Here’s Why Elon Musk’s $44B Twitter Purchase Might Not Happen
- Elon Musk’s bid and seeming purchase of Twitter was seen as a huge win for the crypto community.
A few months ago, Elon Musk’s bid to take over social media site, Twitter, was the biggest news on the planet. However, a few weeks later, the deal seems to have lost steam. Reports state that Musk recently sent a letter to Twitter’s board, signaling his intention to end his $44 billion bid for the company.
The controversial tech billionaire cited his disapproval of what appears to be a lack of sufficient details on Twitter’s fake and spam accounts. The SpaceX CEO addressed his letter to Twitter’s chief legal officer, Vijaya Gadde, explaining his reason for backing out of the deal. Musk and his team are concerned about the accuracy of the information Twitter provided them on phony user accounts. As a result, some conversations around funding for the $44 billion agreement have come to a standstill.
The letter submitted to the SEC noted that Twitter has been shady about two essential pieces of information—its process for detecting and disabling spam and fake accounts as well as verifying the inclusion of such accounts in monetizable daily active users (mDAU). Twitter has reportedly kept its mDAU daily measures a mystery for the past two years.
Elon Musk first agreed to buy the social media platform that supports cryptocurrencies for $54.20 per share, which is around $44 billion in cash. The transaction that would have returned Twitter to being a privately held corporation was approved by Twitter’s board with a unanimous vote of satisfaction.
Expressing Musk’s dissatisfaction with the deal, the letter stated,
In short, Twitter has not provided information that Mr. Musk has requested for nearly two months notwithstanding his repeated, detailed clarifications intended to simplify Twitter’s identification, collection, and disclosure of the most relevant information sought in Mr. Musk’s original requests.
Despite the heat from Musk’s camp, Twitter has defended its actions, noting that there has been no foul play. In a recent news briefing, Twitter defended its method for identifying illegal accounts. According to the social media giant, a sample of the “Monetizable Average Daily Users,” is taken every three months. It noted that it manually examines the sample to evaluate whether or not they are fraudulent, looking at data such as IP addresses that it is unable to openly release. The platform claimed that it has always felt secure knowing that the sum falls below the 5 percent cutoff.
Twitter does not outright prohibit all bots, including those that publish images of otters on the hour or the local temperature. Rather, it searches for clues that point to phony or planned spam behavior, like the creation of numerous accounts or human collaboration to fraudulently elevate a particular tweet, group of tweets or subject.
Can Elon Musk Easily Walk Out of the Twitter Deal?
Since Elon Musk announced his bid for Twitter, there have been questions raised about the validity of his offer. Since the proposal, tech stocks have plummeted, and Tesla has lost about 30% of its value in just six months. There are reports that Musk might suffer a huge loss if the deal pulls through.
Musk would undoubtedly face significant repercussions if he blew the contract, albeit these consequences remain unclear. However, reports state that the agreement between both parties requires Musk to pay a $1 billion penalty if he decides to back out of the deal.
Elon Musk’s Twitter deal was widely seen as a huge win for the crypto space. The Tesla CEO is a known crypto lover and Dogecoin enthusiast. It is yet to be seen how his latest action will affect the crypto market.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
