Musk threatens to scrap Twitter deal over spam bot details

Buyer's remorse could cost the Tesla CEO $1 billion

Elon Musk has threatened to abandon his $44 billion purchase of Twitter, claiming that the social media firm has failed to provide enough information regarding spam accounts.

Musk's legal team has sent a letter to regulators claiming that Twitter had neglected to give him accurate information on the spread of spam bots on the site; information he was entitled to see under the deal agreement.

"As Twitter's prospective owner, Mr Musk is clearly entitled to the requested data to enable him to prepare for transitioning Twitter's business to his ownership and to facilitate his transaction financing," lawyer Mike Ringler wrote in the letter.

"To do both, he must have a complete and accurate understanding of the very core of Twitter's business model - its active user base. Based on Twitter's behaviour to date, and the company's latest correspondence in particular, Mr Musk believes the company is actively resisting and thwarting his information rights," the letter said.

Musk's attorneys say Twitter has merely offered to give information about the company's testing methods.

They argue this is tantamount to ignoring Musk's data demands and constitutes a "material breach" of the merger agreement, which allows Musk the option to cancel the deal if he so desires.

The Tesla CEO has been complaining about the spam bot issue on Twitter for weeks.

He earlier said that the acquisition was "on hold" owing to his worries about bots, and that it "cannot move forward" unless Twitter proves that its spam numbers are accurate.

The company has estimated that spam accounts make up fewer than 5% of its daily users. CEO Parag Agrawal said last month that the firm had given Musk an explanation of how the company calculates spam estimates.

But Musk has disputed this, claiming in a May tweet - without offering proof - that 20% or more of Twitter accounts are fake.

Some Wall Street experts believe the pushback could be a case of buyer's remorse and an attempt to coerce Twitter into lowering its $44 billion purchase price.

From the beginning, there have been doubts about Musk's ability to fund the transaction. Amid wider market worries, social media stocks have also taken a knock in recent weeks.

Musk might be liable for a $1 billion breakup fee if he cancels the transaction.

In a statement released Monday, Twitter said it had been cooperating with Musk in providing information in line with the terms of the merger agreement and that the acquisition is in the best interest of all shareholders.

"We intend to close the transaction and enforce the merger agreement at the agreed price and terms," it added.

Last week, antitrust regulators in the United States opted not to investigate Musk's purchase of Twitter any further, indicating that the deal was unlikely to face regulatory challenges.

The European Union has not yet made a decision about the deal.

In related news, Texas Attorney General Ken Paxton revealed on Monday that Twitter was being investigated for "potentially false reporting over its fake bot accounts."

Paxton said he was starting an inquiry because he has a responsibility to safeguard Texans if Twitter is misrepresenting how many accounts are fake to boost income.

According to Paxton, Twitter has until the 27th June to share documents about how it calculates its user statistics, and how these figures relate to the company's advertising businesses.