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Elon Musk backs out of enormous Twitter deal
By: Ethan Tu
In April of 2022, Elon Musk, the world's richest man, began negotiations to buy Twitter. Now, three months later, he has pulled out of the $44bn dollar deal.
Musk claims he backed out of the deal because Twitter failed to provide enough information on the number of spam and fake accounts. Musk asked for evidence that spam and bot accounts make up less than 5% of its total users, a fact that Twitter has claimed in the past. In May he said the deal was “temporarily on hold,” while he awaited that data. Musk’s lawyer later said Twitter had failed or refused to provide the information, leading to Musk’s decision to back out of the deal. “Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information,” reads the letter Mr. Musk’s lawyer wrote.
Twitter believes that Musk is making excuses to back out of the deal. They claim he really backed out because of his net worth and Twitter's value, which has been on decline since Musk announced he was planning on buying the firm in April.
Two days after Musk terminated his deal to buy Twitter, the company filed a lawsuit against Musk, claiming that he violated his agreement and was legally bound to buy the firm. “The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk,” Twitter chairman Bret Taylor responded in a tweet.
Musk was not a fan of Twitter before the deal, criticizing the company’s ban of some accounts, like that of former US President Donald Trump. As self-described “free speech absolutist”, Musk pledged to loosen Twitter's content moderation rules once the company was under his ownership. He also called for more transparency over how the platform presents tweets to users, a system that currently allows some to be promoted and given wider audiences. (BBC News)
It has been known for a long time that Twitter has a problem with bots. Musk believes that spam or bot accounts account for over 20% of Twitter's users, which may be true considering Twitter’s claims that it removes 1 million bot and spam accounts each day. Spam or bot accounts may try to scam people to send cryptocurrency, or digital currency for prizes that do not exist. Those accounts may also try to steal user information. They are even sometimes used to attack celebrities and politicians. If 20% of Twitter’s users are spam or bot accounts, it will be very difficult for the company to track and get rid of them. Those accounts will create a hostile online environment, forcing real users to be very cautious about what they do.
Musk is already so far into the negotiations so it is not clear whether he can back out at this stage. The original agreement includes a $1bn break-up fee, and experts believe Musk will have to pay that amount at least. Very soon, a long legal battle may take place between the two sides.