Elon Musk could soon face off against Twitter in a Delaware court over whether he should be forced to buy the social media company. Musk’s excuse for backing out? Bots. Specifically, how many bots run rampant on Twitter.
In trying to back out of the $44 billion deal, Musk has asserted that Twitter hasn’t provided enough data on the platform's number of bots — automated accounts that can be benign but can also be used for nefarious purposes like bilking users out of their cash through get-rich-quick schemes.
The way Musk tells it, Twitter dramatically underestimates the number of bots on the social network when it claims they constitute less than 5% of its monetizable daily active users. Musk has estimated, without offering a source, that bots make up as many as 20% or more of Twitter’s user accounts.
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.— Elon Musk (@elonmusk) May 17, 2022
But let’s say, as an exercise, that Musk’s prediction is right and Twitter’s numbers are off by a wide margin. If true, the social network would likely face a serious reckoning from advertisers and users.
Too many bots would mean advertisers aren’t getting their money’s worth when they purchase ads on the platform. As for users, it would mean fewer people than they thought are seeing their tweets.
In its lawsuit against Musk, Twitter contends that it’s “bent over backwards” to furnish him with plenty of information about how it calculates the number of bots on the platform. What’s more, the company says it’s been making the 5% estimate for years, and that it “applies significant judgment” when counting bots.
Still, even Twitter concedes in a securities filing that “the actual number of false or spam accounts could be higher than we have estimated.”
What if Twitter does have more bots than it reported?
Twitter generates the overwhelming majority of its revenue through advertisements. You see them in promoted tweets every time you scroll through your timeline. It’s why someone like me, who doesn’t like golf, sees tweets from The Golf Channel sandwiched between those for the PlayStation 5 and comic books.
In the first quarter of 2022, Twitter generated $1.11 billion of its total $1.2 billion in revenue from advertising. That's over 90% of its revenue. To say that Twitter depends on ads to continue growing its business is an understatement. The same, naturally, is true of its cohorts including Meta, Snap, TikTok, and Alphabet.
Twitter rakes in that cash based on how many actual people see ads on the platform. After all, if you’re a brand, you want real humans to see your ad and perhaps purchase whatever item you’re hawking.
Bots don’t buy things like specialty shampoo, drive cars, or watch The Golf Channel. They exist to fire off tweets and nothing more. Twitter’s statement that less than 5% of its monetizable daily active users are bots is a means of assuaging advertisers’ concerns that real people aren’t seeing their ads.
If Musk is right, though, and 20% or more of Twitter’s monetizable daily active users are bots, and not real people, then advertisers are lighting their cash on fire when they purchase ads on the platform.
It’s not just advertisers that would rebuke Twitter if its bot estimates are too low, either. Average users want to ensure that they’re communicating with other people, not automated programs. If the bot count is 20% or more, as Musk claims, users could end up ditching Twitter too.
Bots are a complicated problem
Counting bots on a platform with 229 million monetizable daily active users isn’t easy. Twitter says it uses automated processes as well as manual checks using sample sets of accounts to measure bots.
“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,” Twitter CEO Parag Agrawal explained via Twitter, of course.
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.
— Parag Agrawal (@paraga) May 16, 2022
But bots aren’t all the same. Some can be programmed to tweet like actual humans and can trip up even the smartest experts. It’s not as though these accounts have signs on them that say, “Hi, I’m a robot.”
Not all bots are bad, either. Some will automatically tell you sports scores, act as alarm clocks, or provide you with the latest news stories based on key topics you’re interested in.
So far, Musk’s claim that Twitter is awash in bots is just that — a claim. Twitter, meanwhile, has given itself plenty of leeway in describing the difficulties of counting bots.
For now, we have to take the company's word for it.
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Got a tip? Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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