You could say Twitter, now in its second week of Elon Musk’s reign, has had an interesting week. That would be an understatement.
Trying to keep up with the unfolding saga that is Musk’s ownership of the microblogging platform isn’t easy. Since Monday, several high-profile executives have left the company, product changes have been made and rolled back without much apparent internal communication, and now the FTC is concerned that Musk’s Twitter may be ignoring its obligations under a previous settlement.
Against that backdrop, Musk keep tweeting like his $44 billion investment won’t blow up in his face. So what the hell is going on over there?
It was the weekend
Elon may have acquired Twitter on October 27th, but it wasn’t until late last week that things started to get interesting.
Musk initiated a mass layoff on Twitter on Friday, Nov. 4, an event described by many employees as chaotic. Reports circulated of people being kicked out of their work accounts and Twitter systems as early as Thursday night — some in the middle of meetings — and by Friday, half the 7,500-person company was out.
A group of five former Twitter employees filed a class-action lawsuit against Twitter, saying the layoffs violated the federal and California state WARN Acts that mandate a 60-day notice period for qualified mass layoffs, which includes Twitter’s.
Musk fired former Twitter leadership, including CEO Parag Agrawal, within days of taking ownership of the company, and advertisers quickly began freezing ad spending on Twitter until things settled down, which they definitely didn’t.
Over the weekend, it became clear to some on Twitter that firing half the company was not a good idea, prompting several dozen people to be asked to return to the company for two reasons: Some were laid off by accident, while others were let go. before leadership had a chance to realize they were critical to building features Musk wanted for the platform.
Reports quickly surfaced that Twitter engineers who were asked mostly say no. Those who agreed to return were allegedly mostly foreign individuals working on visas who would be forced out of the United States without jobs.
Let the Musk sink in
The start of the week was relatively quiet on Twitter, except that Elon, being a bad sport about people impersonating him, announced that accounts that engage in parody without explicitly making it clear would be banned without warning.
On Monday, Musk also claimed Twitter users were at an all-time high, possibly in response to MIT Technology Review publishing research that found nearly a million Twitter users had deactivated their accounts since Musk bought the platform in late October. Twitter says it has about 237 million daily monetized users.
Disinformation on Twitter also increased earlier this week ahead of the US midterm elections, which might not have happened if Musk hadn’t been in charge of the platform.
On Tuesday, news broke that Musk had sold 19.5 million Tesla shares worth $3.95 billion, which the world’s richest man has since told Twitter employees was necessary to save the company.
One of Musk’s big plans to monetize Twitter, something he definitely needs to do, emerged as plans to turn Twitter Blue into an $8-a-month service that would earn paid accounts a verification tick. Blue subscribers’ tweets also appear higher than non-subscribers in searches and replies, making Twitter a fee-based platform.
That paid blue tick wouldn’t come with any actual verification process, and news of the plan caused a stir as people worried about the potential for impersonation, like what happened over the weekend that prompted Musk to ban “impersonators.”
On Wednesday, Twitter began using the “official” account label to distinguish paid verification marks from those that had received it, but only in certain cases, such as high-profile brands.
When that news hit the Twitterverse, Musk and Twitter’s client solutions leader Robin Wheeler took to Twitter Spaces to discuss changes at Twitter and the company’s plans to win back the trust of advertisers. During the call, Musk revealed that he was also considering turning Twitter into a payments platform, taking him back to his PayPal roots. Overall, the conversation did not go well based on what came next.
Wednesday evening and into Thursday morning, Marianne Fogarty, Twitter’s Chief Compliance Officer, Leah KissnerTwitter’s Chief Information Security Officer, Damien Kieran, Chief Privacy Officer, and Joel Rothhead of trust and security, all walked out, leaving Twitter with little in the way of security or compliance leadership.
Rumors briefly swirled that Wheeler had also left, but she has since said she is still with the company.
The reason for the team’s departure may have to do with the FTC’s eyes turning back on Twitter, which it has been under a settlement with since 2010 when it was found to have poor privacy and security practices. The FTC also fined Twitter $150 million earlier this year for using account security data to sell targeted ads.
TechDirt’s Mike Masnick has posted a part of the FTC’s agreement with Twitter, which states that the social media platform must notify the regulator every time it makes product changes. Something that may not have been done since Musk took over.
Not long after the departures, an unnamed Twitter lawyer posted a letter to the company’s internal Slack saying that Twitter’s current head of legal and personal counsel to Musk, Alex Spiro, allegedly said of compliance concerns that “Elon is putting rockets into space, he’s not afraid. of the FTC.”
Engineers, the letter said, were forced to self-certify the changes they made for FTC compliance, which the lawyer said would put Twitter at risk of incurring billions of dollars in fines. “Extremely damaging to the longevity of Twitter,” the lawyer said.
Wednesday was also when Musk made his first formal communication with Twitter’s remaining employees, telling them that not only was Twitter at risk of bankruptcy, but that he was ending the company’s long-standing telecommuting and would force everyone to be in the office “at least” 40 hours a week, with beginning the next day.
Regarding that bankruptcy threat, consider that Twitter made a profit of $513 million in the first quarter of 2022, largely from the sale of MoPub, and a loss of $270 million in the second quarter, ending that period with $2.68 billion in liquid funds.
President Biden also said the foreign investment that enabled the Tesla magnate’s purchase of Twitter was “worth looking at.” Prince Al Waleed bin Talal Al Saud and Qatar Holding, as well as Oracle’s Larry Ellison and others, put up funds to support the takeover.
On Thursday, the official label disappeared and the launch of the new Twitter Blue program that allowed people to buy a verified tick for $8 a month. Twitter also said the blue tick would remain for users verified under the “legacy” verification system.
Chaos ensued, with brands being imitated, politicians parodied as cannibals and scams being flushed, just as predicted. Someone with a paid blue tick impersonated insulin maker Eli Lilly on Twitter to say the drug was now free, sending the drug giant’s stock price down six percent after the false claim went viral.
Musk also met with Twitter staff for the first time yesterday, reportedly telling them much the same thing he said in email communications with staff the day before: Twitter’s finances are in bad shape, the company could collapse and everyone needs to work harder.
The letter also sought to answer questions about the state of Twitter’s compliance with FTC mandates. According to Musk, “Twitter will do whatever it takes to comply with both the letter and the spirit of the FTC’s consent decree. Anything you read to the contrary is absolutely false.”
Musk’s own lawyer also reportedly tried to reassure the staff, saying none of them would go to jail over the situation with the FTC.
Friday “fixes” and beyond
Twitter woke up today to find that not only were users unable to sign up for Twitter Blue, but also “Original” labels we are back on selected accounts.
Users who earned blue checks by subscribing to Twitter Blue reported them missing, and app keeper Jane Manchun Wong said she no longer saw Twitter Blue verified buyability in the Twitter API.
At the time of writing, the ability to subscribe to Twitter Blue also appears to have been removed from the app, whereas earlier today it was there, but showed an accessibility error. Musk has also threatened to remove verified ticks from non-subscribers in the coming months.
It is reported that more than 140,000 accounts had signed up for the latest Twitter Blue suite of features, which earns $13.4 million a year. About 420,000 accounts had verified blue ticks before Musk’s takeover. Twitter’s annual revenue was $5 billion in 2021. Let that sink in.
What happens next for Twitter is anyone’s guess. In another flippant Musk tweet from earlier today, the Twitter CEO shared a picture of a neon #GameOver sign that says “Twitter HQ is awesome.”
The photo, which Musk said was taken in Twitter’s video arcade and bar area, was tweeted without context before clarifying the location. “Humor” aside, that kind of joke won’t inspire confidence in wary advertisers or eagle-eyed government officials.
One thing is certain: Musk’s purchase of the company saddled it with $13 billion in debt, making Twitter responsible for $1 billion in annual interest payments. If it looks like Musk is slipping, those financial obligations and the unfortunate banks tied to them may be part of the reason. That said, a growing risk of insolvency probably won’t prompt the world’s (for now) richest man to act in a calm, collected manner – expect more flaming.
Now, who’s ready for a nice, relaxing weekend? ®
#Twitter #Musk #week #bad #decisions