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Musk says Twitter deal can't go further without knowing number of phony accounts

By Rich Klein
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Musk says Twitter deal can't go further without knowing number of phony accounts
Both Elon Musk and Twitter said on Tuesday that they are committed to the sale, but Musk said he's concerned about how many phony accounts are on the platform. Photo by John Angelillo/UPI | License Photo

May 17 (UPI) -- Billionaire entrepreneur Elon Musk said on Tuesday that his plan to buy Twitter for $44 billion cannot go any further until he knows how many phony or spam accounts are on the platform.

The social platform agreed last month to sell to Musk, who's bought up large chunks of Twitter shares this year and has voiced plans to make it a more productive and profitable company.

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The deal hit a snag last week, however, when Musk saw in a regulatory filing that Twitter estimated that phony and spam accounts accounted for less than 5% of all monetizable daily active users from January to April.

Musk expressed concern over that figure and said he'd look further into the matter.

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Tuesday, the billionaire founder of Tesla and SpaceX said in a tweet that the acquisition can't go further until he knows precisely how many phony accounts there are.

"My offer was based on Twitter's [Securities & Exchange Commission] filings being accurate," he wrote, adding that Twitter CEO Parag Agrawal refused in a social post on Monday to prove that the share of phony accounts is less than 5%.

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"This deal cannot move forward until he does."

Elon and Maye Musk arrive for The Met Gala at The Metropolitan Museum of Art celebrating the Costume Institute opening of "In America: An Anthology of Fashion," in New York City on May 2. Photo by John Angelillo/UPI

Musk added in another tweet that he's still committed to buying Twitter, which has been a highly controversial deal. Twitter also said in a statement Tuesday that it's committed to the deal.

Some analysts have speculated that perhaps Musk is trying to lower the sale price due to the company's substantial loss in stock value in recent days. If Musk walked away from the deal, it's considered likely that it would cost him billions of dollars for breach of contract.

The deal does have a "reverse breakup fee," which would allow Musk to pay $1 billion to abandon the sale, but that would only apply if outside forces sank the deal -- such as a regulatory rejection or hidden fraud. Most experts don't believe that Musk would qualify for the reverse breakup provision.

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Musk has said there's data that show the phony accounts on Twitter actually account for roughly 20% of monetizable daily active users.

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Agrawai made his Twitter post on Monday to answer some of Musk's concerns. One said that "spam harms the experience for real people on Twitter, and therefore can harm our business."

"As such, we are strongly incentivized to detect and remove as much spam as we possibly can, every single day," he added. "Anyone who suggests otherwise is just wrong."

A few weeks ago, Musk -- the world's richest man with a net worth close to $230 billion -- sold around $4 billion in Tesla stock at an average price of $903.58 after the Twitter sale was announced.

RELATED Twitter reports $1.2B in first earnings report after accepting sale to Elon Musk

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