Texas Attorney General Launches Investigation Into Twitter Bots: What Investors Should Know

The attorney general of one of the largest states in the country is launching an investigation against social media network Twitter Inc TWTR. Here are the details.

What Happened: Texas Attorney General Ken Paxton announced the launch of an investigation against Twitter over false reporting of its fake bot accounts. The investigation says the false reporting could be in violation of the Texas Deceptive Trade Practices Act.

“Spam accounts like these inflate followers and reach, and often push deceptive and annoying activity. Bot accounts can not only reduce the quality of users’ experience on the platform but may also inflate the value of the company and the costs of doing business with it, thus directly harming Texas consumers and businesses,” the filing said.

The Civil Investigative Demand issued calls on Twitter to turn over documents on how it calculates user data. The company has until June 27 to respond to the CID from Paxton’s office.

Twitter has said that fewer than 5% of its users are “bots,” a number put in question by the claim from Paxton.

“Texans rely on Twitter’s public statements that nearly all its users are real people. It matters not only for regular Twitter users, but also Texas businesses and advertisers who use Twitter for their livelihoods,” Paxton said. “If Twitter is misrepresenting how many accounts are fake to drive up their revenue, I have a duty to protect Texans.”

Related Link: Elon Musk Quotes The Tempest On Twitter But This Is His Favorite Shakespeare Play 

Why It’s Important: The comments and filing by Paxton come as it was announced Monday that Tesla Inc TSLA CEO Elon Musk sent a letter to Twitter accusing the company of not providing information on bot requests.

“Twitter has, in fact, refused to provide the information that Mr. Musk has repeatedly requested since May 9, 2022, to facilitate his evaluation of spam and fake accounts on the company’s platform,” the letter said.

Musk has indicated that Twitter breached part of an agreement to take the company private at $54.20 per share by not providing information on bot accounts.

“Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement.”

Tesla is headquartered in Texas thanks to a move from the state of California. The timing of the letter from the Texas Attorney General and Musk on the same day have been pointed out on social media Monday.

Paxton previously had a run-in with Twitter over a lawsuit related to the banning of President Donald Trump from the social media platform. 

TWTR Price Action: Twitter shares closed 1.49% at $39.56 on Monday. Shares have traded between $31.30 and $73.34 over the past 52 weeks.

Photo: mundissima via Shutterstock