Cuts at Twitter begin as Musk warns of 'massive' revenue drop

Cuts at Twitter begin as Musk warns of ‘massive’ revenue drop

Elon Musk has begun downsizing Twitter’s 7,500 workforce as the social media platform’s new billionaire owner warned of a “massive drop in revenue” following his controversial $44 billion buyout of the group.

As Musk moves to cut costs, he claimed on Friday that Twitter “has had a massive drop in revenue, due to activist groups pushing advertisers, although nothing has changed with content moderation and we did everything we could to appease the activists”.

Brands such as General Motors, Mondelez, Carlsberg, Volkswagen and General Mills have paused marketing since Musk took the helm, with some advertisers fearing he will allow a wave of hate speech and misinformation to spread to the platform.

While the billionaire claimed that “hate speech” had at times dropped below its usual level on the platform since he took over, he also delivered a warning to advertisers, saying “a thermonuclear name and shame is exactly what will happen” if companies boycotted platform.

The cuts come amid a new round of job cuts rippling through Silicon Valley as companies grapple with the macroeconomic downturn. Twitter employees were notified of their employment status on Friday, according to a company-wide email from the Financial Times.

The email did not clarify the extent of the staff reduction. However, Musk has drawn up plans to cut about 3,700 jobs, or half the workforce, according to two people familiar with the plans, who added that the final figure could change.

“In an effort to put Twitter on a healthy path, we will go through the difficult process of reducing our global workforce on Friday,” said the email received by staff on Thursday.

“We recognize that this will affect a number of individuals who have made valuable contributions to Twitter, but this action is unfortunately necessary to ensure the company’s success.”

The move was immediately met with a class-action lawsuit by a small group of Twitter employees, who alleged the company had violated labor laws by failing to provide the required advance notice.

“Regarding Twitter’s reduction in force, unfortunately there is no choice when the company is losing over $4 million/day,” Musk wrote on Twitter later Friday, saying that employees who had been laid off had been offered three months’ severance pay.

The job losses cap a chaotic first week for Twitter under Musk’s command, during which the world’s richest man overhauled the executive team, asked staff to work around the clock on new products and publicly brainstormed plans to shake up the business via his own Twitter account.

In an indication that the cuts had begun, two employees said many employees lost access to their company’s Slack account and email Thursday night.

Twitter workers who lost their jobs were told to expect an email in their personal inbox while those who stayed would be notified via their company email, according to the Twitter email.

Another employee said some had received a second, vague email from Twitter after their work accounts were suspended, saying their role at the company had been “potentially affected” by the cuts.

Although Musk has not discussed the cuts publicly, Twitter itself lit up with employees announcing their departure and colleagues often responding with a blue heart emoji, in a show of support. “I’m officially out,” wrote Irene Font Peradejordi, a Twitter researcher.

Ned Miles, who is Twitter’s UK lead for audience insights, according to his LinkedIn page, wrote: “I don’t have anything smart to say, I’m just devastated – personally and for the magnificent culture and company we built that is now gone. I love you all.”

There has been unrest within the company for months after Musk first made his bid to buy it, before trying to back down while publicly mocking Twitter staff. After a bitter legal battle, the deal closed on Thursday last week, with Musk paying his original bid of $54.20 per share.

Musk has made no secret of his plans to overhaul Twitter, which has long been criticized for its sluggish pace of product innovation. He has previously said he may cut jobs and costs to make the platform “healthy” and last week tweeted: “Seems like 10 people ‘managing’ for every person coding.”

The email on Thursday said Twitter’s offices would be temporarily closed and all access to the brand would be shut down on Friday “to ensure the security of each employee as well as Twitter systems and customer data”.

Staff had responded earlier by flooding the social media company’s water cooler Slack channel, a messaging group meant to be the online version of chatting around the office water cooler, with emojis of a person greeting, according to another employee.

Before the email, Twitter employees on Blind, a forum for tech workers to post anonymously, shared their disappointment with Musk’s leadership style.

One described current working conditions as a “nightmare scenario that won’t let go”, adding: “Please fire me.” Another comment asked for the cuts to come quickly: “It’s psychological torture at this point.”

Three plaintiffs in the class action said in a legal filing Thursday in the Northern District Court of California that they had been “locked out of their [company] Twitter accounts”.

The suit seeks an injunction to block the layoffs, on behalf of themselves and “all similar employees” in the United States, so that Twitter does not violate the Worker Adjustment and Retraining Notification Act, which requires employers to give 60 days’ notice of a “mass layoff” to affected employees.

The Twitter staff alleges that Musk took a similar approach this summer when he made cuts at Tesla, his electric car company, which led to a lawsuit from employees there.

Additional reporting by Madhumita Murgia and Judith Evans in London

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