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Musk does not rule out Twitter bankruptcy
Entrepreneur Elon Musk recently took over the online service Twitter. photo
© Susan Walsh/AP/dpa
After buying Twitter, tech billionaire Elon Musk boldly set about transforming the online service. Two weeks later there is a lot of trouble.
Twitter is in deep turmoil two weeks after being taken over by tech billionaire Elon Musk. Musk did not rule out bankruptcy when appearing in front of employees. The assignment of verification ticks to subscription customers without checking triggered chaos with fake accounts that looked deceptively real. The US consumer protection agency FTC then sent Twitter an unusually sharp warning. Other top managers in key positions left the company.
Musk warned employees that Twitter’s balance sheet could face a billion-dollar hole in the coming year. “We definitely have to bring in more money than we spend,” he said, according to a recording of the meeting that the technology blog “The Verge” published as text. If this does not succeed, bankruptcy cannot be ruled out, said Musk. “That’s a priority.” His recent sale of shares in electric car maker Tesla, valued at $4 billion, was intended to keep Twitter alive.
Musk: “2023 will probably be tough”
Musk, who also runs Tesla and space company SpaceX, tweeted on Friday: “2023 will probably be tough, but my companies are in good shape.” Twitter has reached an all-time high of active users. “A great day!”
The billionaire bought Twitter for $44 billion. The service was already in the red before the takeover. After the sale, Musk lamented a slump in sales because some major advertisers suspended ads on the platform. They worry their ads could appear alongside offensive tweets if Musk relaxes the rules, as announced.
Twitter also has a loan of around $13 billion that Musk took out for the purchase. Servicing this debt alone is said to cost around one billion dollars a year. Musk wants to supplement the advertising revenue, which has so far accounted for 90 percent of revenue, with a subscription business. The launch of his new subscription with verification ticks initially caused chaos because some users impersonated celebrities and companies with fake accounts.
Rearranging when assigning the ticks
On Wednesday, Twitter had implemented the reorganization announced by Musk when assigning ticks. So far, they have been granted by Twitter to celebrities, politicians and companies after an examination. Under the new system, anyone who pays $8 a month gets the tick. There is no identity check. The tick looks the same in both cases. You can only find out from the text after clicking on the symbol whether you are dealing with an earlier, actually verified account or with a newly purchased tick.
Some users created fake accounts that look deceptively real – for basketball star LeBron James, the games company Nintendo and ex-President Donald Trump. The pharmaceutical company Eli Lilly apologized to Twitter users who were led to believe by a fake account that insulin would be distributed free of charge in the future. An alleged verified Chiquita fake account announced that it had overthrown the Brazilian government.
On Friday night, an additional gray checkmark with the word “Official” next to it appeared in the previously verified profiles. Musk halted the launch of the symbol in the middle of the week. As a further measure, he announced that accounts that pretend to be someone else would have to include the word “parody” directly in their name. The problem with the fake accounts wasn’t that there weren’t any rules against it, but that they couldn’t be discovered and deleted quickly enough – while they had verification ticks.
US consumer protection agency in “great concern”
“We are following the recent developments on Twitter with great concern,” said an FTC spokesman on Thursday. No company or its boss is above the law.
Following previous violations with the FTC, Twitter had committed to subjecting new features to a privacy and security review before launch. According to media reports, Musk assured employees in an email after the FTC warning that Twitter would do everything possible to comply with the agreement with the agency. The FTC can impose heavy penalties. According to their investigations, Facebook paid five billion dollars in 2019.
Musk also warned employees of difficult times in an email. The economic situation is “bad”, especially for a company that depends on advertising revenue. He announced new guidelines for working from home: in future it will only be permitted with his express personal permission. Before the acquisition, Twitter employees were allowed to work from anywhere. Musk is considered an opponent of the home office trend. He has already made that clear at Tesla.
More top executives are leaving Twitter
Musk had cut about every second of the approximately 7,500 jobs on Twitter in the past week. Now he said at the employee meeting that the company still has too many employees.
On Thursday, other top executives left the company: Yoel Roth, who was responsible for filtering out objectionable content, and Lea Kissner, head of information security. According to media reports, Robin Wheeler, who was recently responsible for relations with advertisers, submitted her resignation, but was persuaded by Musk to stay. She tweeted that she was still at it.