Elon Musk had just put the Twitter deal on hold when huge news broke.
Musk’s bid price for Twitter has frozen over his concerns regarding the amount of fake/spam accounts on the site.
Twitter was holding firm that it would not supply him with that information.
This raised considerable speculation that Twitter had far more bot and spam accounts than previously reported.
Then, just a few hours ago, Twitter announced that it would comply with his demand.
Musk Wins Staredown
On Monday, Musk had his attorneys send Twitter a letter that they had requested numerous times since May 9 for Twitter to provide the data regarding fake and spam accounts.
The company currently has about 229 million accounts, and recent reports estimated that upwards of 30 million could be fake accounts, more than double what Twitter had previously reported.
Musk believes that if the company has excess bots and spam accounts, he would not be able to monetize as planned.
Twitter, in turn, responded by stating, “We intend to close the transaction and enforce the merger agreement at the agreed price and terms.”
The problem as I see it, however, is that if this went to court and an audit was ordered, and Musk was right, Twitter would not only lose the Musk deal, but it would also be in store for serious lawsuits from advertisers for fraud.
So, two days after the Musk legal letter, Twitter has suddenly reversed course, my guess is after a massive purge of accounts.
Twitter openly admitted in its SEC filings that it may have grossly underestimated the number of spam accounts on the website.
It stated, “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.”
What I want to see is the reports after Musk gets them to find out just how much of a scam Twitter has been running on advertisers since its inception.