Elon Musk has said his $44bn (£36bn) takeover of Twitter is “temporarily on hold” after the social media platform claimed that fewer than 5% of its users were spam or fake accounts.
The Tesla chief tweeted on Friday morning that the deal was being frozen while he awaited details supporting Twitter’s assertion. In a subsequent tweet, Musk said he was “still committed to acquisition”, amid speculation that the world’s richest man was about to walk away from the deal or seek a lower price.
Musk announced the move alongside a link to a Reuters article published on 2 May that referred to a filing with the US financial regulator, in which Twitter claimed that false or spam accounts represented fewer than 5% of its 229 million daily average users. The filing does not appear to contain new information on spam accounts, however, with previous quarterly filings going back to 2014 also referring to the “fewer than 5%” figure, albeit with the caveat that the true number could be higher.
Musk has agreed to pay a $1bn break fee to Twitter if he walks away from the deal. The news sent Twitter’s shares down 10% to $40.31 when Wall Street opened, on concerns that the deal could collapse.
The agreed takeover values Twitter at $54.20 per share. However, a renowned US short-selling firm, which takes bets against companies’ share prices, said this week that Musk could submit a lower bid for Twitter, owing to a slump in tech stocks and a weak financial performance at the social media platform.
Dan Ives, an analyst at Wedbush Securities, a US financial services firm, said: “The implications of this tweet will send this Twitter circus show into a Friday the 13th horror show as now the Street will view this deal as 1) likely falling apart, 2) Musk negotiating for a lower deal price, or 3) Musk simply walking away from the deal with a $1bn breakup fee.”
Tesla shares, which are part-funding the takeover via a loan taken out against Musk’s shareholding, were up nearly 5% on Friday.
Musk has railed against automated or “bot” Twitter accounts – which are not run by human users – and said after announcing the takeover that he wanted to improve the platform by “authenticating all humans”.
Twitter allows automated accounts on its platform, ranging from disaster early warning systems to algorithmic art. In 2021, it introduced an “automated account” label to publicly mark such accounts as being run by a computer, not a human. But those accounts need to follow strict rules and can lose access if they misbehave.
One such automated account may even have been the driver for Musk’s initial purchase of Twitter stock. Created by a 19-year-old aviation enthusiast, the @elonjet Twitter feed tracks and automatically tweets the location of Elon Musk’s private plane, taken from public flight tracker data.
In January, Musk offered the teenager $5,000 to buy the account and shut it down, declining the creator’s $50,000 counter-offer. A few days later, he began purchasing Twitter stock, filing his legal declaration that he own a substantial stake in early April.
But declared automated accounts such as @elonjet are far outnumbered by spam accounts, which deliberately break Twitter’s terms of service in pursuit of commercial or political goals.
Such accounts may use the reply function or direct messages to send adverts or scams to other users, or they may represent attempts to influence the public discourse by tweeting political propaganda.
Other fake accounts exist purely to boost the metrics of individual users, who can buy followers, likes and retweets from “bot sellers” who control thousands or millions of fake accounts.
“Bots massively multiply the ability of one person to attempt to manipulate people,” Samuel Woolley at Oxford University said after the launch in 2017 of a report into social media manipulation. “Picture your annoying friend on Facebook, who’s always picking political fights. If they had an army of 5,000 bots, that would be a lot worse, right?”