Musk puts Twitter acquisition ‘temporarily on hold’
Elon Musk has said that his planned $44 billion purchase of Twitter is ‘temporarily on hold’ pending an investigation into the number of bots and spam accounts on the social media platform.
A core tenet of Musk’s stated plans for Twitter is the removal of spam accounts from Twitter, and to insist that all human users should be verified.
However, Twitter has made strides to remove fake accounts over recent years, and if fake accounts are indeed a lesser problem than he had assumed, as he hinted in a tweet, Musk’s strategy would make less of an impact than he might have hoped.
In its Q1 2022 results, published at the end of April, Twitter estimated that such accounts only make up a small proportion of its user base.
“We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our mDAU [monetisable daily active users] during the quarter,” Twitter said.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn
— Elon Musk (@elonmusk) May 13, 2022
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Musk tweeted.
It is not clear whether the issue would lead to the end of the deal or simply a rethink of aspects of the planned purchase.
Musk has made a number of vague comments about how he would like to transform the financial aspects of the business, including charging a ‘slight amount’ to business and government users and reducing its reliance on advertising, but the fact remains that Twitter has $5 billion of debts and only earns around $5 billion per year, and his plans include borrowing a substantial amount of the purchase price. Musk also sold $8.5 billion of Tesla shares, presumably to fund the Twitter deal.
In addition, Twitter will likely come up against several legal hurdles as battles over content loom on social media platforms, including with the EU.
The news of the pause comes a day after Twitter fired two top managers – one during his paternity leave – and announced a hiring freeze.
CEO Parag Agrawal said the company has missed revenue targets and needs to expand its user base and revenue.
Twitter shares dropped 20% in pre-market trading on the news. Meanwhile, Tesla shares, which have fallen since Musk announced his plans to buy Twitter, rose by around 5%.