Elon Musk Terminates Deal to Buy Twitter

The Twitter era of Elon Musk's reign has ended before it officially started. According to Reuters, The Tesla CEO is backing out of his $44 billion deal to purchase the social media company "citing material breach of multiple provisions of the agreement." Elon Musk became Twitter's biggest shareholder earlier in the year, and made an offer of $54.20 per share to buy up all remaining shares he does not currently own. Since then, there has been back and forth between Musk and Twitter executives, with the odds of Musk actually going through with the purchase dwindling.

Musk made his offer to buy Twitter in April. Almost a month later in May, he said the deal was temporarily on hold while he wanted to investigate the number of fake/spam accounts on the service. In the reporting, Twitter said there were 229 million users who got served advertising during their first quarter. Musk has been vocal about both the "spam bot" problem and "free speech" on the platform. But, conscientious observers have noted that addressing such topics would be more than a massive headache for the company and users. Twitter has responded by stating in its quarterly securities filings that less than 5% of its accounts are spam.

Then came a letter from Musk's attorneys in June, revealing that part of the billionaire's financing was contingent on receiving data on Twitter's bot numbers, and that Twitter was in "material breach" of the company's agreement. 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," the lawyers wrote.

"The whole issue of spam on the platform has been an issue for years," said Ann Lipton, a law professor at Tulane University. "It would be surprising if that's what gave him cold feet now."

"Mr. Musk does not agree with the characterizations in Twitter's June 1 letter. Twitter has, in fact, refused to provide the information that Mr. Musk has repeatedly requested since May 9, 2022 to facilitate his evaluation of spam and fake accounts on the company's platform," the filing reads.

It adds, "Twitter's latest offer to simply provide additional details regarding the company's own testing methodologies, whether through written materials or verbal explanations, is tantamount to refusing Mr. Musk's data requests. Twitter's effort to characterize it otherwise is merely an attempt to obfuscate and confuse the issue. Mr. Musk has made it clear that he does not believe the company's lax testing methodologies are adequate so he must conduct his own analysis. The data he has requested is necessary to do so."