Elon Musk has warned of abandoning the Twitter deal if the microblogging platform refuses to provide data and information necessary to facilitate evaluation of spam and fake accounts.
Musk believes that Twitter is "actively resisting and thwarting" his information rights and the company's corresponding obligations under the merger agreement, Mike Ringler, the attorney of the world's richest person, wrote in a letter to Twitter chief legal officer Vijaya Gadde.
"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 states.
Twitter has refused to provide the information that Musk has repeatedly requested since May 9, 2022 to facilitate his evaluation of spam and fake accounts on the company's platform, the letter states. Twitter's latest offer to simply provide additional details regarding the company's own testing methodologies, whether through written materials or verbal explanations, is tantamount to refusing Musk's data requests, it adds.
This comes weeks after Musk said that the acquisition deal to take over Twitter has been temporarily put on hold amid concerns over fake accounts on the microblogging platform.
In an SEC filing, Twitter had claimed that spam or fake accounts represented less than 5% of its monetisable daily active users during the quarter ended March 2022.
Musk, however, made it clear that he does not believe the company's lax testing methodologies are adequate so he must conduct his own analysis.
Under the merger agreement, Twitter is required to provide data and information that Musk requests in connection with the consummation of the transaction, the letter says. "Musk is entitled to seek, and Twitter is obligated to provide, information and data for, inter alia, any reasonable business purpose related to the consummation of the transaction," it adds.
"As Twitter's prospective owner, Mr. Musk is clearly entitled to the requested data to enable him to prepare for transitioning Twitter's business to his ownership and to facilitate his transaction financing. To do both, he must have a complete and accurate understanding of the very core of Twitter's business model—its active user base," the letter further states.
Musk believes that Twitter is refusing to comply with its obligations, which is causing further suspicion that the company is withholding the requested data due to concern for what Musk's own analysis of that data will uncover.
The Tesla chief executive last month said he will put up an additional $6.25 billion in equity financing to partially fund his $44 billion Twitter bid, dropping his plans to take a margin loan against the stake he holds in Tesla. This takes the deal's total equity commitment to $33.5 billion.
Musk has already got financing commitments from 18 investors including crypto exchange Binance, venture capital firm Sequoia Capital, asset managers Brookfield and Fidelity for the buyout.