Does Twitter’s board have the will to take on Elon Musk in a PR battle?

Twitter’s shares have consistently traded below the $54.20 (£43) a share, $44bn takeover price agreed with Elon Musk, which tells you that Wall Street has never bought into the Tesla boss buying the social media company. At least, not at that level.

The row over the number of bots on the site fully justifies the scepticism of the street of dreams. Twitter has filed estimates with America’s Securities and Exchange Commission (SEC) that they account for roughly 5 per cent of users, and perhaps fewer.

However, that figure was only an estimate. As such, it was accompanied by a long list of caveats. Independent estimates (which were out there for anyone to see before Musk took the plunge) have put the number at two, three, even four times that.

Musk’s view on the matter came via Twitter (of course) in the form of a response to Teslarati, a California-based media company and publisher of news on Tesla, Musk’s SpaceX venture, and more besides.

“Elon Musk may be looking for a better Twitter deal as $44 billion seems too high with 20 per cent of users being fake or spam accounts,” it declared.

Musk responded: “20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher. My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does.”

Bots are handy for the purveyors of disinformation and misinformation. They aren’t much use to the advertisers Twitter relies on for revenues. That’s why this matters.

Adding spice to the spat was Twitter’s chief executive, Parag Agrawal. Twitter has largely played this straight, mostly refusing to rise to Musk’s lure, which makes all sorts of sense. But Agrawal bit, with a lengthy thread in which he said he would take on the issue and counter Musk’s claims “with the benefit of data, facts, and context”.

In his thread, Agrawal said that Twitter estimated that the number of fake accounts was actually “well under” the aforementioned figure of 5 per cent. But he also said that only Twitter could provide that estimate because it relied on private information that, of course, Twitter was unable to share.

Musk responded with the poop emoji. Of course he did. Plus a demand that Agrawal show him the money (metaphorically).

Lurking in the background to all of this are some fun financial facts. The tech sector has endured a kicking of late, what with the global economic malaise, inflation, and everything else (Twitter included). At the time of writing, its shares are hovering around the $37 mark, which is about 30 per cent below Musk’s bid.

Needless to say, there is no one waiting in the wings willing to pay anything like what Musk is – or was – proposing to pony up. No white knight emerged, even when Musk’s offer looked more reasonable than it does now.

How does this end? That rather depends on Twitter’s board. They’ve taken considerable flak for their stewardship of the company. Musk wouldn’t have emerged as a suitor if Twitter were in better shape. He might now want to find a way to kill the deal without paying the $1bn break fee Twitter would be due if he walked away. That may be chump change to the world’s richest man, but it is still a chunky and unpalatable penalty to have to pay.

He might want negotiate the deal down. It isn’t all that unusual for bidders to try to find pretexts to do that if the market moves in ways they don’t like, or if they just think they can get away with it.

The PR battle is inevitably going to continue, mostly over Twitter. It’s probably going to cut up rough. Musk is much more skilled when it comes to using the social media platform than the people who are running it. He also has an army of loyal acolytes. There may be lawyers involved, too. In my view, there probably will be.

The $44bn question is whether the Twitter board has the conviction and the spine to hold the line.

Not to put too fine a point on it, but there is another dimension to this. This isn’t solely about business: there’s a societal dimension here, too. Musk has intimated that his Twitter will be a more laissez faire operation than it is now, at least in terms of what users can say without incurring the wrath of moderators.

Meanwhile, New York state governor Kathy Hochul has called for CEOs of social media companies to be held accountable for the failure to police hate speech in the wake of the horrifying attack in the city of Buffalo.

That tragedy won’t feed into Twitter’s ultimate fate. But it is something to think about for the whole sector.