Elon Musk is threatening to pull his $44 billion Twitter buyout, accusing the company of hiding information about the number of bot and spam accounts on the platform.
In a letter filed with the Securities and Exchange Commission yesterday, lawyers for Musk said that Twitter has refused to hand over its user data so that Musk can vet the company’s user base.
Twitter has long reported that about 5% of its users are bots.
However, after the company and Musk reached a buyout agreement, the Tesla CEO has repeatedly called the bot number into question and demanded data to do his own verification.
“Mr. Musk has made it clear that he does not believe the company’s lax testing methodologies are adequate so he must conduct his own analysis” to determine how many accounts are fake, lawyers representing Musk wrote in Monday’s letter. “The data he has requested is necessary to do so.”
The letter says that Twitter has “refused to provide the information that Mr. Musk has repeatedly requested since May 9, 2022.” Twitter has offered to explain its testing methodology to Musk, according to the letter, which calls is “tantamount to refusing” the data request.
The letter say that if Twitter does not hand over the data, Musk will consider it a “material breach” of the agreement and will walk out of the deal.
“Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement,” the letter says. Musk reserves the right “not to consummate the transaction and his right to terminate the merger agreement,” according to the letter.
Twitter shares fell 3% on Monday, to $38.83.
Last month, Musk said that the deal was “on hold” while he confirmed that the number of bots Twitter said were on the platform was accurate.
Wall Street analysts interpreted Musk’s concern about bots as a pretext to negotiate a lower price for the deal. Musk had offered $54.20 a share for the company in April. Since then, the stock markets, as well as Musk’s own wealth, have declined precipitously.
Under an acquisition agreement, Musk is on the hook for a $1 billion fee if he fails to acquire Twitter.