Twitter under fire for potentially misreporting bot accounts

7 Jun 2022

Image: © Rafael Henrique/Stock.adobe.com

Elon Musk has been flagging the Twitter bot figures as a reason to end his deal to buy the company.

The Texas attorney general has launched an investigation into Twitter to calculate the number of bot accounts on the platform.

US lawyer and politician Ken Paxton contends that Twitter may have misled Texas consumers and businesses regarding the number of fake or bot accounts that are active on its service. Twitter will now be investigated under the Texas Deceptive Trade Practices Act to determine if its reported figures are “false, misleading or deceptive”.

This investigation requires Twitter to hand over user data from the period 2017 to 2022 documenting the number of daily, monthly and monetisable active users in Texas and worldwide, as well as the number of “inauthentic” accounts, including spammers and bots.

The attorney general also demands to know how Twitter arrived at its publicly stated figure that false or spam accounts on the platform amount to less than 5pc of monetisable daily active users.

Twitter has until 27 June to furnish the attorney general with this data.

Twitter’s bot problem

The question of how many user accounts on Twitter are bots has been used by Elon Musk to potentially back out of his deal to buy Twitter for about $44bn.

In a filing earlier in May, Twitter said that less than 5pc of monetisable daily active users are spam.

In a long Twitter thread explaining how the company deals with spam and bots, Twitter CEO Parag Agrawal said more than half a million spam accounts are suspended on the platform every day, with the company locking millions of accounts each week “that we suspect may be spam” and not real humans.

Agrawal also said an “overview of the estimation process” was shared with Musk.

Buyer’s remorse

Musk, however, continues to raise the Twitter bot figures as a reason to end his deal to buy Twitter.

The letter claims Twitter is “actively resisting and thwarting [Musk’s] information rights” in a “clear material breach” of the terms of the acquisition.

It goes on to say Musk reserves his “right not to consummate the transaction and his right to terminate the merger agreement” if this matter is not resolved,

Musk waived due diligence on the Twitter deal, apparently to pressure Twitter shareholders into accepting his “best and final” offer of $54.20 per share.

However, following dips in Twitter’s stock, Musk’s bid for the social media platform is now calculated to be overpriced.

In a statement to Axios, Twitter said it will continue to cooperatively share information to finalise the deal in accordance with the agreed terms. “We intend to close the transaction and enforce the merger agreement at the agreed price and terms,” the company said.

Legal controversy

Musk’s takeover deal with Twitter includes a clause whereby if either party ends up terminating the agreement, they have to pay the other a $1bn fee. Some Twitter shareholders are even suing Musk and Twitter to ensure the deal goes through at the agreed price.

Musk is also under investigation by the US Securities and Exchange Commission into why he did not disclose the significant stake he accrued in Twitter earlier this year within the required time frame.

The Texas attorney general launching the Twitter investigation, who secured the Republican party nomination for re-election later this year, is himself mired in legal controversy.

Paxton was indicted on securities fraud charges in 2015, to which he pleads not guilty as he awaits trial, and he is also under investigation by the FBI over corruption charges. The bar association of Texas has also investigated complaints over his attempts to overturn the 2020 election of Joe Biden as US president.

“Texans rely on Twitter’s public statements that nearly all its users are real people. It matters not only for regular Twitter users, but also Texas businesses and advertisers who use Twitter for their livelihoods,” said Paxton. “If Twitter is misrepresenting how many accounts are fake to drive up their revenue, I have a duty to protect Texans.”

Musk, an avowed Republican voter, is a key investor in Texas tech. As well as being a resident of the state, he recently moved Tesla’s headquarters to Austin and opened a factory in Texas this year. His space-tech company SpaceX also has a significant presence in Texas.

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Additional reporting by Vish Gain.

Elaine Burke is the editor of Silicon Republic

editorial@siliconrepublic.com