News hardware Angry, Elon Musk fears bankruptcy for Twitter
The Twitter x Elon Musk soap opera continues and the worries haven’t stopped since the takeover! Worse still, advertisers have been fleeing the platform since the arrival of the businessman who has not been angry with this drop in income.
Elon Musk and Twitter, a long-term affair
Sometimes we feel like our life is a movie. Others that it is a long calm river. But in the case of Elon Musk’s, we could all grab some popcorn and sit quietly to watch all the ups and downs that seem to be happening to him. And above all, we would get our money’s worth because every day has its share of episodes to watch.
The Twitter arc has now taken to the next level: while everything seemed up in the air, Twitter has finally been bought out for the sum promised and it’s time for changes at the blue bird. Except that everything does not go as planned and Elon lost a lot of money in this deal which cost him much more than he would have liked.
A little reminder of the facts of this year 2022:
- In January Elon Musk begins to buy stocks en masse. The price is then around $38.
- In April, he owned 9% of the company, or almost $2.6 billion, and he announced that he wanted to take control of it.
- A few days later, he announced a takeover bid at $53.50 per share, for a total of $44 billion. The share price then soars to $50 per share.
- In May, Musk changed his mind and wanted to withdraw from the deal (which had finally been accepted by Twitter). The fault, according to him, to the many bot accounts.
- The case is brought to justice because Twitter intends to enforce its commitment to Musk. The problem for the latter is that he may well lose the case, the American justice could easily consider that he wanted to illegally manipulate the market to sell his more expensive shares.
- In October, Musk changes his mind again and ends up accepting the deal! Twitter is finally bought out, but the billionaire had to go into debt for it.
So we have an indebted Musk coming into the company and making “small” changes. But things don’t go the way he wanted…
Twitter has had a massive drop in revenue, due to activist groups pressing advertisers, even though nothing has changed with content moderation and we did everything we could to appeal the activists.
Extremely messed up! They’re trying to destroy free speech in America.
— Elon Musk (@elonmusk) November 4, 2022
Paid certification, withdrawal of advertisers, massive drop in income, massive layoffs… Twitter is doing badly and Elon Musk is angry!
Who would have thought that taking over a loss-making company at $44 billion could pose any problem? Especially since the entrepreneur’s first decisions succeeded in scaring off a large number of advertisers and therefore caused the company to lose a lot of money.
One such decision was to lay off 50% of Twitter’s workforce. On the front line, marketing, design and managers. Moderation was also affected with 15% fewer staff. Even excellent elements like the Frenchman Emmanuel Cornet who spoke at Liberation and who was among the 5 to 10% of the best engineers in the company, according to the lists drawn up this week, were not kept.
Yesterday was my last day at Twitter: the entire Human Rights team has been cut from the company.
I am enormously proud of the work we did to implement the UN Guiding Principles on Business & Human Rights, to protect those at-risk in global conflicts & crises including Ethiopia,
— Shannon Raj Singh (@ShannonRSingh) November 4, 2022
It was by failing to log in that hundreds of employees learned that they had lost their jobs. In exchange for this forced departure, the company provided them with three months of allowances, more than what is obligatorily required in the US. To explain these layoffs, Musk explained that Twitter is currently losing $4 million a day. Legal questions arise however and some of the former employees are said to be preparing to go to court, as Musk failed to comply with US law requiring mass layoffs to be announced 60 days in advance.
Regarding Twitter’s reduction in strength, unfortunately there is no choice when the company is losing over $4M/day.
Everyone exited was offered 3 months of severance, which is 50% more than legally required.
— Elon Musk (@elonmusk) November 4, 2022
On the one hand, Elon Musk announced in a Ted conference that he did not want to buy the company with economic motivations, but rather in a desire to advance freedom of expression. In a tweet aimed at the platform’s advertisers, he even talks about advancing humanity!
On the other hand, he decides to set up a subscription to be able to recover the famous certificate which allowed until then (to a certain extent) to recognize and identify the accounts of official personalities and thus to give more weight to their voice while allowing them not to have their identity usurped. If you want to keep your certification, you will have to pay and anyone can have access to it.
As much in the idea as in its realization, there are however a lot of problems that can occur through this. Identity theft can thus be done without any concern. State administrations could even be affected and lead to serious problems if these accounts are not monitored with precision!
Additionally, Musk recently announced that if you don’t pay the $8 per month, you will be heavily punished by the algorithm. And that’s pretty harsh, considering you’ll have to scroll through your Twitter feed a lot to see posts from unverified people. If you don’t pay, you’ll be in the same box as bots and trolls (who can of course pay to be quiet).
If you don’t pay the $8 your tweets will be suppressed by an algorithm. Not making this shit up he said it to a room of investors yesterday & claimed this would solve hate speech. “You’ll have to scroll really far to see unverified users” pic.twitter.com/gSzXtzFYtC
— Aaron Stewart-Ahn (@somebadideas) November 5, 2022
But the problem doesn’t end there. The libertarian wills of Elon Musk scared advertisers who until then represented 90% of the platform’s revenue in the form of advertising. American agribusiness giant General Mills (Cheerios and Häagen-Dazs), automaker General Motors, Mondelez international (Oreo) Pfizer, Audi, and many others took their clicks and clacks and stopped pay for advertisements on the platform.
More than 40 groups Democracy and Anti-Misinformation Campaigns issued an open letter to Twitter’s 20 biggest advertisers, including Coca-Cola, Google and Disney, urging them to threaten Musk to stop all advertising if he was setting up his plan “to undermine brand safety and community standards, including the liquidation of content moderation”.
Even the UN stepped up to the plate with a thread asking Elon Musk to respect human rights and not only protect freedom of speech, but also not let hate speech pass, respect privacy while keeping moderation afloat.
Celebrities have also added their two cents. Some leaving the platform, others announcing that they were going to. One of those who made the most noise is Stephen King. For context, Elon Musk initially wanted to charge $20 a month for the subscription, which pissed off the writer quite a bit. The story does not say if it was he directly who made Elon Musk change his mind…
Elon Musk is clearly a divisive personality. Whatever happens, only the future will tell us what will happen to Twitter…