Elon Musk’s fixation on bots could lead to a lower price point for Twitter

Elon Musk’s standoff with Twitter over data regarding bot accounts has taken a new twist.

The social media site agreed on Wednesday to meet Musk’s demands for access to its full data stream, according to a report in The Washington Post. The capitulation by Twitter could put Musk in a more powerful position as the acquisition moves forward, which could be key, should he try to renegotiate the $44 billion deal—something experts say is increasingly likely.

“These are classic tactics to try to get a lower price,” says Brian Fitzgerald, managing director at Wells Fargo Securities.

Musk has regularly raised questions about the number of false accounts and spambots on Twitter since he struck the deal to buy the company on April 25. Last month, he demanded the site show “supporting calculation that spam/fake accounts . . . represent less than 5% of users.” At the time, he also claimed the deal was on hold.

Musk raised the stakes earlier this month, accusing Twitter, in a letter filed with the SEC, of being in “a clear material breach” of the merger agreement.

The Post reports that Twitter will now give Musk access to its full data stream, which is made up of more than 500 million tweets per day, as well as information about the accounts that are tweeting, and the devices from which they’re tweeting.

Despite Twitter’s 5% bot claim, Musk has alleged fake and spam accounts could make up as much as 20% of the site’s members. Twitter has long said it does not believe Musk will find information that it (and other companies that pay to access the data stream) have missed. For years, the company has said the number of bots and spam accounts represent less than 5% of its total users. Outside research has suggested that number could be higher, according to the Post‘s reporting.

The company has previously suggested Musk was using the data requests as a way to lower the deal price or walk away from it entirely. (When he signed his initial deal to buy the company in April, Musk waived his right to look deeply at Twitter’s finances and internal workings.)

So, Twitter called his bluff. But in doing so, it also blinked in a high-stakes stare down. Which some believe could give Musk the upper hand in possible future standoffs, including about price.

“I think he’s smarting a bit just by the fact that he put in a bid at the market high and the market, in general, has collapsed,” Fitzgerald tells Fast Company.

One of Musk’s purported reasons for wanting to buy Twitter was to fix the bot problem, so Fitzgerald says the threats to cancel the deal over the issues of bots were always a bit of an odd complaint.

“The whole reason he’s buying it is so he can fix it,” he says. “So, you’d almost think he wants more bots.”

Should Musk demand a lower price for Twitter, it wouldn’t be the first mega deal to be adjusted downward in the current market. Business-planning-software company Anaplan agreed earlier this week to lower the price per share it would accept from private equity firm Thoma Bravo by 3.4%.

The fact that other deals are trimming the price per share by marginal amounts, and still going through, is likely to be of little comfort to Twitter shareholders, though. Should Twitter agree to a lower price at Musk’s insistence, Fitzgerald says it’s a virtual certainty that a contingent of stockholders will claim the board of directors failed in its fiduciary responsibility, and sue.

“I think a haircut is probably going to end up happening,” he says. “It won’t be egregious, but there will be lawsuits, anyway.”

Twitter is expected to provide the information to Musk as soon as this week. The next chapter—and next battle between the social media company and their would-be owner—could begin in the days that follow.

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