Tesla CEO and founder, Elon Musk, has been in the news lately because of his proposed $44 billion takeover bid of the social media platform, Twitter, the fundraising process, and the recently reported stall owing to a report that it has a high “Twitter bots to users percentage”.
Although, the billionaire has always being vocal and is known for stirring reactions on social media based with controversial takes on key issues, especially in the U.S., he took the social media by storm after offering to acquire Twitter after a successive storm of tweets lashing the platform for not fully supporting free speech.
We had earlier reported that the SpaceX CEO proposal would see him acquire Twitter for a reported $54 market price per share ($44 billion total). This follows his earlier acquisition of a 9.2% stake of Twitter’s total shares to become the highest shareholder of the company in April.
The recent news is that the reported takeover has been put on hold after Musk insinuated in a tweet last week that the deal has been put on hold to effectively ascertain if spam accounts, or bots on the social media platform were truly below 5% as claimed by Twitter CEO Parag Agrawal.
He however claims he remains committed to the purchase. Especially if Twitter provides public proof that in fact less than 5% of its accounts are fake or spam, as the company reported in a May 2 regulatory filing.
Related: With $7bn from investors, this is how Elon Musk is funding his $44bn Twitter bid
The big question is what are Twitter bots? And, why is Elon Musk agitated by it? Below, we answer some of these questions.
What are Twitter bots?
In simple terms, bots are spam and fake accounts that mimics real Twitter users.
Simply explained, these are automated accounts that imitates how people use the blogging service. They tweet at other accounts, can retweet user tweets and can follow others, for example.
But, there aren’t real human users behind them…
“At its heart, a bot is a piece of code that mimics human interaction online,” said Tamer Hassan, CEO of Human Security, which specializes in bot detection.
But bots aren’t typically on Twitter to engage in authentic dialogue with people. Instead, they’re on Twitter to achieve a goal, which can be either beneficial or malicious.
Are Twitter bots harmful?
For emphasis, Twitter bots can sometimes be beneficial.
They are sometimes used to provide useful services and information to users. Just like @vidbot which helps a user to download a specific video or @stockbot which provides information on the stock market.
But, there are malicious bots which may misinform, abuse or even programmed to consistently provide false information on very sensitive issues (fake news). Another type of bot is spam accounts. These are used to sell products that might not exist or used to swindle individuals.
Musk recently labeled bitcoin bots the “single most frustrating problem on Twitter.” Some crypto bots will attempt to persuade users to send cryptocurrency to an online wallet in exchange for a larger prize, which does not exist.
Why is Musk concerned?
There are two possible reasons why Musk is concerned about spam accounts or bots.
First, they pose a danger to the company’s business strategy. Twitter’s revenue is largely dependent on the number of users. They are recipients of ads placed by advertisers. And, Twitter’s valuation is dependent on the total number of users. Have a horde of fake users affects the credibility of that number.
Second, they have the potential to smear the platform’s reputation as a genuine forum for original user interaction. Fake news is a major issue on the social space now. And, Twitter cannot afford to have agenda pushing accounts.
Days before the purchase, Mush had earlier mentioned that if the takeover went through, he was going try to defeat twitter bots and spam accounts.
Bots can be problematic for a number of reasons, affecting users’ experience and impacting ad sales, experts say. Musk expressed concerns over the financial health of twitter if Ads companies can’t ascertain the value they get for their money?
Some financial experts believe that Musk’s concern about fake accounts might be a pretext to negotiate a cheaper price for the acquisition or abandon it completely given that share prices of both Tesla and Twitter have fallen in the weeks since Musk reached a deal to purchase the social media platform, on April 25, making the transaction less appealing as a result.
But, Elon has refuted that claim.
What matters at the end?
Twitter makes the majority of its money by selling ads to its users, so the number of people who view the ads is extremely important to the company’s success. If the number of spam or bot accounts on Twitter is more than the business has calculated, it might reduce the number of monetizable users and ad revenue generated.
As a result, Twitter’s bottom line may suffer.
For its part, Twitter has acknowledged the challenge of accurately estimating the number of fake accounts on the platform.
In its public filing this month in which it stated that fake accounts make up less than 5% of users, Twitter added a note of caution about the figure:
“In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated.”
Despite the setback, Twitter has said in a regulatory statement on Tuesday that it intends to complete the purchase at the agreed-upon price and terms, subject to Twitter stockholder approval, and that will be closed this year. The board of directors of Twitter have recommended unanimously that shareholders approve the deal.
We will see how that goes…
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