On Monday, the lawyers that represent Tesla Inc (NASDAQ:TSLA) CEO Elon Musk sent a letter to Twitter Inc (NYSE:TWTR) Chief Legal Officer Vijaya Gadde with a note from Musk accusing the platform of refusing “to provide the information that Mr. Musk has repeatedly requested since May 9, 2022, to facilitate his evaluation of spam and fake accounts on the company’s platform.”
So What Happened Now? Looks like Twitter called the bluff.
The Washington Post reported on Wednesday that Twitter’s board of directors plans to fully comply with Musk’s requests, offering him unadulterated access to Twitter’s “firehose,” which is literally every single tweet that is sent daily. Currently, about 500 million tweets are sent per day.
For the uninitiated, the Twitter Firehose guarantees delivery of 100% of the tweets that match specific criteria (bots and spam in Musk’s case) — according to BrightPlanet, "Twitter’s Firehose is handled by two data providers, GNIP and DataSift. Similar to the streaming API, the Firehose consists of an agreement between an end-user and distributors of the Firehose (GNIP or Datasift) on what tweets the end-user should receive in near real-time. As the data providers receive tweets, they are pushed directly to the end-user (Musk)."
Why This Matters: Musk’s legal team has maintained that access to the Firehose is essential to understanding the volume of bots and spam accounts on Twitter, and the deal had been put on hold until Musk received access.
So why has this been a point of contention for the deal to be finalized? Well, 92% of Twitter’s revenue came from advertising in 2021, the companies that pay Twitter to advertise on its platform gauge the number of users that could see the ad, and pay Twitter accordingly.
If Twitter’s total number of active users is skewed, then its ad revenue must be as well — so the previously agreed buyout price of $54.20 per share is at the center of the debate, hence the standoff.
Some of the leaders at Twitter, and Silicon Valley insiders, say that Musk is using this data request as a pretext to negotiate at a lower price, or walk away from the deal entirely.
“Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement — We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement at the agreed price and terms,” said Twitter spokesperson Scott Bisang.
Photo: Created with an image from Daniel Oberhaus on Flickr