33 minutes ago
photo source, Getty Images
Twitter responded to the announcement and said it plans to take legal action to enforce the fulfillment of the deal.
Tesla CEO Elon Musk withdraws his plan to acquire Twitter for $44 billion.
Musk said the reason for the withdrawal was that Twitter refused to provide information that was critical to the company’s business performance, including fake accounts and spam accounts.
Musk signed a deal to acquire Twitter in late April.
Twitter responded by saying it plans to take legal action to enforce the fulfillment of the deal.
Brett Taylor, Chairman of the Board of Directors, said he was “committed to closing the deal at the price and terms agreed upon with Musk”, heralding a lengthy legal battle.
The deal between Musk and Twitter included a clause that required them to pay a $1 billion fee if they broke the contract.
fake account controversy
In May, Musk said the deal was “temporarily put on hold” over Twitter’s fake and spam accounts.
Musk has been pressing Twitter to prove his position that spam bot accounts account for less than 5% of all accounts.
Musk’s attorneys said in a letter to the U.S. Securities and Exchange Commission that Twitter was unable or refused to provide this information.
“Twitter has continued to ignore Musk’s requests, sometimes denying them for reasons that appear to be unjustifiable, and sometimes claiming to have responded to Musk’s requests by giving him incomplete or unusable information,” the defense lawyers said.
Spam accounts do things in a way that abuses the way the platform works, such as distributing information to a large number of people at once. Twitter said on the 7th that it is deleting regarding 1 million spam accounts every day.
Musk believes that spam or bot accounts on Twitter account for close to 20% instead of 5%.
Twitter’s share price fell 7% in following-hours trading following news of the final decision to cancel the deal was announced.
analysis
North American Technical Reporter James Clayton
Elon Musk has been trying to get information regarding how many daily active users Twitter has over the past few weeks.
Twitter is having issues with bots. Just yesterday, he said he had deleted a million spam accounts a day.
Musk explained in a letter that the reason for the withdrawal was because of repeated refusals to disclose information on the number of Twitter bot accounts.
However, it is still unclear whether Musk is in a situation where it can be withdrawn as the deal has already been agreed in writing.
Musk will need to prove that Twitter violated the agreement.
There may be other reasons Musk doesn’t want to proceed with the deal.
Shares of big tech companies have fallen sharply over the past few weeks. Musk may have thought he had offered too large an amount.
The impact of the acquisition on the other companies it operates cannot be ignored. Tesla’s stock fell sharply following Musk expressed interest in the Twitter takeover.
Musk’s stance on acquiring Twitter to defend freedom of expression was sometimes taken as naive, given that Twitter is subject to individual national laws.
Wouldn’t Musk, following all, think he had taken on too much more than he might handle?
