Elon Musk Backs Out of Purchasing Twitter

By: Anna Luo

Last Friday, Elon Musk declared his intent to withdraw his offer to purchase Twitter, citing the company’s failure to provide sufficient information on the number of spam and bot accounts.

The billionaire first announced his interest in April, saying he planned to loosen Twitter’s content moderation rules under his ownership. According to the BBC article by James Clayton, “He has 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.”

However, the deal was put on a hold in May as Musk reportedly waited for more data about spam and bot accounts. Despite Twitter’s claim that such accounts only make up less than 5% of its total users, Musk believes the actual percentage is much higher.

In the amendment he filed with the US Securities and Exchange Commission, Musk’s lawyer stated that “Sometimes Twitter has ignored Musk's requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Musk incomplete or unusable information.”

However, there may be other reasons for his interest in backing out of the deal. There has been a noticeable fall in Tesla’s share price recently, most likely due to supply shortages and complications caused by the lockdown in China and war in Ukraine. The stock market price for other large tech companies have also been falling in the past months.

Despite all this, it’s unknown whether or not Musk can still back out at this stage. Even though the company allegedly violated multiple terms in their original sales agreement, lawyers for Twitter claimed otherwise. Their statement reads that “Twitter has breached none of its obligations under the agreement,” and that “Twitter will continue to provide information reasonably requested by Musk … and to diligently take all measures required to close the transaction.”

According to a tweet from CTO Bret Taylor last Friday, they have “plans to pursue legal action to enforce the merger agreement.” On Sunday, Twitter reportedly hired Wachtell, Lipton, Rosen & Katz LLP with plans to take Musk to court.

Sources:

- https://www.reuters.com/technology/elon-musk-terminating-twitter-deal-2022-07-08/

- https://www.investopedia.com/musk-files-end-twitter-deal-5525840

- https://www.bbc.com/news/business-62102821

- https://www.theguardian.com/technology/2022/jul/11/elon-musk-twitter-memes-lawsuit-threat-deal

- https://www.cnbc.com/2022/06/03/tesla-shares-dip-on-elon-musks-plans-to-cut-workforce.html