The old ‘pull out’ joke has been making rounds on the internet, and it goes: ‘Musk has finally learned to pull out after fathering 9 children.’ Now that we have it out of our system, let’s talk about why Elon Musk abandoned his Twitter deal.
The billionaire genius has his own solid reasons for him getting cold feet. Elon Musk’s lawyers have written a letter to the SEC, detailing his reasons for pulling out of the deal. You can read the whole letter here, but we have summarized these reasons for you.
5 reasons Musk pulled out of Twitter deal
- Twitter didn’t share data: According to Mr. Musk’s letter to the SEC, “Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified”. Since Musk and Twitter entered into an agreement, it was important for Musk to get his hands on the necessary data.
- Twitter gave inaccurate information: While this is a big accusation, the letter repeatedly brings it up. Mr. Musk’s lawyers claim that Twitter’s data on spam and bot accounts is “wildly higher than (the claimed) 5%”.
- Useless “capped” APIs: The letter claims that even when Twitter shared developer APIs with Mr. Musk’s team, it “artificially capped” the access capabilities of these APIs. As a result, Musk’s team couldn’t carry out a thorough analysis of spam accounts in Twitter’s mDAU (monetizable daily active users).
- Twitter mDAU major part of the deal: Mr. Musk’s lawyers are repeatedly emphasizing Twitter’s mDAU (monetizable daily active users) since these users are a major part of the deal. Musk’s letter says this number is important since “approximately 90% of its revenue comes from advertisements”.
- A string of high-level resignations: Lastly, the letter says Mr. Musk and his team are concerned about the departure of several high-level Twitter officials. Twitter fired its Revenue Product Lead and the General Manager of Consumer, and later announced laying off its talent acquisition team. Other than the two firings, three other key executives, including the Head of Data Science, the Vice President of Twitter Service, and a Vice President of Product Management for Health, Conversation, and Growth have resigned.
What’s next?
Prior to this article, we’ve also covered 5 things that can happen now that Elon Musk’s Twitter deal is off the table. While that analysis sides heavily with Twitter, Mr. Musk’s lawyers have also made a convincing case.
Twitter has already announced that it will be suing Musk for breach of agreement, but both parties apparently have enough material to drag each other through the mud. However, if the court sides with Mr. Musk, then it could spell disaster for Twitter as the platform will have to revise its publicly disclosed spam account percentage, which it currently pegs at give-or-take 5%.
What do you think about Musk’s letter to the SEC bailing on his deal? Are these reasons justified, or should Musk have just gone ahead with the deal? Do let us know in the comments.
