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The SEC asked Twitter to explain its user metrics after Elon Musk complained

The SEC asked Twitter to explain its user metrics after Elon Musk complained


The investigation may have been spurred by Elon Musk’s bot concerns

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Illustration by Alex Castro / The Verge

This summer, the SEC conducted an active review of Twitter’s user numbers in response to concerns of bot activity, as revealed in new filings made public on Wednesday. The review came in the weeks after Elon Musk raised concerns over the same user figures and suggests federal regulators took Musk’s allegations seriously.

Notably, the review began more than a week before the full whistleblower report by Peiter “Mudge” Zatko, although it deals with many of the same concerns he reported to the SEC.

“please disclose the methodology used in calculating these figures”

“We note your estimate that the average number of false or spam accounts during fiscal 2021 continues to represent fewer than 5% of mDAU,” the commission wrote to Twitter in a letter dated June 15th. “To the extent material, please disclose the methodology used in calculating these figures and the underlying judgements and assumptions used by management.”

Seven days later, Twitter responded with a description of the methodology that is broadly consistent with the company’s public statements. As described in the statement, Twitter conducts a human review of thousands of randomly chosen accounts out of the mDAU sample every quarter and flags for spam and platform manipulation where appropriate.

It’s not clear whether this explanation was good enough for the SEC. A new letter announced the completion of the review on July 27th but gave no further judgment of Twitter’s conduct, saying only that “the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.”

Twitter’s unusual system for measuring “monetizable daily active users” (or mDAU) has been at the center of both Elon Musk’s short-lived takeover attempt and a recent whistleblower report. Broadly, Twitter maintains that measuring the smaller sample allows it to more effectively track whether real human users on the platform are seeing the ad spaces it sells. But because no one outside of Twitter knows whether a given account is included in the mDAU sample, it makes it nearly impossible for outsiders to fact-check the company’s numbers.

In his whistleblower report, Peiter “Mudge” Zatko cited the mDAU system as a primary cause of growing bot activity on the platform, alleging that senior management was “concerned that if accurate measurements [of bot activity] ever became public, it would harm the image and valuation of the company.”

Twitter did not immediately respond to a request for comment.