News hardware Furious, Elon Musk fears bankruptcy for Twitter
The Twitter x Elon Musk soap opera continues and the concerns haven’t stopped since it took off! To make matters worse, advertisers have fled the platform since the arrival of the entrepreneur who did not resent this decrease in revenue.
Elon Musk and Twitter, a lasting relationship
Sometimes we feel like our life is a movie. The other is that it is a long quiet river. But in Elon Musk’s case, we can all grab some popcorn and sit quietly to watch all the ups and downs that seem to happen to him. And best of all, we get our money’s worth because every day has its share of episodes to watch.
The Twitter arc has reached the next level: while everything seems to be up in the air, Twitter has finally been sold for the amount promised and it’s time for changes to the blue bird. Except everything doesn’t go according to plan and Elon loses a lot of money on this deal that is worth more than he wants.
A little reminder of the facts of this year 2022:
- In January Elon Musk started buying stocks in bulk. The price is around $38.
- In April, he owned 9% of the company, or about $2.6 billion, and 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 rises to $50 per share.
- In May, Musk changed his mind and wanted out of the deal (which Twitter eventually accepted). The fault, according to him, in many bot accounts.
- The case was brought to justice because Twitter wanted to enforce its promise to Musk. The problem for the latter is that he may lose the case, American justice will easily consider that he wants to illegally manipulate the market to sell his more expensive shares.
- In October, Musk changed his mind again and ended up accepting the deal! Twitter was finally bought, but the billionaire had to go into debt for it.
So we have a grateful Musk coming into the company and making “small” changes. But things don’t go his way…
Twitter’s revenue has dropped significantly, due to activist groups’ pressure on advertisers, even though nothing has changed in content moderation and we’ve done our best to appeal to activists.
It’s a mess! They are trying to destroy free speech in America.
— Elon Musk (@elonmusk) November 4, 2022
Paid certification, advertisers withdrawing, massive drop in revenue, massive layoffs… Twitter is doing badly and Elon Musk is angry!
Who would have thought that taking over a company that was losing $44 billion could cause any problems? Especially since the first decisions of the entrepreneur 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 has also been affected with 15% fewer staff. Even talented elements like the Frenchman Emmanuel Cornet who spoke at Liberation and is 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 was fired from the company.
I am very proud of the work we have done to implement the UN Guiding Principles on Business & Human Rights, to protect those at risk in global conflicts and crises including Ethiopia,
— Shannon Raj Singh (@ShannonRSingh) November 4, 2022
By not logging in hundreds of employees found out they lost their jobs. In exchange for this forced departure, the company gave them a three-month allowance, more than the mandatory requirement in the US. To explain these layoffs, Musk explained that Twitter is currently losing $4 million a day. Legal questions have arisen 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.
As for reducing Twitter’s power, unfortunately there is no choice when the company is losing more than $4M/day.
All those who left were offered 3 months severance, which is 50% more than the legal requirement.
— Elon Musk (@elonmusk) November 4, 2022
On the one hand, Elon Musk announced at a Ted conference that he did not want to buy the company with economic motivations, but rather with the desire to promote freedom of expression. In a tweet aimed at the platform’s advertisers, he even talked about advancing humanity!
On the other hand, he decided to set up a subscription to regain popularity certificate which allowed until then (to a certain extent) to identify and define the accounts of official personalities and thus give more weight to their voice while allowing them to remain anonymous. If you want to keep your certification, you have to pay and anyone can have access to it.
As with the idea and its implementation, however, many problems can occur through it. Identity theft can be done without any worries. State administrations can 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 $8 per month, you will be heavily penalized by the algorithm. And that’s pretty harsh, considering you have to scroll through your Twitter feed a lot to see posts from unverified people. If you don’t pay, you’re in the same box as bots and trolls (who will of course pay to keep quiet).
If you don’t pay the $8 your tweets will be suppressed by an algorithm. Not kidding, he told a room of investors yesterday and said it would solve hate speech. “You have to scroll far to see unverified users” pic.twitter.com/gSzXtzFYtC
— Aaron Stewart-Ahn (@somebadideas) November 5, 2022
But the problem does not end there. Elon Musk’s libertarian will has frightened 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 have taken their clicks and clacks and stopped paying for ads on platform.
More than 40 groups The Democracy and Anti-Misinformation Campaigns released an open letter to Twitter’s 20 largest advertisers, including Coca-Cola, Google and Disney, urging them to threaten Musk with stopping all advertising if he sets up the his plan “to undermine brand safety and community standards, including the elimination 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 stop hate speech, respect privacy while maintaining moderation.
Celebrities also added their two cents. Some are leaving the platform, others have announced that they are going. One of the loudest is Stephen King. For context, Elon Musk initially wanted to charge $20 a month for the subscription, which somewhat upset the writer. The story doesn’t say if he changed Elon Musk’s mind himself…
Elon Musk is clearly a divisive personality. Whatever happens, only the future will tell us what will happen on Twitter…