Elon Musk has filed a
motion with the SEC to put an end to the $44 billion takeover deal
that he had signed with Twitter, because of the company’s inability to provide
accurate information on the number of fake accounts on the platform.
According to Musk’s team, they made repeated requests to Twitter
for access to accurate information, but the company failed to comply with the
contractual requirements and offered only limited access to the required data, which
resulted in violation of the terms.
As per Musk’s filing, the information was meant to be
provided by Twitter for business purpose related to the consummation of the
transaction. However, Twitter made multiple moves to keep the information to
itself, such as by ignoring Musk’s requests, rejecting them for unjustified
reasons, and other times, even claiming to comply, but actually providing incomplete
or unusable information.
The filing has also highlighted the specific types of
information related to the number of fake accounts, that was not provided to
Musk. These include information related to Twitter’s process for auditing the
inclusion of spam and fake accounts in mDAU, information related to Twitter’s
process for identifying and suspending spam and fake accounts, daily measures
of mDAU for the past eight quarters, board materials related to Twitter’s
mDAU calculations, as well as materials related to Twitter’s financial
condition.
Now that Musk has decided to end the deal, it is now up to
the SEC and/or the courts to decide whether the reasoning stated is justified,
and how it moves forward, or not, with the merger. The consequences could be
catastrophizing for Twitter, considering that the company has gone as far as to
cut executive jobs and redefine its entire business approach ever since it
signed the deal with Musk.
