Musk accuses Twitter of breach of agreement, threatens to terminate deal

Elon Musk has accused Twitter of violating the merger agreement and “resisting and thwarting” his right to seek information on the actual number of fake accounts on the microblogging platform. 

These concerns were raised by the law firm representing Musk, in a letter sent to Twitter’s Legal, Policy, and Trust Lead Vijaya Gadde on June 6. 

The law firm warned that because of this breach of obligations under the agreement, Musk reserves the right “not to consummate the transaction and terminate the merger agreement.”

It also pointed out that Twitter offered to provide more details about the company’s testing methodologies instead of sharing the data Musk had requested. The letter said that Musk doesn’t believe in Twitter's lax testing methodologies. “The data he has requested is necessary to conduct his own analysis,” it added. 

The letter also noted that Twitter’s refusal to comply with obligations of the merger agreement raises the “suspicion” that the company is withholding the requested data as it fears that Musk’s own analysis of that data will “uncover” something.

According to the letter, Musk as Twitter’s prospective owner is entitled to the data to “prepare for transitioning Twitter’s business to his ownership and to facilitate his transaction financing.” 

For both of these actions, he must have accurate information about Twitter’s active user base, it added. 

In an emal response to Mint and TechCircle, a Twitter spokesperson said, "Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement. We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement at the agreed price and terms."

Days after the announcement of the $44 billion bid, Musk accused Twitter of hiding the accurate number of spam and fake accounts on its platform and urged the social network to come clean. He also said that the deal was on hold until the matter was cleared. 

Twitter on its part has reiterated that the number of spam accounts on the platform was estimated to be less than 5% of the monetizable daily active users in the first quarter. In a series of Twitter posts on May 16, the company CEO Parag Agrawal assured that Twitter suspends over half a million spam accounts every day and locks millions of accounts each week that are suspected to be spam. 

Musk believes the number is at least 4 or 5 times more than what Twitter claims. “The lowest estimate would be probably 20%,” he said at a virtual event on May 17. 

Last week Twitter said that the waiting period under the HSR Act to complete the acquisition has expired.