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Elon Musk Puts Twitter Deal on Hold Over Concerns with Bot Accounts

Elon Musk Puts Twitter Deal on Hold Over Concerns with Bot Accounts
Source: BBC

Elon Musk has put his $44 billion (£35 billion) proposal to acquire Twitter on hold, citing concerns over the amount of bogus or spam accounts on the network.

He stated that he was awaiting facts “to corroborate [the] calculation that spam/fake accounts do indeed comprise fewer than 5% of users.”

Later, Mr Musk said he was “still committed to [the] transaction.”

Analysts believed that he may be attempting to renegotiate the price or perhaps walk away from the acquisition.

Mr Musk’s remarks sent Twitter’s stock price down 10% in New York morning session.

Even before Mr Musk’s statements, the company’s shares was trading for less than Mr Musk’s offer of $54.20 per share, indicating that the markets were not persuaded he would complete the takeover.

Mr Musk’s statements, according to Dan Ives, a tech analyst at investment company Wedbush Securities, will “turn this Twitter circus act into a Friday the 13th horror show.”

“Many will see this as Musk utilizing these Twitter filing/spam accounts to get out of this purchase in a rapidly shifting market,” he said in a note.

“Musk’s habit of generating so much ambiguity via a tweet (rather than a file) is highly disturbing to us… and now turns this whole agreement into a circus show with numerous questions and no firm answers as to the deal’s future ahead.”

Mr Musk has made it clear that “fighting the spam bots” is a top priority for him following his planned acquisition of the firm.

Twitter has long been accused of failing to do enough to combat automated and false accounts that post material.

Twitter estimated that bogus accounts accounted for less than 5% of its daily active users during the first three months of this year in a document filed more than two weeks ago. It warned that the statistics were estimates and that they may be higher.

Those statements were similar to those made by the business in earlier filings.

According to Susannah Streeter, analyst at Hargreaves Lansdown, the amount of spam bots on the site is a crucial metric since a greater than projected figure might hinder the company’s potential to develop advertising income or paid-for memberships.

She did say, though, that it was unclear how serious Mr Musk’s fears were.

“There will also be concerns raised about whether false accounts are the true reason for this delaying strategy, considering that his major objective for the takeover appeared to be encouraging free expression rather than focused on money development,” she added.

“The $44 billion price tag is enormous, and it might be a plan to reduce the amount he is willing to pay for the platform.”

Many companies’ values have been wiped out by weeks of market volatility in the United States, including once-favored tech giants.

Mr Musk’s interest in Tesla, the electric vehicle firm where he serves as CEO, has also plummeted, a blow to Mr Musk, whose standing as the world’s richest person is tied to his investment in the company and who had expected to use his shares to help finance the purchase of Twitter.

He raised $8.5 billion by selling shares last month. He intended to use the stock to get $6.5 billion in loans.

Tesla’s stock rose more than 5% after Mr Musk tweeted that the deal was temporarily put on hold.