Elon Musk warns Twitter deal stuck without fake account proof

Elon Musk has said his $44bn deal to buy Twitter may be in jeopardy due to a disagreement over the number of fake accounts on the social media platform.

Mr Musk tweeted that the deal “cannot move forward” unless Twitter backs up its claims that less than 5% of daily users are fake or spam accounts.

Twitter has defended its figures, adding that Mr Musk waived rights to “due diligence” to clinch the deal.

The spat has raised doubts about the takeover.

Analysts have speculated that Mr Musk may be looking for ways to renegotiate the price of the deal or walk away.

Mr Musk agreed the $44bn (£34.5bn) deal to buy Twitter with its board in April, but last week Mr Musk said the deal was “on hold” while he sought details about fake accounts.

He has continued to press the issue in tweets and public appearances, while also hinting that he could seek a lower price.

On Tuesday, Mr Musk said Twitter boss Parag Agrawal had “publicly refused to show proof” that fewer than 5% of its accounts were fake, and said the deal “cannot move forward” until Mr Agrawal does show proof.

Mr Musk’s tweet then appeared to be deleted.

The billionaire, who also runs carmaker Tesla, has put the number of fake accounts at 20% or more.

Mr Musk and Mr Agrawal have been publicly debating the spambot figures on Twitter but relations appear to have soured.

On Monday, Mr Musk responded to Mr Agrawal’s defence of the the firm’s spam reporting with a poo emoji, later repeating his claim that Twitter was underestimating the figure.

Mr Musk has said he is concerned that advertisers on Twitter don’t know what they are paying for.

“So how do advertisers know what they’re getting for their money? This is fundamental to the financial health of Twitter,” he wrote.

After putting his offer on hold Mr Musk told a conference in Miami on Monday that “you can’t pay the same price for something that is much worse than they claimed”.

He said that a deal is “not out of the question” at a different price but added: “The more questions I ask, the more my concerns grow.”

Twitter has said it is committed to completing the deal at the agreed price.

In a filing with regulators on Tuesday, it told shareholders that Mr Musk’s apparent eagerness to get the deal done, even without ordinary research into the business, set him apart from any other potential suitors.

“Other potential [buyers] would require substantial due diligence, creating a delay and risk to reaching the signing of such a potential transaction,” it said.

Deal doubts

Mr Musk has called for tests of random samples of Twitter users to identify bots. He said “there is some chance it might be over 90% of daily active users”.

Researchers have estimated that anywhere from 4% to 20% or more of the millions of Twitter profiles are fake.

Twitter shares on Monday closed more than 8% down at $37.39, sowing doubts that Mr Musk would go ahead with his acquisition at the agreed price.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said that it “looks increasingly likely that Elon Musk is positioning to renegotiate a sharply lower price tag for Twitter or even try and pull the pin on the deal”.

She said that establishing the number of real users on Twitter is considered “vital to future revenue streams via advertising or paid for subscriptions on the site”.

“The volatility which has hit tech stocks and contributed to a sharp decline in Twitter’s valuation is also highly likely to be part of the equation,” Ms Streeter said, adding that Mr Musk is “clearly rueing the timing of his rash offer to pay $44bn for the social network”.