Elon Musk threatens to scrap Twitter deal over lack of transparency

Elon Musk at the TED2022 conference
Elon Musk at the TED2022 conference (Image credit: TED)

What you need to know

  • Elon Musk has threatened to pull out of his $44 billion Twitter bid if the company fails to provide data on its spam bots problem.
  • Musk wants to know how Twitter counts the number of fake accounts on its platform.
  • According to his lawyers, Twitter is "thwarting his information rights" under the merger agreement.

Elon Musk's bid to acquire Twitter has recently suffered a series of setbacks. The most recent stumbling block comes as Musk threatens to withdraw his $44 billion merger offer over Twitter's refusal to provide data on its spam bots problem.

In a letter to Twitter's chief legal officer, Musk's lawyers warned that the Tesla CEO could terminate the deal if the social media company fails to disclose information about how it calculates the number of fake accounts on the platform. The letter was included in a filing with the Securities and Exchange Commission (via The New York Times).

The lawyers accused Twitter of "thwarting" Musk's rights to information under the terms of the merger agreement. Musk has been requesting data on Twitter's fake account estimates for several weeks. The deal was put on hold last month due to the platform's spam bot problem.

"Based on Twitter’s behavior to date, and the company’s latest correspondence in particular, Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement," the filing stated. "This is a clear material breach of Twitter’s obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement."

Twitter did not immediately respond to Android Central's request for comment. But the company said in a press statement that it "will continue to cooperatively share information with Elon Musk to consummate the deal in accordance with the terms of the merger agreement."

Musk's legal team noted that his request for information is a necessary step in preparing to transition Twitter’s ownership. This information will also enable Musk to "have a complete and accurate understanding of the very core of Twitter’s business model—its active user base," according to the letter.

In its Q1 2022 earnings report, Twitter revealed that fake accounts account for less than 5% of the platform's user base. However, the service admitted that this figure did not accurately represent the number of fake accounts on the platform.

"If Twitter is confident in its publicized spam estimates, Mr. Musk does not understand the company’s reluctance to allow Mr. Musk to independently evaluate those estimates," Musk's legal team said.

Jay Bonggolto
News Writer & Reviewer

Jay Bonggolto always keeps a nose for news. He has been writing about consumer tech and apps for as long as he can remember, and he has used a variety of Android phones since falling in love with Jelly Bean. Send him a direct message via Twitter or LinkedIn.