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> Musk has no legal standing to use any of that to back out of the merger. The claim is that Twitters SEC filings had bots at ~5%, and Musk made the investment

> Musk has no legal standing to use any of that to back out of the merger. The claim is that Twitters SEC filings had bots at ~5%, and Musk made the investment based on that. From the leaked recordings of staff, everyone knew that the percentage was much higher.

colinmhayes 4y ago
That is a misreading of twitters filing.
jcranmer 4y ago
That's not what the SEC filings say. The SEC filings say that up to 5% of the number of monetizable daily active users (i.e., the number of users after eliminating bots) may be bots--or, in other words, the techniques that Twitter uses to detect bots have up to a 5% false negative rate. No one is saying that 5% of Twitter's users is bots, except for when Musk is trying to put those words into Twitter's beak.
- martin8412 4y ago
  They don't just say up to five percent are bots - They say that their methodology might be flawed and the actual number could be higher or lower.
- hef19898 4y ago
  In addition, one could make the claim that monetizeable bots cannot have a material adverse effect since they are still generating revenue and profits.
  - saalweachter 4y ago
    I mean, the point of Twitter's statement is to try to bound the risk. They could fix their methodology, or their advertisers could sue them for charging them for bot views, and the magnitude of the risk is ~5% of their mDAU, according to Twitter. A company with 95% of its revenue coming from bot-clicks and a company with 5% of its revenue coming from bot-clicks might make the exact same amount of money, but one is substantially more screwed in the future.
- hartator 4y ago
  > No one is saying that 5% of Twitter's users is bots, except for when Musk is trying to put those words into Twitter's beak. "In its disclosures, Twitter claims to have nearly 238 million monetizable daily active users (“mDAU”) who participate on the platform, and tells its investors that this userbase metric is a bellwether for its ability to generate revenue and the “best way to measure [Twitter’s] success . . . .” I think they are talking about this number being significant less than 238 million. "They show that in early July fully one-third of visible accounts may have been false or spam accounts—resulting in a conservative floor of at least twice as many false or spam accounts as the 5% that Twitter discloses for the entire mDAU population." They are talking about the same after bot removal 5%.
  - vehementi 4y ago
    That logic is nonsense, 3rd party observers have no way to know what twitter counts as a daily active user. They *could not possibly* make any such estimate.
mattbrewsbytes 4y ago
I made a bad analogy before about this, if Twitter were a house Musk was buying, he waived the right to back out of the deal based on home inspections (bots/spam accounts). He still can analyze bots/spam as much as he wants (as he should) but from the article it has no basis in the legal contract signed. > The merger agreement contained no references to false or spam accounts, and Musk didn't ask Twitter for any information to verify the number of spam accounts before signing the merger deal.
phailhaus 4y ago
Nope, Twitter has been very clear in their filings: > Additionally, our calculation of mDAU is not based on any standardized industry methodology and is not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. Similarly, our measures of mDAU growth and engagement may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology. Musk can't barge in and say "but MY calculations have a HIGHER number!" because Twitter already acknowledged this could be the case. Musk decided to buy anyways. [1] https://www.sec.gov/Archives/edgar/data/1418091/000141809120000199/twtrq320ex992.htm https://www.sec.gov/Archives/edgar/data/1418091/000141809120...
- delecti 4y ago
  > Musk can't barge in and say "but MY calculations have a HIGHER number!" because Twitter already acknowledged this could be the case Not to mention that some of Musk's publicly stated reasons for the purchase are to reduce the bot problem to improve Twitter's value.
megablast 4y ago
Completely wrong.
RandomBK 4y ago
Twitter doesn't say that 5% of all accounts are bots. While I don't have inside knowledge of how Twitter does things, the industry standard is to: 1. Build a classification model to determine whether an account is a bot or not. 2. Measure the precision/recall curve of that model, and pick a threshold where the precision would be >95% (i.e. >95% of what the model labels as "humans" are really humans). (Higher recall leads to lower precision and vice versa. Higher recall means a higher mDAU, so it's a balancing act between a high number versus a high confidence in that number.) 3. Let the model loose on all accounts. 4. The number the model tags as humans is the "mDAU", though <5% of these might be false positives. While this model takes a lot of training data to build, verifying its continued precision/recall characteristics can be completed with very little ongoing sampling - easily handled by the "100 a day" figure Musk has claimed.
- lostdog 4y ago
  Twitter describes how they get the 5% number (from Matt Levine [0]). They randomly sample 100 accounts per day and have human raters decide if they're bots or not. This is the right way to validate that your fancy ML algorithms are working well. [0] https://archive.ph/GtYzO https://archive.ph/GtYzO

colinmhayes 4y ago

That is a misreading of twitters filing.

jcranmer 4y ago

That's not what the SEC filings say. The SEC filings say that up to 5% of the number of monetizable daily active users (i.e., the number of users after eliminating bots) may be bots--or, in other words, the techniques that Twitter uses to detect bots have up to a 5% false negative rate. No one is saying that 5% of Twitter's users is bots, except for when Musk is trying to put those words into Twitter's beak.

martin8412 4y ago
They don't just say up to five percent are bots - They say that their methodology might be flawed and the actual number could be higher or lower.
hef19898 4y ago
In addition, one could make the claim that monetizeable bots cannot have a material adverse effect since they are still generating revenue and profits.
- saalweachter 4y ago
  I mean, the point of Twitter's statement is to try to bound the risk. They could fix their methodology, or their advertisers could sue them for charging them for bot views, and the magnitude of the risk is ~5% of their mDAU, according to Twitter. A company with 95% of its revenue coming from bot-clicks and a company with 5% of its revenue coming from bot-clicks might make the exact same amount of money, but one is substantially more screwed in the future.
hartator 4y ago
> No one is saying that 5% of Twitter's users is bots, except for when Musk is trying to put those words into Twitter's beak. "In its disclosures, Twitter claims to have nearly 238 million monetizable daily active users (“mDAU”) who participate on the platform, and tells its investors that this userbase metric is a bellwether for its ability to generate revenue and the “best way to measure [Twitter’s] success . . . .” I think they are talking about this number being significant less than 238 million. "They show that in early July fully one-third of visible accounts may have been false or spam accounts—resulting in a conservative floor of at least twice as many false or spam accounts as the 5% that Twitter discloses for the entire mDAU population." They are talking about the same after bot removal 5%.
- vehementi 4y ago
  That logic is nonsense, 3rd party observers have no way to know what twitter counts as a daily active user. They *could not possibly* make any such estimate.

mattbrewsbytes 4y ago

I made a bad analogy before about this, if Twitter were a house Musk was buying, he waived the right to back out of the deal based on home inspections (bots/spam accounts). He still can analyze bots/spam as much as he wants (as he should) but from the article it has no basis in the legal contract signed. > The merger agreement contained no references to false or spam accounts, and Musk didn't ask Twitter for any information to verify the number of spam accounts before signing the merger deal.

phailhaus 4y ago

Nope, Twitter has been very clear in their filings: > Additionally, our calculation of mDAU is not based on any standardized industry methodology and is not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. Similarly, our measures of mDAU growth and engagement may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology. Musk can't barge in and say "but MY calculations have a HIGHER number!" because Twitter already acknowledged this could be the case. Musk decided to buy anyways. [1] https://www.sec.gov/Archives/edgar/data/1418091/000141809120000199/twtrq320ex992.htm https://www.sec.gov/Archives/edgar/data/1418091/000141809120...

delecti 4y ago
> Musk can't barge in and say "but MY calculations have a HIGHER number!" because Twitter already acknowledged this could be the case Not to mention that some of Musk's publicly stated reasons for the purchase are to reduce the bot problem to improve Twitter's value.

megablast 4y ago

Completely wrong.

RandomBK 4y ago

Twitter doesn't say that 5% of all accounts are bots. While I don't have inside knowledge of how Twitter does things, the industry standard is to: 1. Build a classification model to determine whether an account is a bot or not. 2. Measure the precision/recall curve of that model, and pick a threshold where the precision would be >95% (i.e. >95% of what the model labels as "humans" are really humans). (Higher recall leads to lower precision and vice versa. Higher recall means a higher mDAU, so it's a balancing act between a high number versus a high confidence in that number.) 3. Let the model loose on all accounts. 4. The number the model tags as humans is the "mDAU", though <5% of these might be false positives. While this model takes a lot of training data to build, verifying its continued precision/recall characteristics can be completed with very little ongoing sampling - easily handled by the "100 a day" figure Musk has claimed.

lostdog 4y ago
Twitter describes how they get the 5% number (from Matt Levine [0]). They randomly sample 100 accounts per day and have human raters decide if they're bots or not. This is the right way to validate that your fancy ML algorithms are working well. [0] https://archive.ph/GtYzO https://archive.ph/GtYzO