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Elon Musk Is Backtracking on Twitter. What’s Next and What Does It Mean?

Updated on April 26, 12:29 AM EDT

What You Need To Know

Elon Musk, the world’s richest man, has walked away from a deal to buy Twitter Inc. for about $44 billion. His issue? Spam bots, he says.

Musk, who has more than 100 million followers on the platform, said the company made “misleading representations” about the number of automated and fake on the social network. Combating the spread of bots, as well as unleashing free speech, had earlier been the tent poles of Musk’s proposed changes if he took over.

Twitter’s board responded with plans to sue Musk and compel him to complete the agreement, setting up what could be a protracted legal battle. The company has denied Musk’s claims of spam bots overwhelming the service, saying they are less than 5% of total users.

Before its collapse, the deal had been assembled at breakneck speed, with events playing out mostly on Twitter itself. Musk’s enthusiasm could be seen dwindling with every tweet. The deal includes a provision for him to pay a $1 billion fee, under certain circumstances, if the deal breaks down.

By The Numbers

  • $5.08 billion Twitter's revenue in 2021
  • 217 million Monetizable daily active users, as of the fourth quarter of 2021
  • $54.20 Price per Twitter share, under the deal to buy Twitter

Why It Matters

Going private under Musk would have meant dramatic change for a company that got its start in 2006 as a service for sharing short-burst updates with friends and transformed into a global hive of public debate.

His dalliance with the company, which started as a discourse about the future of free speech, has evolved into a stock-market frenzy, with traders bracing for more chaos as Twitter takes the billionaire to court.

The ensuing legal fight will play out in a court in Delaware, the home state of President Joe Biden, which historically frowns on efforts to scrap merger agreements, according to legal scholars.

Investors, social media users and Twitter’s dejected employees will be closely watching the saga, which leaves Twitter with many bad options. If Musk succeeds in scrapping the agreement, Twitter stock will likely plummet. If the social media platform prevails in court, the company will be run by a reluctant patron (who could later sell his stake) while still struggling to meet ambitious growth targets.

    A Delaware judge has ample reason to expedite the trial and demonstrate that the laws that benefit us all — including the Tesla CEO — aren't to be toyed with.