Twitter to Provide Musk with its ‘Full Firehose’ of Tweets as it Works to Finalize Takeover Deal
The Twitter/Elon Musk saga is moving to the next uncomfortable stage, with Twitter now planning to provide Musk’s team with its ‘full firehose’ of tweets, in order to let Musk determine for himself the amount of fake and bot profiles in the app.
Earlier this week, Musk’s legal team filed an official statement with the SEC in which it explained that Musk will not go through with his $44 billion takeover of the company if Twitter’s unable to provide evidence to support its claim that fake accounts and bots make up just 5% of its active user base.
Musk’s team asserts that this is critical information, as Twitter relies on its reach data to maximize its core ads business, and if a significant proportion of its users are not actual, real people, that materially changes the deal.
Thus far, Twitter has stood by its numbers, which it says have been measured via processes that have been accepted by the SEC in the past. Now, it’s looking to hand over all the information that it can to Musk’s team.
As reported by The Washington Post:
“After a weeks-long impasse, Twitter’s board plans to comply with Elon Musk’s demands for internal data by offering access to its full “firehose,” the massive stream of data comprising more than 500 million tweets posted each day, according to a person familiar with the company’s thinking.”
What, exactly, Musk will then do with all that info is hard to say, but clearly, Twitter’s legal team has advised that this is the only way to appease Musk’s demands, providing all the information that it can, which will then enable Musk and Co. to develop their own assessment process to determine the amount of fake profiles in the app.
What happens from there is hard to say. If Elon comes up with his own methodology, and finds that the fake profile count is more like 20%, what then?
Some have noted that Musk waived various due diligence elements in his initial takeover offer, in order to hasten the deal, which means that he essentially has to go through with the purchase, no matter what.
But clearly, Elon himself believes that won’t hold up in this respect.
And he’s likely right, but when it comes to bots and fake accounts, the challenge for Elon will be in proving that Twitter acted with ill-intent – i.e. has Twitter intentionally misreported its numbers in order to enhance its market position?
I would suggest that would be difficult to prove definitively, even if Musk can come up with his own detection methodology – if Musk’s team comes up with a better solution for detecting bots, I suspect that Twitter will say ‘thanks for that, we weren’t aware of that in the past’, and the deal would then have to go through as planned, because Twitter hasn’t acted in bad faith in its past disclosures.
Though there is another argument – that Musk can wriggle out of the deal if he’s able to demonstrate that a ‘major event’ has significantly altered Twitter’s value, which then changes the parameters of the initial deal. That’d be a lot harder to prosecute, but maybe, if Musk can come up with a breakthrough reporting process, which shows that many more than 5% of Twitter’s active users are fake, that could be classified as a ‘major event’ in itself?
That seems like weaker legal ground, but Musk seems to believe that if he’s able to provide clear evidence that the amount of fake profiles on the platform is indeed much higher than Twitter says, that he’ll be able to walk away, or maybe reduce his offer price.
In reality, I’m not sure that’s actually how this will play out.
In any event, Twitter’s moving ahead with its preparations for an Elon takeover, with Reuters reporting that it’s planning to hold a shareholder vote by early August to consummate the deal.
At the same time, legal challenges continue to provide additional distractions for the company, with Twitter also fighting a January 6th committee request for its employees’ internal communications – “including Slack messages about moderating Tweets related to the Capitol attack”.
As per Rolling Stone:
“The social media giant is asserting a First Amendment privilege to push back on the panel’s demand for communications about moderating tweets related to the Capitol insurrection.”
Of course, Twitter’s constantly facing challenges and issues of this type. But you can only imagine that Musk’s legal team would be grinding their teeth at the thought of having to deal with such in future.
If such issues are bothering Elon himself, however, he’s hardly showing it. He’s too busy tweeting about the believability of ‘Red Riding Hood’, and setting his sights on another social app.
YouTube seems to be nonstop scam ads
— Elon Musk (@elonmusk) June 7, 2022
It’s like he’s just now realizing that there’s a lot of scam activity on social platforms, which you would think that someone would take more note of before offering $44 billion to purchase a social app.
Will Elon eventually become the owner of Twitter? On balance, taking legal considerations into account, and looking at the public-facing evidence, that still seems the most likely outcome.
But there’s a lot more to come before we reach a final conclusion.