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U.S. securities regulators are questioning how Twitter counts fake accounts on its platform.
The U.S. Securities and Exchange Commission (SEC) asked the company in June about its approach to counting fake or spam accounts and “the underlying judgments and assumptions that management uses.”
The agency’s corporate finance department made the request in a June 15 letter, not long after Tesla CEO Elon Musk raised the issue as part of a $44 billion exit. (£37bn) The rationale for the Twitter deal.
Such questions may be commonplace, and it is unclear whether the SEC has launched a formal investigation into Twitter’s fake accounts.
The Palo Alto, Calif.-based law firm Wilson Sonsini responded in a June 22 letter that the firm believed it adequately disclosed the approach in its 2021 annual report.
Twitter estimated fake accounts through an internal review of sample accounts, the letter said.
The number of fake accounts “represents the average number of fake or spam accounts in the sample for each month of the analysis period over a quarter,” the letter said.
It added that in the fourth quarter of last year, when the SEC questioned it, less than 5 percent of Twitter’s “monetizable daily active usage or users,” or mDAU, were fake accounts.
The letter, revealed in a Securities and Exchange Commission filing on Wednesday, comes a day after Twitter’s former security chief claimed the company had misled regulators about its poor cybersecurity defenses and efforts to root out disinformation campaigns. Negligence with fake accounts.
Peiter Zatko, who served as Twitter’s security chief until he was fired earlier this year, filed whistleblower complaints with the Securities and Exchange Commission, the Federal Trade Commission (FTC) and the Justice Department last month.
The legitimate nonprofit whistleblower aid group that worked with Mr Zatko said he had gone to great lengths to address his concerns within the company before he was fired in January.
One of Mr. Zatko’s most serious allegations is that Twitter violated the terms of the 2011 FTC settlement by falsely claiming that it had taken stronger measures to protect the security and privacy of its users.
Mr. Zatko also accused the company of deceitful handling of “spam” or fake accounts, allegations at the heart of Musk’s attempt to pull out of the Twitter acquisition.
Twitter said on Tuesday that Mr Zatko was fired for “poor leadership and poor performance”, adding that “the allegations and opportunistic timing appear to be designed to attract attention and cause harm to Twitter, its customers and shareholders”.
The company called his complaint a “false narrative” that was “riddled with inconsistencies and inaccuracies and lacked significant context.”
Mr. Musk called off the sale in July, saying Twitter had failed to provide a detailed method for counting fake accounts.
But Twitter filed a lawsuit in Delaware Chancery Court, asking a judge to order Musk to complete the purchase.
Twitter has set September 13 as a date for its shareholders to vote on Mr. Musk’s pending acquisition, with the board recommending approval.
A trial in the Twitter lawsuit is scheduled for October.
Mr. Musk agreed in April to buy Twitter and take it private for $54.20 a share, vowing to ease the company’s regulation of content and root out fake accounts.
As part of the deal, Mr Musk and Twitter have agreed to pay each other a break-up fee of $1bn (£848m) if one party is held responsible for the deal’s failure.
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