Elon Musk cancels his $44 billion purchase of Twitter deal.
Elon Musk is attempting to halt his $44 billion (£36 billion) purchase of Twitter, claiming many violations of the contract.
The announcement follows the world’s richest person’s decision to purchase Twitter in April as the most recent twist in a protracted saga.
Mr. Musk claimed that the reason for his withdrawal was that Twitter has not given sufficient details regarding the quantity of spam and false accounts.
Twitter says it plans to pursue legal action to enforce the agreement.
Twitter CEO Bret Taylor tweeted, “The Twitter Board is committed to complete the acquisition on the price and terms agreed upon with Mr. Musk,” setting the stage for what may become a protracted court battle.
A $1 billion (£830 million) break-up fee is stipulated in the original merger agreement.
Dispute over phony accounts
In May, Mr. Musk stated that the agreement was “temporarily on pause” while he awaited information regarding the quantity of spam and false Twitter accounts.
The company’s claim that less than 5% of its users are spam and bot accounts was challenged by the wealthy businessman, who demanded proof.
Mr. Musk’s attorney said in a letter submitted to the US Securities and Exchange Commission that Twitter had failed or refused to provide this information.
The letter states that Twitter has “at times ignored Mr. Musk’s requests, at times rejected them for reasons that appear to be unjustifiable, and at other times pretended to comply while providing Mr. Musk with inaccurate or incomplete information.”
Spam accounts are made to disseminate information to a big audience and influence how they use the platform.
Twitter claimed on Thursday that it eliminates roughly 1 million such accounts daily.
Mr. Musk thinks that up to 20% of Twitter users are likely to be spam or automated accounts.
Following the news, Twitter’s stock dropped by 7% in after-hours trade.
For some weeks, Elon Musk has been attempting to learn how many daily active Twitter users there are.
Bots are a concern on Twitter.
In fact, it only recently claimed to be removing a million spam accounts daily.
In a filing, Mr. Musk claimed that he had frequently requested information regarding the number of Twitter bot accounts but had been denied access to it, which is why he wanted to end the agreement.
However, Elon Musk has already signed this agreement, so it is unclear at this point if he can back out.
Mr. Musk will have to provide evidence that Twitter broke their contract.
There are more reasons Mr. Musk might decide to back out of the agreement.
Did Musk offer too much? Given the recent sharp decline in the stock price of major tech companies.
Additionally, there was the proposed merger’s effect on Mr. Musk’s other businesses.
Since he revealed his interest in Twitter, the share price of Tesla has drastically decreased.
His stance on free speech and how Twitter might filter in the future—based on the legal systems of other nations—also occasionally came out as naive.
Did Elon Musk ultimately come to the conclusion that he had taken on too much?
Tesla and SpaceX were founded by Mr. Musk, who is rumored to be the wealthiest man in the world.
As a self-described “free speech absolutist,” he had promised to relax Twitter’s content control policies as soon as he acquired the business.
He has long criticized Twitter for blocking some accounts, like the one belonging to former US President Donald Trump.
Additionally, he has asked for greater transparency in the system that permits select tweets to be promoted and sent to larger audiences on the site.