Musk’s Twitter buy on hold, puts doubt on deal

Entrepreneur cites reservations about platform’s reporting on fake accounts

DETROIT — Tesla billionaire Elon Musk has put his plan to buy Twitter on temporary hold, raising fresh doubts about whether he’ll proceed with the $44 billion acquisition.

Musk tweeted early Friday that he wanted to pinpoint the number of spam and fake accounts on the social media platform. He has been vocal about his desire to clean up Twitter’s problem with “spam bots” that mimic real people, and he appeared to question whether Twitter was underreporting them.

But the company has disclosed in regulatory filings that its bot estimates might be low for at least two years, leading some analysts to believe that Musk could be raising the issue as a reason to back out of the purchase.

“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Musk tweeted Friday morning, indicating he’s skeptical that the number of inauthentic accounts is that low.

On Friday, Musk subsequently tweeted that he’s “still committed to acquisition.” Neither Twitter nor Musk responded Friday to requests for comment. Musk has conducted a long flirtation with Twitter that culminated in an April deal to acquire the social platform.

The problem of fake accounts on Twitter is not a secret.

In its quarterly filing with the U.S. Securities and Exchange Commission, Twitter itself expressed doubts that its count of bot accounts was correct, conceding that the estimate may be low. “In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated,” the filing says.

A review of Twitter filings with the SEC shows that the company’s estimate of spam bot accounts and similar language expressing uncertainty about it have been in Twitter’s quarterly and annual reports for at least two years, well before Musk made his offer.

Sara Silver, a professor of business journalism and financial communication at Quinnipiac University, said it appears Musk could be using the number of spam accounts as a pretext to pull out of the deal.

“To claim that this is the reason that he’s putting the deal on pause, it’s not credible,” Silver said. “This is not a new issue for him. It’s not just entering his consciousness now.”

Stock in both Twitter and Tesla swung sharply in opposite directions Friday afternoon, with Twitter’s stock falling nearly 9% and shares of Tesla, which Musk had been selling help fund the Twitter deal, rising about 8%.

But shares of Tesla have tumbled since it was revealed the social platform had become a Musk target.

“It’s become much more expensive for him to buy this company using his Tesla shares,” Silver said.