Elon Musk has indicated he wants to renegotiate his $44 billion deal to buy Twitter after a battle over bots with the company's CEO.
Why it matters
The comments have raised concern the deal might fall through. One analyst has estimated the chances of success are now less than 50%.
Continued sharp words between Musk and the company. Probably on Twitter.
Elon Musk said Tuesday his $44 billion deal to buy Twitter "cannot move forward" until the company backs up its estimate of bots on the platform, the latest escalation of his clash with the social network.
In an early morning tweet, Musk reiterated his skepticism of the company's estimate that less than 5% of its its daily users are false or spam accounts. "My offer was based on Twitter's SEC filings being accurate," he said, asking for proof the company's estimates are accurate.
The mercurial entrepreneur suggested that as much as 20% of the platform's users are bots. He didn't provide a methodology for his estimate though it jibes with a weekend report from SparkToro, a research firm. (SparkToro includes automated accounts, such as headline trackers, in its estimate.)
The comment followed Musk's appearance Monday at a Miami conference at which he said a deal at a lower price isn't "out of the question," according to Bloomberg News. Last week, he tweeted that the deal, which includes a $1 billion termination fee, was "temporarily on hold."
The volley of remarks has raised expectations that the deal, which has already had a series of soap opera turns, may not be completed. On Monday, shares of Twitter fell more than 8% and continued slipping on Tuesday. Twitter now trades at to $37.23, well below the $54.20 that Musk and the company's board of directors had agreed to.
An attorney representing Musk didn't respond to a request for comment. Twitter declined to comment.
Also on Tuesday, Twitter filed a preliminary proxy statement on the deal. The company is "committed to completing the transaction on the agreed price and terms as promptly as practicable," it said in a statement.
Dan Ives, an analyst at Wedbush Securities, estimates the deal as it currently stands has a less than 50% chance of going through.
"The elephant in the room for the Twitter board is Musk can walk away for a $1 billion ... breakup fee ... and likely cite the bot/fake account issue as the reason," Ives wrote in a note. He added that a deal break would likely be contested by Twitter in the courts.
Musk, who has more than 93 million followers, has been critical of Twitter's moderation policies, especially its inability to get a handle on the number of bots. One of his ideas to tackle the problem is to authenticate all human users of the platform. He also wants to relax Twitter rules that curb certain speech, a plan that includes reinstating the account of banned user and former President Donald Trump.
The outspoken billionaire entrepreneur already runs electric car company Tesla and rocket company SpaceX. The world's richest person, Musk has sold some of his Tesla shares, presumably to fund the purchase of Twitter.
The Musk-Twitter deal came together in a hurry. The widening gap between the offer price and Twitter shares, as well as falling shares of Tesla, have led some investors to speculate whether Musk might seek a lower price.
Twitter CEO Parag Agrawal said last week that he "expects the deal to close" but added that the company will be "prepared for all scenarios."
Agrawal followed up on Monday with a thread about how Twitter fights spam and bots without "inadvertently suspending real people," noting that Twitter removes over half a million spam accounts every day. He added the company's internal estimates on the number of spam accounts on the platform were "well under 5%" for the last four quarters.
Musk responded to the thread on Monday with a poop emoji and by questioning how bots impact advertisers. "This is fundamental to the financial health of Twitter," Musk tweeted.
Musk previously said that the deal isn't "a way to sort of make money." Instead, he was focusing on its value to society as a forum for free expression.
The deal comes at a tumultuous time for Twitter. The company has struggled to expand both its user base and its ad sales as it competes with bigger social media companies. Last week, it announced the departure of two senior executives alongside a hiring freeze.
Queenie Wong of CNET News contributed to this report.