A few weeks ago, Elon Musk’s announcement that he was organizing a hostile takeover bid for Twitter took the world by storm. He was set to buy 100% of the company for $44 billion and take it private, to focus on better developing it as an online public forum committed to free speech. At the time, he listed two major problems that he felt were plaguing the social media giant: the site’s policy for restriction of free speech, and the overwhelming number of artificial bot accounts.
Twitter’s community was divided on the issue, and for some time it looked like Elon had a fight ahead of him before he could fully acquire the site. For one, Twitter’s board members and many shareholders were not happy with the aggressive nature of the bid. The world’s richest person had earlier acquired a 9% passive stake, and many viewed his offer as a threat to “tank” Twitter’s stock by selling his majority share, lest the board deny his offer. Finally, the board unanimously agreed to accept Musk’s offer, and it seemed as though he was going to get what he wanted after all.
But earlier this week, the business world was hit with a hiccup in the Musk-Twitter saga. Musk announced through his account that the deal was on hold because the management could not prove to him, beyond doubt, that no more than 5% of Twitter’s Monetizable Daily Active Users (mDAUs) were spam bot accounts. He accused the Twitter management of opacity in their dealings with him and the United States Securities and Exchange Commission (SEC).
Musk’s tweet read:
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.”
He was immediately hit with angry responses accusing him of bluffing the entire time. A while after the original tweet was posted, Musk added:
“Still committed to acquisition.”
“To find out, my team will do a random sample of 100 followers on @twitter.
I invite others to repeat the same process and see what they discover ...”
As the situation escalated online, Musk faced comments from various users on the platform. One day later, Twitter CEO Parag Agrawal broke his silence on the issue with a lengthy thread detailing all that had been happening inside the company in the meantime and stated how he was committed to delivering his best performance despite all that was going on.
However, his response on the matter at hand came two days after his first tweet, on May 16. Then, he posted a thread beginning with “Let’s talk about spam, and let’s do so with the benefit of data, facts and context...”
He first mentioned his company’s commitment to fighting spam as effectively as possible in yet another long thread. He said that Twitter’s team uses advanced algorithms to fight and remove spam every single day. He then stressed how important it was to do this without harming the experience of legitimate users, and how all of Twitter’s spam detection and removal systems were designed around this goal. Delivering a final piece of information about the dynamic nature of malicious spam accounts on Twitter, and how hard it is to catch up with their flexible methods, Parag dived into the data.
“We suspend over half a million spam accounts every day, usually before any of you even see them on Twitter. We also lock millions of accounts each week that we suspect may be spam – if they can’t pass human verification challenges (captchas, phone verification, etc).”
“Now, we know we aren’t perfect at catching spam. And so this is why, after all the spam removal I talked about above, we know some still slip through. We measure this internally. And every quarter, we have estimated that <5% of reported mDAU for the quarter are spam accounts.”
“Our actual internal estimates for the last four quarters were all well under 5% – based on the methodology outlined above. The error margins on our estimates give us confidence in our public statements each quarter.”
In these three tweets, Parag maintained his company’s stance that Twitter estimated no more than 5% of mDAUs as being spam accounts. He added, though, that a public audit of these figures, as Musk stated was his condition for the deal to move forward, was not possible, as the evaluation process involved the usage of both public and private user data, saying:
“Unfortunately, we don’t believe that this specific estimation can be performed externally, given the critical need to use both public and private information (which we can’t share). Externally, it’s not even possible to know which accounts are counted as mDAUs on any given day.”
News agency Teslarati then shared an article headlined “Elon Musk may be looking for a better Twitter deal as $44 billion seems too high with 20% of users being fake or spam accounts.”
It was to this that Musk responded, effectively replying to Parag’s statement as well, saying:
“20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher.
My offer was based on Twitter’s SEC filings being accurate.
Yesterday, Twitter’s CEO publicly refused to show proof of <5%.
This deal cannot move forward until he does.”
This exchange prompted a fierce discussion among major individuals in the technology and business space about the accuracy of Musk’s moves and his intentions. Many theorized that this was a play by Musk to land himself a cheaper deal, and others said that Musk did not have any intention of buying the company in the first place and that this was his excuse to renege on the deal.
If what is being said about Musk trying to negotiate a better deal through scare tactics is true, that would put him in trouble with the courts. Legally, an acquisition can be halted on grounds of the company hiding, mismanaging, or misrepresenting figures and data at the time of the deal, but if the Twitter board sees fit to go through with Musk’s demands in the interests of investors, regardless of their legality, we could see a new deal being sketched out.
We have watched an unfolding of dramatic events in the short span of just 2 weeks. Only time will tell if Musk will have his way, or if there are other plans inbound for Twitter.
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