Who would have thought, that Bankruptcy and Twitter would be the words used in the same sentence, and that too just days after Elon Musk’s dramatic takeover of the company. Well, apparently we will be taking those two words together, and rather soon if things don’t change.
Ever since Elon Musk took up the ownership of Twitter, the social media company has been hit by one turmoil after another, and its methods of navigating through its troubles have done little to inspire confidence. Despite Musk’s assurances, several advertisers have pulled out of the platform, while many of the company’s top executives have either been fired or left of their own volition. Musk’s third week as the CEO and owner of Twitter saw the billionaire address his employees for the first time, wherein he revealed that bankruptcy was a very real possibility if it failed to generate more cash.
Painting a grim outlook for the future, Musk capped a tumultuous two weeks with the bleak warning that “bankruptcy isn’t out of the question” if the company fails to address its delicate financial issues, and soon. “Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn,” Musk said in an email to employees. “We need roughly half of our revenue to be subscription.”
This inspires little confidence in the coming times for the social media company, which has already seen a mass exodus of employees and top brass alike, and this list has now expanded to reportedly include Yoel Roth, Twitter’s head of safety and integrity, Lea Kissner, the company’s chief information security officer, Damien Kieran, Twitter’s chief privacy officer, Robin Wheeler, Twitter’s head of client solutions, and Marianne Fogarty, the company’s chief compliance officer.
I've made the hard decision to leave Twitter. I've had the opportunity to work with amazing people and I'm so proud of the privacy, security, and IT teams and the work we've done.
I'm looking forward to figuring out what's next, starting with my reviews for @USENIXSecurity 😁
— Lea Kissner (@LeaKissner) November 10, 2022
It seems that Musk’s idea to lay off thousands – it unceremoniously dumped 3700 employees (about 50% of its workforce) recently, which earned it a lawsuit by several of its former, disgruntled employees – did not work as well as the billionaire had intended. It also goes against Musk’s words prior to the acquisition, where he had assured that he was not looking to milk Twitter for all it was worth and turn it into a cash cow. The billionaire’s desperation for the micro-blogging site to earn profits is clear enough, even though it came at the cost of many of those who kept Twitter running successfully for years.
It remains to be seen whether Twitter – and Musk’s – hope for its subscription service to boom proves to be fruitful. With an increased subscription rate, Twitter Blue expands the eligibility for verified accounts by allowing all those who subscribe to get the “Blue Tick” verification mark. Given that it opens a separate can of worms and would help scammers run more effective scams, Twitter briefly rolled out a grey “Official” label before Musk “killed” it, then did a U-turn (we have seen enough of those happen with him) to bring them back in some parts of the world.
Musk also revealed that the company was losing more than $4 million a day, mostly because advertisers have started pulling out, despite his threats to publicly shame them, once he took over. Should the revenue from subscriptions fail to offset the diminishing income from advertising, then Twitter’s already dismal finances will be in a more delicate position than before. Of course, this comes alongside the $13 billion in debt that Musk has burdened Twitter with, on which it faces interest payments that come to nearly $1.2 billion in the next 12 months.
And to add the cherry to the cake – aka, an already chaotic day – the US Federal Trade Commission (FTC) informed that it was watching Twitter with “deep concern,” now that the company’s privacy and compliance execs departures put Twitter at risk of violating regulatory orders. “No CEO or company is above the law, and companies must follow our consent decrees. Our revised consent order gives us new tools to ensure compliance, and we are prepared to use them,” Douglas Farrar, director of public affairs, at the FTC, said.
Overall, there has been little good news for Twitter ever since its new owner took over the reins and brushed off reports of another day of disarray. Unless Musk’s aim is to run Twitter to the ground, he may have to pull off a miracle to bring the platform’s finances under control.
