According to a report, there’s a great chance that Elon Musk’s agreement to buy Twitter Inc. (NYSE:TWTR) will fall through due to his doubts that the company is accurately reporting the number of spam bots on the platform. Even though Twitter’s executives insisted the number is low and explained in detail how the figures are calculated, Musk’s doubt remains resolute.
Twitter Inc. (NYSE:TWTR) has repeatedly claimed that spam bots make up less than 5% of its user base. On the other hand, Musk claims that Twitter’s bot percentage is much higher and has threatened to pull out of his agreement to buy the company for $44 billion until the number is confirmed.
The Washington Post reported Thursday that Musk’s team has concluded that Twitter Inc. (NYSE:TWTR) cannot verify its spam accounts figures and has ceased engaging in discussions about funding the deal. As a result, the acquisition has been placed “in serious jeopardy,” according to the newspaper.
In response to the Post’s story, a Twitter spokesperson told Bloomberg that the company would continue to cooperatively reveal information to Musk to advance the transaction according to the terms of the merger agreement. He also asserted that the company believes that this agreement aligns with all shareholders’ best interests, which is why Twitter Inc. (NYSE:TWTR) intends to close the deal and enforce the merger agreement.
Twitter Inc. (NYSE:TWTR) fell 4.4% as the market opened in New York on Friday. As of Thursday, the stock had declined 10% this year, closing at $38.79.
In a media briefing on Thursday, Twitter Inc.’s (NYSE:TWTR) executives said the company manually reviews thousands of accounts each quarter to determine the 5% spam bot percentage and estimates that the actual number is significantly lower than what is disclosed in filings. Moreover, the company uses internal data to verify the bot number, including IP addresses and phone numbers, to determine whether a human operates the account.
Elon Musk Requests Twitter Data
Elon Mush, the world’s richest man, has requested an audit of Twitter’s estimates. It was reported that Twitter Inc. (NYSE:TWTR) has been sharing some data with Musk and working closely with his team within the parameters of their purchase agreement. In response to a question about the type of data being shared with Musk, an executive refused to comment but stated that the company does not share internal data with outsiders because of privacy concerns.
Musk was previously granted access to Twitter’s “fire hose” of public tweets, but this only includes public tweets, not the private accounts’ data.
A Twitter executive cautioned that outsiders would be unable to accurately estimate the number of bots on the service without such data. It was requested that the executives remain anonymous.
However, this is not the first time Twitter’s inability to accurately distinguish between real accounts and spam bots has jeopardized its growth and reputation. According to the company, up to 8.5% of its active users are likely bots that automatically contact its servers for regular updates without user interaction. This caused Apple to cease allowing its Safari browser to automatically pull links from Twitter followers in 2015, which resulted in Twitter losing more than 3 million followers.
In 2019, Twitter Inc. (NYSE:TWTR) replaced its declining monthly active users by focusing on growing its monetizable daily active users. However, during its first-quarter report in April, the company acknowledged that it had mistakenly counted multiple accounts associated with one user as separate daily active users. While this miscalculation only reduced its daily active users by less than 2 million, it raised more questions about Twitter’s ability to measure its core audience.
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