Elon Musk says Twitter claims ‘bot check’ broke NDA

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Elon Musk on Saturday tweeted that Twitter’s legal team accused him of violating a nondisclosure agreement by revealing that the sample size for the social media platform’s checks on automated users was just 100 accounts.

“Twitter legal just called to complain that I violated their NDA by revealing the bot check sample size is 100!” the Tesla CEO tweeted. “This actually happened.”

Shares of Twitter were down by nearly 10% in pre-market trading on Monday.

Musk on Friday tweeted that his $44-billion cash deal to take the company private was “temporarily on hold” while he awaited data on the proportion of its fake accounts.

He said his team would test “a random sample of 100 followers” on Twitter to identify the bots.

When a user asked Musk to “elaborate on process of filtering bot accounts,” he replied: “I picked 100 as the sample size number, because that is what Twitter uses to calculate <5% fake/spam/duplicate.”

Musk tweeted during the early hours of Sunday that he is yet to see “any” analysis that shows that the social media company has fake accounts less than 5%.

He later said that “There is some chance it might be over 90% of daily active users.”

Dan Ives, the senior analyst at Wedbush, said in a Monday note that the “bot” issue could be a ploy by Musk to lower the $54.20 per share price tag.

Ives said that several ractors, including the changing stock market as well as financing issues, “has caused Musk to get cold feet” and that the hang-up over “bots” is “likely more of a scapegoat to push for a lower price.”

Musk on Friday sent Twitter stock plummeting more than 25% after announcing that his buyout was on pause — fueling speculation that the world’s richest man was looking for a way to back out of the deal.

Twitter’s board that nobody will come close to making an offer similar to scope, and that Musk, whose electric car maker Tesla has lost $300 billion of its market capitalization since the deal was announced last month, is fully aware of this.

“The elephant in the room for the Twitter board is Musk can walk away for a $1 billion as a small breakup fee (for Musk-all relative) and likely cite the bot/fake account issue as the reason, even though this likely would be contested by Twitter in the courts,” according to Ives.

Musk on Friday announced that his $44 billion buyout of Twitter was “on hold.”
AFP via Getty Images

“If a revised deal does get done by Musk and Twitter, it will likely will be at a lower price once negotiations take over and the diligence happens around Twitter DAU and algorithms hot button issues.”

Musk later tweeted that he was committed to following through on the acquisition.

In Musk’s initial tweet, the billionaire included a link to a May 2 Reuters article quoting Twitter’s a Twitter regulatory filing. 

“Twitter Inc estimated in a filing on Monday that false or spam accounts represented fewer than 5% of its monetizable daily active users during the first quarter,” the Reuters article said.

Musk has said that cracking down on spam accounts and bots will be one of his top priorities for Twitter if the deal goes through. 

Investors have had to weigh legal troubles for Musk, as well as the possibility that acquiring the platform could be a distraction from running the world’s most valuable automaker.

Musk has pledged to make sweeping changes at Twitter.
Musk has pledged to make sweeping changes at Twitter.
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On Thursday, Twitter said the company was pausing most hiring except for business-critical roles, adding in a statement that “we are pulling back on non-labor costs to ensure we are being responsible and efficient.”

In a memo sent to staffers and confirmed by Twitter, CEO Parag Agrawal said the company has not hit growth and revenue milestones after the company began to invest “aggressively” to expand its user base and revenue.

Musk slammed on the brakes a day after two Twitter honchos were fired.

Kayvon Beykpour, the company’s general manager, and Bruce Falck, Twitter’s head of revenue, announced that they were let go by Agrawal, who circulated a memo to employees Thursday announcing the departures.

Jay Sullivan, the head of consumer product, will take over Beykpour’s position.

Twitter has been thrown into turmoil since the company’s board of directors announced last month that it had accepted Musk’s $44 billion buyout offer.

He has said he intends to buy out shareholders and take the company private.


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