Elon Musk’s arrival at the helm of Twitter has plunged the company into a tumultuous period. Although many advertisers have decided to leave the platform, thousands of workers, who sometimes work in the main branches of society, have been laid off. The situation is such that the American authorities may become involved.
Managers, employees, self-employed… Thousands of departures
After buying Twitter for 44 billion dollars, Elon Musk came to the company’s headquarters in a very rude way, and directly made stunning changes. In addition to firing several platform executives, it also parted ways with half of its staff, mostly in divisions related to security or social network moderation.
Now, this wave of layoffs also affects freelancers who work at Twitter for fixed terms. According to CNBC, about 4,400 of Twitter’s 5,500 contract workers were fired under dubious conditions, only to realize their access to the platform’s computer systems had been cut. Some employees fired by Musk experienced the same misfortune: they realized they were fired because they could no longer access their work mailbox or the company’s internal systems.
Upstream, many leaders decided to leave the firm. Among them, we find important executives like Lea Kissner, head of IT security or Yoel Roth, who manages customer trust and emblematic figure of Twitter. Additionally, the company also lost its Chief Privacy Officer, Damien Kieran, and its Chief Compliance Officer, Marianne Fogarty.
Advertisers are reducing their spending
This massive departure causes major concerns to advertisers, who are more likely to pause their advertising campaigns on the social network and prefer to invest in rivals such as TikTok or Instagram. This is for example the case of Chipotle, General Mills, General Motors, Volkswagen, Mondelez, or even United Airlines.
Even worse for Twitter, one of the largest advertising agencies in the world, Omnicom, which represents giants such as Apple, PepsiCo or McDonald’s, is now recommending that its customers reduce their spending on the platform. GroupM, the world’s largest ad buying agency, further told its clients that Twitter is an investment in ” very delicate “. In question, the many dismissals and departures, as well as the many verified accounts that usurp the identity of brands. This last element results from the change in the Twitter Blue subscription offer, which now offers a blue dot, usually given to authenticate an account, to everyone who subscribes to the platform for $8 a month. Eventually, Musk wants this system to account for in half of the social network’s income.
The new Twitter Blue has already caused a stir on Twitter, when a verified account posing as pharmaceutical company Eli Lilly posted a tweet saying “ insulin is now free “. The post went viral and remained on Twitter for at least two hours before being deleted. The company saw its share price plummet.
These distractions are very bad: we are entering an important time of the year for Twitter, where it is negotiating long-term contracts with its biggest advertisers. They generate more than 30% of the company’s advertising revenue in the United States, reports the wall street journal. In 2021, advertising provided 89% of Twitter’s $5.08 billion in revenue.
For his part, Elon Musk is trying to ensure brands and prove that the number of active users of the platform is at the highest in its history, but at the moment, his efforts seem to be in vain. Moreover, SpaceX, another company run by the billionaire, got one of the biggest advertising offers available on Twitter for 250,000 dollars. The aim of the campaign: to promote Starlink in Spain and Australia. This order is somewhat unusual for the company, as Twitter faces the exit of its largest advertisers.
Twitter usage continues to increase. One thing is for sure: it’s never boring!
— Elon Musk (@elonmusk) November 10, 2022
Elon Musk wants to turn Twitter into a payment system
The current situation does not seem to give assurance to Elon Musk who, in his first email sent to employees, mentioned a possible loss as well as an economic situation ” terrible “. For these reasons, the entrepreneur no longer wants Twitter to rely on advertising. In addition to the subscription system, he envisions a future where the platform will become a super-application like WeChat in China.
Last week, Musk sat down with his employees and detailed his vision for Twitter, which he also wants to make payments with debit cards and bank accounts linked to the service. ” I think there is this opportunity for change in payments. And payments are really just an exchange of information. Informationally, there is not much difference between, for example, sending a direct message and sending a payment. […]. So that’s a direction we’re going to take, allowing Twitter users to send money anywhere in the world, instantly and in real time. We just want to make it as useful as possible “, he declared.
These words are not surprising; on several occasions, Musk confessed his admiration for Chinese super-applications, and also mentioned his desire to develop an application ” can do anything called X. Apparently, Twitter will be included in this one. The platform must first overcome many regulatory hurdles before achieving such a result, and it must also be able to rise above water when the current context is not really in its favor.
The FTC is on the prowl
Musk may also face another problem in the coming months. In a statement, a representative of the Federal Trade Commission (FTC) explained that the agency is monitoring the actions of the leader and Twitter: “ We are following recent developments on Twitter with great concern. No CEO or company is above the law, and companies must obey our consent decrees. Our Revised Consent Order Gives Us New Tools to Ensure Compliance, and We’re Ready to Use Them “.
The FTC is referring here to an arrangement established with Twitter in 2011 after the company was accused of misleading users about how their phone numbers were used to sell ads. Subsequently, the company pledged to implement privacy safeguards and report on an information security program by submitting all of its new features to authorities prior to deployment.
The departure of many leaders worries the authorities, who believe that Twitter is in danger of not respecting this agreement. According to a media survey CNBCinternal employees fear that the FTC will decide to impose large fines on Twitter that could reach several billion dollars.
At the moment, the weather is far from Twitter. It’s still unclear if Elon Musk will keep the social network afloat and change it as he sees fit. If his experience in entrepreneurship plays in his favor, the situation remains very complex and its evolution almost impossible to predict.