South African-born Elon Musk is locked in tense negotiations with Twitter to tow an R700 billion-plus ($44 billion) deal over the line, but it could all be undone by a complex miscalculation.
Elon Musk digs at Twitter’s spam estimation
The mega-billionaire sent tremors across the market when he boldly estimated in a recent episode of the All-In podcast that Twitter’s spam and fake accounts make up 20% of the platform’s userbase, contrary to their 5% claims.
Musk argued that, in fact, the estimation “could be much higher.”
If true, this would, in effect, undermine the $54.20 share price his offer is based on.
“Twitter’s CEO (Parag Agrawal) publicly refused to show proof of <5%. This deal cannot move forward until he does,” he tweeted.
Agrawal, in response to comments Elon Musk made on the podcast, placed a great deal of confidence in the internal estimates made by Twitter which, he said, uses a complex-but-accurate methodology to determine its monetisable daily active userbase (mDAU).
“We suspend over half a million spam accounts every day, usually before any of you even see them on Twitter. We also lock millions of accounts each week that we suspect may be spam – if they can’t pass human verification challenges (captchas, phone verification, etc).
“The hard challenge is that many accounts which look fake superficially – are actually real people. And some of the spam accounts which are actually the most dangerous – and cause the most harm to our users – can look totally legitimate on the surface,” he wrote.
According to Twitter’s last quarterly report, the platform’s mDAU grew by 15.9% year-on-year to 229 million, garnering 39,6 million daily active users in the US and more than 189.4 million worldwide.
Agrawal added that Twitter uses ‘multiple’ human reviews targeted at a sample of accounts that the platform counts as mDAU, consistently differentiating between profiles managed by real people and spam/fake accounts within three months.
“Each human review is based on Twitter rules that define spam and platform manipulation, and uses both public and private data (eg, IP address, phone number, geolocation, client/browser signatures, what the account does when it’s active…) to make a determination on each account,” he added.
Agrawal doubled down on the assertion that Twitter’s spam/fake account representation in its total mDAU was less than 5% based on this internal methodology.
“There’s just no way to know the number of bots. It’s – like, it’s unknowable as the human soul, basically,” Musk mocked.
What does this all mean for advertisers?
Elon Musk’s revelation, if true, may hold dire implications for Twitter’s business, particularly advertisers subjected to the platform’s incredibly high-priced minimum daily budget.
If anything, the rumblings around ‘spam-gate’ have prompted discussion around Twitter’s culpability if, say, it is found that the platform has been overcharging advertisers.
If McDonalds and Wendy’s can be sued over the size of their hamburgers, can Twitter, it’s management and directors by sued by advertisers and stock holders over the size of their unreported fake and bot numbers!! https://t.co/KN8s2IVD1g
— Charles Hall (@thecharleschall) May 18, 2022
According to Agrawal, however, it would take a monumental effort, using external and internal data (which they aren’t at liberty to share), to determine the actual value of its mDAU.
Elon Musk, per Fox Business, has called on the US Securities and Exchange Commission (SEC) to investigate the accuracy of Twitter’s internal estimate.
On the other hand, Agrawal casually stated that Twitter is awaiting Musk’s response to their motivation for the 5% estimation.
“We shared an overview of the estimation process with Elon a week ago and look forward to continuing the conversation with him, and all of you,” he wrote.
