Now he is arguing — with out presenting any proof — that there is likely to be simply too a lot of these automated accounts for the $44 billion (A$61 billion) deal to maneuver forward.
The sharp turnaround by the world's richest man makes little sense besides as a technique to scuttle or renegotiate a deal that is changing into more and more expensive for Musk, specialists mentioned.
And whereas such hardball ways aren't unusual in company mergers, the best way it is taking place — in a extremely public, seemingly erratic dialog on the very platform Musk desires to purchase — has little precedent.
In impact, Musk is negotiating the way forward for Twitter ... on Twitter.
"That is the hook he is attempting to seize onto as the rationale for him to probably stroll away or negotiate the value down decrease," mentioned Brian Quinn, an affiliate regulation professor at Boston Faculty.
"He's torpedoing the deal, attempting to speak down the deal."
Musk took to Twitter early on Tuesday to say his deal to purchase the corporate cannot "transfer ahead" except the corporate exhibits public proof that fewer than 5 per cent of the accounts on the social media platform are faux or spam.
That adopted a Friday tweet that mentioned the deal was on maintain pending extra bot particulars — inflicting Twitter inventory to plunge by almost 10 per cent — and Monday feedback at a Miami convention suggesting he needed a cheaper price for the corporate.
Specialists say Musk cannot unilaterally place the deal on maintain, though that hasn't stopped him from performing as if he can.
If he walks away, he could possibly be on the hook for a $1 billion breakup charge.
Musk additionally spent a lot of Monday in a back-and-forth with Twitter CEO Parag Agrawal, who posted a collection of tweets explaining his firm's effort to struggle bots and the way it has persistently estimated that lower than 5 per cent of Twitter accounts are faux.
It is a message that Twitter has been disclosing to the US Securities and Alternate Fee for years, whereas additionally cautioning that its estimate is likely to be too low.
In his tweet Tuesday, Musk mentioned that "20 per cent faux/spam accounts, whereas 4 occasions what Twitter claims, could possibly be a lot larger. My supply was based mostly on Twitter's SEC filings being correct."
He added: "Yesterday, Twitter's CEO publicly refused to point out proof of 5 per cent. This deal can't transfer ahead till he does."
That sort of language is senseless, Quinn mentioned.
"The disclosures he is complaining about are the identical disclosures the corporate has filed on the SEC for fairly a little bit of time. There's nothing new right here," Quinn mentioned.
"Within the run-up to the transaction, the corporate gave him the chance to interact in due diligence and kick the tires and go searching. He waived due diligence and mentioned, 'No, I do not wish to see any extra.'"
Twitter declined to remark.
Getting chilly toes about mergers is nothing new.
It typically leads potential consumers to search for modified situations that may get them out of a deal or providing worth.
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It was the COVID-19 pandemic, partly, that led French luxurious powerhouse LVMH, the mum or dad firm of Louis Vuitton and different attire and wine manufacturers, to say it was abandoning a deliberate takeover of US jeweller Tiffany & Co. in 2020.
Tiffany sued to implement the deal, and LVMH lashed again.
In the long run, the famed jeweller agreed to a barely lowered buyout worth.
The Twitter sale settlement permits Musk to get out of the deal if there's a "materials hostile impact" brought on by the corporate.
It defines that as a change that leads to an hostile influence on Twitter's enterprise or monetary situations.
Chester Spatt, a finance professor at Carnegie Mellon College and a former SEC chief economist, mentioned Musk might declare that Twitter gave him unsuitable details about the variety of spam bots.
Even when the excuse does not maintain up, it will possibly function a negotiating tactic with the company board that is attempting to promote the corporate.
"In a merger scenario, a cloth hostile change is commonly the important thing to your capacity to renegotiate the deal," Spatt mentioned.
Twitter shares have dropped under their buying and selling worth earlier than Musk unveiled his bid.
Tesla shares are additionally down for the reason that Twitter bid, which impacts Musk's capacity to boost cash for the acquisition.
"It is fairly pure for the customer to wish to reduce a greater deal," Spatt mentioned.
Twitter might take Musk to courtroom and argue that the sale contract stay in power, however that may price the corporate huge authorized charges, Spatt mentioned.
The entire string of Musk tweets will doubtless draw scrutiny from the SEC, which is able to most likely take a look at whether or not any false or deceptive statements have been made, Spatt mentioned.
"The SEC does not wish to see manipulation of the general public markets," he mentioned.
"Their position is attempting to assist be certain that buyers are getting a good deal, to ensure the data out there may be correct."
Nevertheless, Musk has made his statements within the open, and though he could also be negotiating that means, the SEC is extra involved with hidden facets of a deal, Spratt mentioned.
The bot downside additionally displays a longtime fixation for Musk, who as one among Twitter's most energetic superstar customers is vulnerable to having faux accounts mimicking his title and likeness to advertise cryptocurrency scams.
And he appears to assume it is an issue for many different Twitter customers, in addition to advertisers who promote advertisements on the platform based mostly on what number of actual folks they anticipate will see them.
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"Twitter claims that 95 per cent of day by day energetic customers are actual, distinctive people," he tweeted Tuesday. "Does anybody have that have?"
At a Miami expertise convention on Monday, Musk estimated that not less than 20 per cent of Twitter's 229 million accounts are spam bots, a share he mentioned was on the low finish of his evaluation.
It was on the similar All In Summit that Musk gave the strongest trace but that he wish to pay much less for Twitter than the $44 billion he agreed to final month.
"The possibilities of a deal in the end getting performed isn't wanting good now," Wedbush Securities analyst Dan Ives, who covers each Twitter and Tesla, mentioned in a analysis word.
He estimated that there is "60 per cent + probability" that Musk finally ends up strolling away from the deal and paying the $1 billion breakup charge.
Musk's supply to purchase Twitter for $54.20 per share was made public on April 14.
Twitter shares closed Tuesday at $38.32, up 2.5%.
To finance the acquisition, Musk pledged a few of his Tesla shares, which have slumped in worth by a few third for the reason that deal was introduced.
In tweets on Monday, Agrawal acknowledged that Twitter is not excellent at catching bots.
He wrote that each quarter, the corporate has made the estimate of lower than 5 per cent spam.
"Our estimate relies on a number of human evaluations of 1000's of accounts which might be sampled at random, persistently over time," Agrawal wrote.
Estimates for the final 4 quarters have been all effectively underneath 5%, he wrote.
"The error margins on our estimates give us confidence in our public statements every quarter."
Twitter has put the underneath 5 per cent estimate in its quarterly filings with the SEC for not less than the final two years, effectively earlier than Musk made his supply in April.
Over that very same interval, Twitter has additionally expressed uncertainty in its bot depend, conceding that the estimate could also be low.