Tesla CEO Elon Musk made big waves a few months ago with news of his offer to buy Twitter. After initial reluctance, Twitter agreed to the sweetheart deal and the process moved forward.
Though on Friday, Musk pulled out, saying he’s no longer interested in buying the Big Tech platform.
According to a document filed with the Securities and Exchange Commission (SEC), Musk has already notified Twitter he will not complete the purchase of the platform.
The question is: why?
Why is Musk Pulling Out?
The entrepreneur claims he is not comfortable with the transparency of the platform concerning its users. Musk’s offer was for a very generous $44 billion.
According to the document issued by the SEC, Twitter failed to comply with its contractual obligations.
Mike Ringler, Musk’s attorney, said Twitter failed to meet one of the entrepreneur’s demands that it was to cease to access data from users with the purpose of monetizing.
The breach of contract penalty is $1 billion on both sides. In this case, Twitter claims it should be paid all by Musk since he’s the one who’s pulling out.
The negotiation has been worked on since January this year. The real issue that seems to be tripping up the deal is fake accounts and bots, not just user privacy concerns and transparency.
Musk says Twitter has around 20% of fake accounts and bots, while the platform claims this amount to be only 5%.
Elon musk is terminating his agreement to buy Twitter: So basically Twitter has a huge amount of spam accounts —way more than they let on — and has gotten busted for it!!!
As I said weeks ago spam accounts are probably 50% not 5% of Twitter users. A
— Donald Trump Jr. (@DonaldJTrumpJr) July 8, 2022
Twitter Craters in the Stock Market
Those who follow the stock exchanges saw, this week, that Twitter shares plummeted after Musk’s investigation team said it is not possible to ascertain the exact numbers of fake accounts and bots on the platform.
However, they insist the amount is much higher than Twitter’s claim of 5%.
The main point raised by Musk’s lawyers is Twitter should have consulted the businessman with much more specific information after several developments during negotiations.
Some of these decisions were the resignation of two high-ranking employees, the layoff of around 30% of the talent acquisition team, and the freezing of hiring new employees for the platform.
This negatively impacted the viability of the deal, according to Musk’s legal team, and he should have been kept more in the loop about what was going on.
Following Musk’s decision, Bret Taylor, chairman of Twitter’s Board, tweeted the platform is committed to closing the deal and it will do everything, within the law, to complete the merger.
Specifically, he said they would be launching a lawsuit against Musk for breach of contract.
Sundance: “It appears that Twitter Inc did not want to reveal how Jack’s Magic Coffee Shop was able to sustain operations, at an extremely high cost, without making money.”
Is there a Fed under Twitter’s nest?
Elon Musk Terminates Twitter Purchase Deal https://t.co/qjlcnlsj7A
— Rasmussen Reports (@Rasmussen_Poll) July 9, 2022
What Happens Now?
What happens now remains to be seen. This will now go to court and we will see how it unfolds.
Musk has strong support from Republicans because of his support for free speech. He is hated by the left for the same reason.
At this point, Twitter could be in very deep trouble if they don’t clean up their act.