Contents
Why Elon Musk is Buying Twitter
Despite the public nature of his recent tweets about the Twitter bot count, it’s not clear why Elon Musk is buying the social networking site. The obvious reason could be to get rid of the bots. Another reason could be that Musk is hesitant to take over a company he no longer wants. In either case, it’s important to understand why Musk is buying Twitter. If you don’t know, read on to learn more about the decision.
Elon Musk wants to eliminate bots
Earlier this year, Musk, CEO of Tesla, tweeted that he’s considering purchasing Twitter in order to eliminate bots. His statement made headlines around the world, as Musk has a history of pushing for increased privacy and more transparency. While Twitter has admitted to being a victim of bots, Musk’s lawsuit argues that the company is in clear violation of its acquisition agreement.
Twitter has claimed that five percent of its accounts are spam and bots. Elon Musk, however, believes the number is much higher. This is despite the fact that the platform only allows about 500 million tweets per day. Twitter’s SEC filings list how many bots are active in its platform. So, this is a clear case of Elon Musk trying to make a point by renegotiating the terms of his Tesla acquisition.
Tesla is likely to face legal action after Elon Musk’s announcement, which could lead to a court battle over the terms of the deal. Despite the lack of clarity, Twitter’s board has already indicated that it intends to enforce the merger agreement. Musk’s stock price dipped after he told investors that the Twitter deal was “temporarily on hold.” However, it increased by about two percent after the announcement was made on Friday. Musk’s disappearance from the platform for nearly a week in late June only increased rumors that he was trying to back out of the deal.
He wants to avoid taking over a company he no longer wants
There is a possibility that Elon Musk is buying Twitter to avoid taking over a company he doesn’t want. The famously mercurial businessman bought a 9% stake in Twitter two weeks ago, only to announce last week that he had lined up $46.5 billion in financing for the purchase. Musk had previously said that he had given up making business plans and relied almost exclusively on his own counsel. Musk has stated that he had stopped making business plans years ago, but people close to him have said that when he made his offer last month, he had no idea what to do with the company. The company has more than 100 million users and Musk uses the platform extensively.
If the deal doesn’t close, Twitter can sue Musk for damages in lieu of specific performance. The amount of damages would depend on how much Twitter has been damaged. However, this provision is specifically disavowed in the merger agreement. Moreover, damages are limited to $1 billion for certain terminations. So, if Musk wants to avoid taking over a company he doesn’t want, he should sell Twitter.
He wants to get more information about Twitter’s bot counts
Tesla CEO Elon Musk has escalated the battle against bots by asking Twitter’s 93 million users for feedback and calling on the U.S. Securities and Exchange Commission to investigate. These bots can negatively affect user experience and ad sales. Twitter has responded to Musk’s concerns by providing information to users in accordance with the acquisition deal. Analysts say Musk may pull out of the deal if the market takes a tumble after the news breaks.
The latest report from Twitter shows that fewer than 5% of its active users are bots. However, Musk questions whether that number is too low. He compares Twitter’s bot counts to termites in a house and says that if you find 90 percent of termites in your house, that’s unacceptable. So it seems that Musk wants more information about Twitter’s bot counts.
The deal has been on hold since May, when Musk threatened to walk away from the deal. The deal was originally expected to close in the second half of this year, but Musk’s tweets last month suggested he might reconsider his plans. Last month, Musk argued that Twitter was breaching the merger agreement by not providing him with data. Twitter rebutted those allegations and said the company is doing everything necessary to finalize the deal.
