An agreement with Elon Musk is worthless
Elon Musk is the richest person in the world, and an active Twitter user. When he tweets, he gets a lot of spammy replies, many of which seem to be written by automated bots. He has complained about this a lot. Eventually he decided to do something about it. The thing that he decided to do about it was buy Twitter. On April 13, he sent a letter to Twitter Inc.’s board of directors offering to buy the company for $54.20 per share in cash. “If our twitter bid succeeds,” he tweeted, “we will defeat the spam bots or die trying!”
His Twitter bid succeeded. On April 25, Twitter and Musk issued a joint press release announcing that he had agreed to buy Twitter for $54.20 per share. The press release included a quote from Musk promising to “make Twitter better” by, among other things, “defeating the spam bots.” He was really mad at the spam bots! He wanted to buy Twitter because of the spam bots.
Yesterday he announced that he does not want to buy Twitter because of the spam bots:
Elon Musk declared he won’t proceed with his $44 billion takeover of Twitter Inc. unless the social media giant can prove bots make up fewer than 5% of its users, casting yet more uncertainty over the deal.
The billionaire tweeted “this deal cannot move forward” unless Twitter provides proof of its claims, reiterating his own view that the ratio is far higher. …
Twitter said it is “committed to completing the transaction on the agreed price and terms as promptly as practicable,” in a statement on Tuesday. …
The battle over bots has become a sticking point for Musk, who told a tech conference in Miami on Monday that fake users make up at least 20% of all Twitter accounts, possibly as high as 90%. Twitter regularly states in its quarterly results that the average of false or spam accounts “represented fewer than 5% of our monthly daily active users during the quarter,” adding that it applied “significant judgment” to its estimate, and the true number could be higher.
I think it is important to be clear here that Musk is lying. The spam bots are not why he is backing away from the deal, as you can tell from the fact that the spam bots are why he did the deal. He has produced no evidence at all that Twitter’s estimates are wrong, and certainly not that they are materially wrong or made in bad faith. [Continue reading…]