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Elon Musk says he's put the blockbuster Twitter deal on pause over fake accounts

Elon Musk says he wants to see more details about the number of fake accounts on Twitter before his deal to buy the social media platform goes through. He's seen here last week, arriving for the 2022 Met Gala at the Metropolitan Museum of Art in New York.
Angela Weiss
/
AFP via Getty Images
Elon Musk says he wants to see more details about the number of fake accounts on Twitter before his deal to buy the social media platform goes through. He's seen here last week, arriving for the 2022 Met Gala at the Metropolitan Museum of Art in New York.

Updated May 13, 2022 at 8:51 AM ET

Elon Musk said he's putting his $44 billion takeover of Twitter "temporarily on hold," saying that he wants more details about how many of the social platform's accounts are bogus or spam.

The Tesla and SpaceX mogul said he needs to make sure the fake accounts "do indeed represent less than 5%" of Twitter's users, as the company has estimated.

Musk tweeted about putting the massive deal on hold early Friday, sharing a recent Reuters news story about the takeover. He later added a reply stating, "Still committed to acquisition."

The Reuters article cited a federal filing Twitter made shortly after the company reached a sales deal with Musk, stating that of the 229 million Twitter users who saw advertising in the first quarter of 2022, less than 5% were fake accounts.

Musk will examine Twitter's estimates of fake accounts

The 5% figure comes from Twitter's first-quarter earnings report, which it released days after reaching a sales agreement with Musk.

The question of fake Twitter accounts has to do with how the company tracks the number of "monetizable daily active usage or users" — essentially, the accounts it shows ads to, when people or organizations access Twitter on any given day.

The company works to detect and suspend false or spam accounts, and to omit them from its calculations of monetizable active users. But Twitter also acknowledged in its filing that fake or spam accounts still exist on its platform. It added, "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."

In its earnings report, Twitter said it brought in $1.2 billion in revenue, including $1.11 billion in ad revenue — a sharp rise from the same period in 2021. But its costs and expenses rose at an even sharper rate, to $1.33 billion — resulting in an operating loss of $128 million.

The impact of the delay is uncertain

Twitter announced the deal to sell to Musk on April 25, saying he would take the company private by paying $54.20 per share in cash, after a whirlwind courtship between the billionaire and the social media platform.

When Twitter announced in its purchase, it didn't give a precise deadline for closing the deal, saying only that it expects to complete the transaction sometime in 2022.

In his Friday update, Musk didn't provide any other details about putting the deal on hold, leaving it open to interpretation as to how he might postpone or delay the massive purchase.

The seriousness of the matter is also an open question, as Musk often uses Twitter to air spontaneous thoughts alongside his concrete plans.

Before he tweeted about the Twitter buy, for instance, Musk's previous message demanded, "Stop the war on straws!"

Earlier this week, Musk said that once he completes the deal, he would reverse Twitter's permanent ban on former President Donald Trump. He called the ban "a morally bad decision, to be clear, and foolish in the extreme."

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