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The document filed to the SEC’s website has revealed that the Securities and Exchange Commission earlier has probed Twitter regarding its measurements of false and spam accounts and monetizable daily active users (mDAU).
Due to its battle with Elon Musk and a whistleblower disclosure last week which inquired about the company’s incentives to accurately measure spam and false bot accounts, Twitter has come into the spotlight.
The agency also inquired about the company’s statement in its 2021 annual report that stated false and spam accounts constitute 5% of mDAU in a letter addressed to the CEO Parag Agarwal. mDAU uses this metric for measuring the size of its user base. In the letter, the SEC asked to reveal the methodology used in calculating these figures and the underlying judgements and assumptions that management uses.
In addition, it also asked for the restatement of Twitter regarding its mDAU figures in its Merch 2022 quarterly report for the previous three years. The SEC also demanded information regarding the whereabouts of an error that led to overstate mDAU of the company and how it arrived at the conclusion that “there was not a material weakness in your control over financial reporting and that your disclosure controls and procedures were effective as of March 31, 2022.”
In a letter published on June 22, Twitter explained that the percentage of false and spam accounts is calculated on the basis of the application of Twitter’s business judgment and a sample of accounts. It also reiterated the statements on the process as per the company’s quarterly reports. Moreover, it said that human reviewers analyze randomly chosen accounts. On the basis of which Twitter considers mDAU and checks if the accounts violate any rules against spam and platform manipulation. The company said those assessments are then went through a multi-step review process.
In the letter, Twitter stated that mDAU’s overstatement is a consequence of a feature launched in March 2021 that will enable users to link separate accounts to easily switch between them.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
