The Securities and Exchange Commission earlier this summer probed Twitter regarding its measurements of monetizable daily active users and false and spam accounts, according to documents filed to the SEC's website that were first reported last week.
In a June 15addressed to Twitter CEO Parag Agrawal, the agency asked about the company's statement in its 2021 annual report that false and spam accounts make up less than 5 per cent of mDAU, the metric Twitter uses publicly to quantify the size of its userbase. "Please disclose the methodology used in calculating these figures and the underlying judgements and assumptions used by management," the SEC said in the letter.
Twitter said in the letter that its overstatement of mDAU was a result of a feature launched in March 2021 that allowed people to link separate accounts to easily switch between them. The company said the overstatement of mDAU had no impact on any of its other key metrics or its financial statements. It added that it determined the overstatement was "immaterial," and therefore "there was not a material weakness in its internal control over financial reporting."to Twitter saying it had completed its review of the 2021 annual report and March quarterly report.
Musk is currently fighting the company in court to exit his US$44 billion acquisition deal, after accusing Twitter of misrepresenting the prevalence of spam and fake bot accounts on its platform. Musk's lawyers have alsoTwitter's process for measuring mDAU. Musk agreed to buy Twitter on April 25 and first said the Twitter deal was "temporarily on hold" while he evaluated the bot issue on May 13 — about a month before the SEC's letter to the company.
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