Tech

Elon Musk accuses Twitter of breaching contract over spam bots

Elon Musk on Monday accused Twitter of breaching its contract with him by failing to provide information about spam accounts — and once again threatened to back out of his $44 billion takeover deal. 

Attorneys for the world’s richest man wrote that Twitter has refused to provide information that would “facilitate his evaluation of spam and fake accounts on the company’s platform,” according to a stern letter to Twitter that was filed with the Securities and Exchange Commission. 

Musk’s lawyers argued that Twitter’s alleged stonewalling amounts to “a clear material breach of Twitter’s obligations under the merger agreement.” 

“Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company’s corresponding obligations) under the merger agreement,” the attorneys wrote. “Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.” 

The SpaceX and Tesla boss’s latest machinations stem from his claim that he has a right to hit the ground running when the Twitter deal closes, but the social media giant is not providing him enough information to do that, a source close to the situation said.

Twitter shares closed at $39.56 on Monday — far below the takeover price of $54.20 per share, indicating investors are increasingly skeptical the deal will go through. 

Musk faces a $1 billion breakup fee, plus the risk of hefty legal expenses from a breach-of-contract lawsuit, if he scraps the deal.

By sending a letter to Twitter, he is establishing a paper trail if he chooses to walk away from the merger in a few weeks to justify his actions, a hedge fund manager who does not presently have a Twitter position told The Post.

Despite Musk’s salvo, Twitter again insisted that it won’t let the billionaire wriggle free from the original terms of the deal.

“We intend to close the transaction and enforce the merger agreement at the agreed price and terms,” a Twitter spokesperson told The Post.

Twitter
Musk’s lawyers argued that Twitter’s alleged stonewalling amounts to “a clear material breach of Twitter’s obligations under the merger agreement.”  AP

Musk has repeatedly questioned Twitter’s claim that roughly 5% of accounts on its site are spam accounts or bots. 

The Tesla CEO said in May that the Twitter takeover deal was “on hold” as he awaited more information about spam and fake account figures. Days later, he responded to a post from Twitter CEO Parag Agrawal about steps the company is taking to combat bots with a poop emoji. 

The company offered in an SEC filing last week to give Musk additional information on how it measures spam bots — but Musk’s attorneys claimed the offer was “merley an attempt to obfuscate and confuse the issue.”  

“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,” Musk’s lawyers said Monday. “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.” 

One ex-Twitter engineer believes that the best way for Musk to test Twitter’s spam claims would be to create his own army made up of millions of bots, as The Post exclusively reported last week.