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Twitter’s Board of Directors reportedly now plans to comply with a demand from Elon Musk to turn over internal data after Musk threatened to terminate his $44 billion purchase of the company for refusing to provide details related to how many bot accounts are on the platform.
“The information could be provided as soon as this week,” The Washington Post reported. “Currently some two dozen companies pay for access to the trove, which comprises not only a real-time record of tweets but the devices they tweet from, as well as information about the accounts that tweet.”
An attorney for Musk said in a letter to Twitter’s general counsel and head of legal, policy, and trust, Vijaya Gadde, that the social media company was “actively resisting and thwarting his information rights” as agreed to in the contract.
“This is a clear material breach of Twitter’s obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement,” the letter said.
The number of fake accounts on the platform could inflate the company’s ad revenue and thus lead Musk to seek to renegotiate how much he is willing to pay for the company.
Texas Attorney General Ken Paxton (R) announced on Monday that his office had opened an investigation into Twitter “for potentially false reporting over its fake bot accounts.”
Paxton said in a press release that the investigation centers on discovering whether Twitter has violated the Texas Deceptive Trade Practices Act.
In a statement, Paxton’s office said:
On Twitter, ‘bots’ are automated, non-human accounts that can do virtually the same things as real people: send tweets, follow other users, and like and retweet others’ posts. Spam accounts like these inflate followers and reach, and often push deceptive and annoying activity. Bot accounts can not only reduce the quality of users’ experience on the platform but may also inflate the value of the company and the costs of doing business with it, thus directly harming Texas consumers and businesses.
Twitter has received intense scrutiny in recent weeks over claiming in its financial regulatory filings that fewer than 5% of all users are bots, when they may in fact comprise as much as 20% or more. The difference could dramatically affect the cost to Texas consumers and businesses who transact with Twitter.
To address this concern, Attorney General Paxton issued a Civil Investigative Demand (CID) to investigate whether Twitter’s reporting on real versus fake users is “false, misleading, or deceptive” under the Texas Deceptive Trade Practices Act. The CID requires Twitter to turn over documents related to how it calculates and manages its user data and how these numbers relate to Twitter’s advertising businesses. Twitter has until June 27 to respond to Attorney General Paxton’s Demand.
“Texans rely on Twitter’s public statements that nearly all its users are real people. It matters not only for regular Twitter users, but also Texas businesses and advertisers who use Twitter for their livelihoods,” Paxton said. “If Twitter is misrepresenting how many accounts are fake to drive up their revenue, I have a duty to protect Texans.”