Elon Musk, who seemed poised to take over Twitter less than a month ago, has spent this week attempting to maneuver his way out of the $44 billion bid he made for the company…because of bots. Last Friday, Musk said that the deal was “temporarily on hold” until Twitter could prove that less than 5% of its users were fake or spam accounts. Then, this week, he opened the door for renegotiations. But it’s clear that Twitter is not interested in letting Musk out of the agreement: Twitter’s board told The New York Times Tuesday that it believes Musk’s offer is in the “best interest of all shareholders. We intend to close the transaction and enforce the merger agreement.” So who wins here? Twitter’s board? Musk? The bots? According to close industry observers, what we’re seeing play out is likely less about spam accounts and more about the power dynamics between Twitter—a company that’s struggled to get itself on firm footing—and Musk, the only man who appears interested in buying it.
To rewind a little, the bots in question are referred to in a line in Twitter’s quarterly financial report, which estimated that during the first three months of 2022, fewer than 5% of the platform’s active users were fake or spam accounts—something Musk took issue with, questioning whether the number was falsely low. “This is a big deal. It seems like if you said, ‘Okay, I agree to buy your house.’ You say the house has less than 5% termites. That’s an acceptable number. But if it turns out it is 90% termites, that’s not okay. It’s not the same house,” Musk said during a Monday appearance at podcast summit. And so he’s put his offer to buy Twitter on hold until the company assures him that there are in fact not a lot of bots on Twitter.
Underlying this latest twist in the Musk–Twitter saga is the irony, which Bloomberg’s Matt Levine pointed out, that Musk literally said he wanted to take over Twitter to defeat the bots. “If our twitter bid succeeds, we will defeat the spam bots or die trying!” he tweeted not long after offering to buy the company. Once the board accepted the bid, Musk noted in a press release statement that “defeating the spam bots” would be a top priority under the company’s new ownership. “He said he wanted to buy Twitter to get rid of the spam bots, and now he’s saying he doesn’t want to buy Twitter because it has spam bots. Only one of those things can be true,” Casey Newton, who writes the tech newsletter “Platformer,” tells Vanity Fair. The report detail Musk is grumbling about, an estimate in line with those of past Twitter security filings, was disclosed 11 days before Musk started bot-gate.
So what changed? Observers are quick to note that this bot drama all happened amid a recent market downturn that resulted in huge losses for Tesla, which harbors the vast majority of Musk’s fortune. “The macro environment has changed so much from the beginning of the deal to where we are now, so one would think negotiations would start over,” Douglas Boneparth, a member of CNBC’s Digital Financial Advisor Council, tells Vanity Fair. “Musk certainly does not want to pay more for something that he feels now is worth less given market conditions.”
Musk himself has hinted at this desire to get back at the negotiating table. After declaring the deal “on hold” last week, on Monday he suggested he could get Twitter’s board back to the bargaining table, saying that a cheaper deal was not “out of the question.” That said, Twitter’s board has been forced to constantly adjust to Musk’s erratic shifts and respond to his whims. For example, on Monday, Twitter CEO Parag Agrawal explained why it is difficult to assess how many spam accounts are on the platform, as some accounts that look fake “are actually real people,” while others that are fake “can look totally legitimate on the surface.” (Musk shrugged off Agrawal’s detailed thread with a poop emoji.) As Boneparth asks, “Where does Twitter draw the line?”
The board, having already rolled over for Musk once, could again capitulate and sell the company for a lower price. But as of Twitter’s latest statement, it appears it wants to draw the line at $44 billion. Musk could walk away. Both Musk and Twitter consented to a $1 billion breakup fee if either side breaks from the agreed-upon deal (though Musk could try to use the bot accusations to avoid the fee). But as Boneparth and Newton both note, Musk might have the “upper hand” in all this. Musk does not need to come up with an “excuse” like bots in order to force Twitter to renegotiate, Newton says. “He was the only person who was willing to buy Twitter at that price.”
Then again, “because Elon has destroyed so much value in the company already, there could be another buyer…willing to pay $10 billion, $15 billion, or $20 billion for Twitter,” Newton says. “In a weird way, the sweepstakes for who owns Twitter could get more interesting in the aftermath of this.”