pc of users on the site.

Musk made the statement via Twitter and linked to a Reuters article from 2 May, when Twitter made the estimate on the number of spam accounts on its site during the first quarter of 2022.

Future Human

In its first quarter earnings report released last month, Twitter said it performed an internal review of a sample of accounts and estimated that the “average of false or spam accounts” during the first quarter represented fewer than 5pc of its 229m monetisable daily active users.

“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,” Twitter said on 28 April.

Musk said that the deal is on hold as he wants to see the company’s calculations that confirm this percentage.

Following the statement, Twitter shares fell by nearly 18pc in pre-market trading, their lowest since Musk first shared his plans to takeover the company in early April, Reuters reported.

The share hit is another blow for Twitter, as it was recently revealed that the company has paused most hiring and is reviewing all existing job offers to determine whether any “should be pulled back”.

In a company-wide memo seen by Reuters, Twitter CEO Parag Agrawal attributed the decision to pause hiring to Twitter not being able to meet previous growth targets.

Agrawal’s memo also told staff of the departure of two of the company’s senior staff members.

Kayvon Beykpour, general manager of the consumer product division, and revenue product lead Bruce Falck, both tweeted that leaving Twitter was not their own decision.

Musk and Twitter

Since the start of April, a lot has ensued between Musk and Twitter. First, he became one of the company’s biggest stakeholders, and there were plans to have him installed on the company’s board.

Days after it was revealed that Musk would not become a Twitter board member after all, he offered to buy the company and take it off the stock market.

“Twitter has extraordinary potential. I will unlock it,” he wrote in a letter at the time addressed to board chair Bret Taylor. He added that he believes in Twitter as a platform for “free speech” and said it “needs to be transformed as a private company”.

Musk has been critical of Twitter in recent months. At the end of March, he asked his more than 80m followers in a tweet whether the platform “rigorously adheres” to the principle of free speech.

“Given that Twitter serves as the de-facto public town square, failing to adhere to free speech principles fundamentally undermines democracy,” he added in a follow-up tweet. “What should be done?”

He then asked followers whether a new social media platform was needed, and said he was giving “serious thought” to building one.

These tweets came after Musk had started building up a stake in Twitter – a move that has also come under the microscope. Last month, a Twitter shareholder sued Musk for failing to promptly disclose that he had bought a significant stake in the company.

Musk had been acquiring shares since January and acquired 5pc by 14 March, meaning he needed to notify the SEC by 24 March under the US agency’s rules. However, the lawsuit document stated that Musk continued to amass shares before notifying the SEC.

The deal includes a clause whereby if either party ends up terminating the agreement, they have to pay the other a $1bn fee. The filing also states that if the deal isn’t closed by 24 October, both sides could walk away without a takeover.

Elon Musk in 2018. Image: Daniel Oberhaus via Flickr (CC BY 2.0)

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Leigh Mc Gowran is a journalist with Silicon Republic

editorial@siliconrepublic.com