Elon Musk is pumping the brakes on Twitter (TWTR) because it’s got something to prove. The deal will be on hold until Twitter can prove that only 5% of Twitter accounts are spam.
What’s the big deal? Spam accounts have plagued social media platforms for years now, and it’s messing with monetization.
- In Q1, Twitter reported that it had 229 million accounts that were served ads.
- If 5% of its accounts are fake, then that’s over 11.4 million accounts that are throwing off advertiser numbers.
Power move? Elon might believe that Twitter is more than 5% spam and could use this as negotiating leverage.
Elon’s initial offer to buy Twitter was $44 billion. He may end up paying less depending on the level of spam found.
- Musk says he’s, “still committed to the acquisition,” but if he were to stop the deal, he’ll end up paying a $1 billion breakup fee.