Tesla CEO Elon Musk announced on Friday that he would terminate the $44 billion deal to purchase Twitter that he made just three months ago.
Musk, who is the world’s richest person, cited a longstanding disagreement he has had with Twitter over the true number of spam and bot accounts on the social media platform.
Twitter asserts that fewer than 5 percent of all accounts on the site are fake, but the Tesla CEO claims that the real number could be around 20 percent without providing a source for the figure.
In May, Musk stated that his $44 billion deal to purchase the company “cannot move forward” until he receives clarification about the number of bots and fake accounts on Twitter.
Musk and Twitter CEO Parag Agrawal have exchanged a number of tweets about the amount of spam accounts on the site.
Elon Musk claims Twitter is not upfront about bots, spam accounts
In a long thread of tweets, Agrawal discussed the issue of bot accounts on Twitter and argued that the company’s estimates regarding their number is very likely accurate but is an estimate.
“We suspend over half a million spam accounts every day, usually before any of you even see them on Twitter,” Agrawal wrote in May. “We also lock millions of accounts each week that we suspect may be spam—if they can’t pass human verification challenges (captchas, phone verification, etc.).”
In a legal filing released on Friday, Musk’s lawyers claim that “Twitter is in material breach of multiple provisions” of the massive deal, and “appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement.”
In April, Musk signed a legally binding deal to purchase Twitter for $44 billion dollars, and it includes a $1 billion fee if the Tesla CEO decides to back out of the agreement. The contract also allows Twitter to sue the South African businessman and force him to pay if the deal breaks down.
Bret Taylor, the chairman of Twitter, stated on Friday that the platform would be pursuing legal action against Musk for backing out of the agreement.
“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement,” Taylor wrote on Twitter. “We are confident we will prevail in the Delaware Court of Chancery.”
The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.
— Bret Taylor (@btaylor) July 8, 2022
Oftentimes, such legal battles result in re-negotiations or settlements rather than all-out victories for one party over the other. It is possible that Musk has announced that he will terminate the deal now with the hopes of renegotiating the massive purchase for a lower price.