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.