By: Sophia Yingxuan Wang
Elon Musk is rescinding the $44 billion offer he made to buy Twitter. Musk said that this was because Twitter did not provide enough information to back up its claim on the amount of spam and fake accounts on the app. Twitter has sued Musk.
The deal was previously put on hold in May as Musk waited for Twitter to release the data on the amount of spam and fake accounts. Spam accounts use the abilities of normal bots to perform harmful or annoying activity. He requested evidence to back up Twitter’s claim that less than 5% of all the users on Twitter were spam and fake accounts. Musk himself believes that spam and fake accounts could make up more than 20% of all the users on Twitter, though he did not offer evidence. Twitter recently released a statement claiming that they remove 1 million spam accounts per day.
Musk’s lawyer said in a letter filed with the US Securities and Exchange Commission that Twitter had either refused or failed to provide the information. Musk’s lawyer claims that “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.”
This might not be the only reason that Musk decided to pull out of the deal. Tesla’s share price fell significantly after he announced his interest in buying Twitter.
Twitter has sued Elon Musk in the Delaware Court of Chancery, writing that “Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.” Twitter’s share prices have been declining since Musk agreed to buy it, falling to nearly 40 percent below his offer price.
If Twitter allows Musk to just drop the deal, the whole company could be ruined. In the lawsuit, Twitter wrote that “Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away. This repudiation follows a long list of material contractual breaches by Musk that have cast a pall over Twitter and its business.”
Sources:
https://www.washingtonpost.com/technology/2022/07/13/twitter-lawsuit-elon-musk/