Last week Tuesday, tweets from Elon Musk cast some doubts on the $44 billion deal to acquire Twitter. He said that his purchase of Twitter would be on hold until Twitter's CEO Parag Agrawal can prove that less than 5 percent of Twitter users are bots or fake accounts.
Musk said in a tweet that, as opposed to claims by the company, there are about "20% fake/spam accounts" on the platform, which is four times the official number provided by Twitter. Many of these spam accounts are supposedly bots, that is, automated accounts not run by humans.
Musk tweeted early that Tuesday morning: "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 is another hitch in one of the world's most-followed acquisitions.
On Monday, May 16, Agrawal had made a thread where he rejected the method proposed by Musk to evaluate the number of spam accounts on the platform. He viewed it as 'flawed.' Musk was likely referring to this tweet when he said that the CEO had "publicly refused to show proof."
Reuters reported last Tuesday that Twitter is still committed to seeing the deal through at the agreed price and terms as soon as Twitter shareholders approve it. According to Reuters, the company said that the deal is expected to close this year.
How Musk reached his conclusion about 20% of fake accounts is unknown. Also, Twitter does not provide the public with its data troves for inspection. As such, the actual number of fake/spam accounts is unknown.
According to Forbes, Musk says his team is "evaluating a random sampling of accounts following Twitter's official account." This approach "is statistically questionable," and the method employed to determine whether an account is fake remains unclear.
How This Affected Twitter And Tesla Shares
With the Musk Twitter deal, there have been "significant shifts" in Tesla's value. In pre-market trading early Tuesday, Twitter shares dropped around 2%, while Tesla shares jumped about 4% that same Tuesday morning.
Musk said that the issue of fake and spam accounts on Twitter would be one of his "top" priorities once he starts leading the company.
This is not the first time Twitter has faced issues involving mathematical errors with its user base. For three years in a row, it reported more than its actual users. According to The Verge, "Twitter overstated the number of daily users on its service for three years straight, overcounting by up to 1.9 million users each quarter." They counted multiple accounts belonging to the same user even when some were not in use.
Although this most recent setback has many wondering if the deal will still pull through, Musk says he is still committed to seeing it through. Whether he is trying to secure a better deal or walk away remains speculations. If he decides to walk, he will have to pay a $1 billion termination fee.