Having agreed a deal to acquire Twitter for $44bn last month, Elon Musk has put the acquisition on hold temporarily.
This is due to concerns about the true percentage of spam and fake accounts on the platform.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn— Elon Musk (@elonmusk) May 13, 2022
Musk cited a Reuters report on Twitter's claim in a filing that fake accounts made up less than 5% of Twitter's total user numbers.
According to Twitter's filing:
"We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our mDAU during the quarter."
"The false or spam accounts for a period represents the average of false or spam accounts in the samples during each monthly analysis period during the quarter... 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."
With Musk having talked about ridding Twitter of fake/spam accounts as a priority, the true extent of the issue is clearly a problem. It's an issue which also impacts potential ad revenues.
Research suggests that Twitter's estimate of fewer than 5% of accounts being fake may be optimistic.
For example, a study from SparkToro found that most Twitter accounts have significant numbers of fake followers, estimating between 5% and 30%. In some cases, the majority of followers were fake - 61% of Donald Trump's followers for example.
Twitter shares fell 19% after Musk threw doubt on the takeover. Meanwhile, Tesla shares rose 5%...
UPDATE: A new study by SparkToro in partnership with Followerwonk found that almost 20% of all Twitter accounts are likely to be fake or spam.
This data is based on a random sample of 44, 058 live Twitter accounts, and suggests that Twitter's less than 5% estimate is very hopeful.