What just happened? Elon Musk's $44 billion purchase of Twitter is looking even shakier after the world's richest person threatened to terminate the deal over a "material breach" of the company's obligations under the agreement. Once again, the issue relates to Twitter allegedly refusing to prove how many bots and fake accounts are on the platform.
Musk's lawyers made the claim in a letter to Twitter's chief legal officer, Vijaya Gadde, yesterday, alleging that Twitter is "actively resisting and thwarting" his information rights by refusing to provide information on the number of fake, spam, and bot accounts that have long been a problem on Twitter.
The letter, published on the SEC website, states that Musk made the information request on May 9 but the formal response Twitter sent on June 1 was insufficient. "Twitter's latest offer to simply provide additional details regarding the company's own testing methodologies, whether through written materials or verbal explanations, is tantamount to refusing Mr Musk's data requests," wrote law firm Skadden, Arps, Slate, Meagher & Flom.
On May 13, Musk said the Twitter buyout was temporarily on hold until he had evidence supporting a claim that false or spam accounts represented fewer than 5% of Twitter's monetizable daily active users in Q1. The Tesla boss did add, however, that he remained committed to the acquisition but later said the actual figure could be closer to 20%.
Correct— Elon Musk (@elonmusk) June 6, 2022
A material breach would allow Musk to drop his takeover attempt of Twitter without paying the $1 billion termination fee, though Twitter will doubtlessly argue that the issue does not constitute such a breach, and the case would likely end up in court.
In what could amount to even more trouble for Twitter, Texas attorney general Ken Paxton said he has launched an investigation into the company for "potentially false reporting over its fake bot accounts."