Elon Musk backed out of his acquisition of Twitter over a disagreement about API rate limits.
Musk has made multiple public statements expressing his curiosity about the prevalence of fake or automated Twitter accounts, claiming that this information would affect the company’s stock price. Before finalizing the deal, the billionaire wanted to know more about Twitter’s procedures for identifying and dealing with fake accounts.
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API Rate Limits Are the Main Reason Behind Musk Ditching Twitter Deal
A letter from Musk’s attorneys detailing their efforts to source information is included in one of the documents Twitter filed after Musk cut off service.
Musk and his team allegedly requested “a variety of board materials, including a working, bottom-up financial model for 2022, a budget for 2022, an updated draft plan or budget, and a working copy of Goldman Sachs‘ valuation model underlying its fairness opinion,” according to the document.
According to Twitter’s official blog post, “Twitter has provided only a pdf copy of Goldman Sachs’ final Board presentation.”
The document claims that other disclosures “come with strings attached, use limitations or other artificial formatting features, which has rendered some of the information minimally useful to Mr. Musk and his advisors.”
“For example, when Twitter finally provided access to the eight developers ‘APIs’ first explicitly requested by Mr. Musk in the May 25 Letter, those APIs contained a rate limit lower than what Twitter provides to its largest enterprise customers.”
“Twitter only offered to provide Mr. Musk with the same level of access as some of its customers after we explained that throttling the rate limit prevented Mr. Musk and his advisors from performing the analysis that he wished to conduct in any reasonable period of time.”
“Additionally, those APIs contained an artificial ‘cap’ on the number of queries that Mr. Musk and his team can run regardless of the rate limit – an issue that initially prevented Mr. Musk and his advisors from completing an analysis of the data in any reasonable period of time,” the document states.
On June 29, Musk and his team brought up the issue of query limits, but Twitter didn’t remove it until July 6 despite Musk’s repeated requests.
Musk felt Twitter violated the merger agreement due to the company’s failure to respond to his requests for improved access to API-delivered data related to his various businesses, including those involving electric vehicles, tunneling, artificial intelligence, and spaceborne internet access, tequila, and rocketry.
Thus, he cut off the further investigation, leaving unanswered the questions of why Twitter might have provided only limited access to its APIs and why it could not offer more access given the company’s massive size.
If the move was strategic, it will likely end up in court, and Twitter chairman Bret Taylor has said the network plans to have the Delaware Court of Chancery hear the matter so the deal can go through.
Musk, for his part, spent the weekend tweeting about his space internet venture Starlink and implying that his recently acknowledged twin children are related to his efforts to solve the world’s population problem.
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