Elon Musk escalated the drama surrounding his $44 billion bid to buy Twitter on Friday, saying in a predawn tweet that the deal was done “temporarily on hold” until he could learn more details about the volume of spam and fake accounts on the platform, and two hours later he tweeted that he was “still committed” to the acquisition.
The announcements mark the latest chapter in an unfolding corporate saga that has raised questions about free speech online and the ramifications of blaming the richest person on earth for one of the most influential social media platforms.
Mr Musk, Tesla’s chief executive officer, has said that ridding the platform of fake accounts, bots and spam would be one of his top priorities post-acquisition. In his tweet, Mr. Musk referenced a May 2 Twitter regulatory submission that included an estimate that less than 5 percent of Twitter users were spam and fake accounts.
Known for his outspoken and sometimes impulsive business style, Mr. Musk’s comments had many pondering the future of the deal.
Twitter has few restrictions on signing up for an account, and the company has long struggled with spam and bots. However, it was difficult to accurately quantify the extent of the problem. In a May 2 regulatory filing, Twitter said it estimated less than 5 percent of its users were fake or spam, a number it had previously released. Twitter warned that it used “significant judgement” in the calculation and that its “estimate of false or spam accounts may not reflect the actual number,” language similar to that used in the company’s previous filings.
Musk’s comments were seen as either a tactic to lower the price of the acquisition or an excuse to eventually pull out altogether.
“Many will see this as Musk using these Twitter filing/spam accounts to get out of this deal in a rapidly changing market,” said Daniel Ives, analyst at Wedbush, in a note to investors.
Twitter did not respond to a request for comment.
Mr Musk’s surprise bid for Twitter has sparked considerable debate over the role of a social media platform in monitoring what is being said by its users. Twitter has tried for years to combat hate speech, harassment and other online abuses, but Mr Musk, who has used the platform to attack and belittle critics in the past, has pledged to relax the company’s content moderation policies. On Tuesday, he said he would lift a ban on former President Donald J. Trump.
How Elon Musk’s Twitter deal unfolded
A blockbuster deal. World’s richest man Elon Musk capped the infamous billionaire’s seemingly unlikely attempt to buy Twitter for around $44 billion. Here’s how the deal went:
Pulling out of the deal could get messy. The purchase agreement includes a $1 billion fee that Mr Musk would have to pay if he exits the deal, although it was unclear how such a clause would apply if Mr Musk could prove Twitter’s user counts were incorrect. If Mr Musk’s debt financing is intact, Twitter could also take the billionaire to court to force him to pay the deal.
Mr Musk has pledged to use his personal fortune to fund the deal for Twitter, a plan that has been hurt by the recent slump in stock prices, including Tesla’s. Tesla stock has fallen nearly 30 percent over the past month. Mr. Musk sells Tesla stock as well as personal loan collateral to raise cash.
If a deal were to close, business challenges at Twitter could force Mr Musk to continue to draw on his shares in the electric carmaker to plug potential funding holes. And any problem at Tesla that caused shares to fall far enough could trigger clauses in Mr. Musk’s personal loans that would require him to add more collateral, limiting his ability to invest in Twitter.
Tesla shares rose on Friday following Mr Musk’s comments.
Mr Musk’s offer has caused uncertainty at Twitter, a company already struggling to add new users and generate more revenue. On Thursday, Twitter CEO Parag Agrawal fired two top executives, halted hiring and vowed to cut spending.