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 leaders have left the company, product changes have been made and rolled back without much apparent internal communication, and now the FTC is worried Musk’s Twitter might be ignoring its obligations under a previous settlement.
Against that backdrop, Musk continues to tweet like his $44 billion investment isn’t about to blow up in his face. So what the hell is going on over there?
That was the weekend that was
Elon may have acquired Twitter on October 27, but it wasn’t until late last week that things started getting interesting.
Musk initiated a mass layoff at Twitter Friday, November 4, an event described by many employees as chaotic. Reports circled that people were ejected from 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 that the layoffs violated the federal and California state WARN Acts that mandate a 60-day notification period for qualifying mass layoffs, in which Twitter’s is included.
Musk earlier fired Twitter leadership, including CEO Parag Agrawal, within days of taking ownership of the company, and advertisers quickly began to freeze ad spending on Twitter until things settled down, which they most definitely did not do.
By the weekend it became clear to some at Twitter that firing half the company wasn’t a great idea, leading to several dozen people being asked to return to the company for two reasons: Some were laid off on accident, while others were let go before leadership had a chance to realize they were essential to build features Musk wanted for the platform.
Reports quickly emerged that Twitter engineers being asked back were mostly saying no. Those that did agree to return allegedly were mostly foreign individuals working on Visas who would be forced out of the US without a job.
Letting the Musk sink in
The beginning of the week was relatively calm on Twitter, outside of Elon being a poor sport about people impersonating him, announcing that accounts engaging in parodies without making that explicitly clear would be banned without warning.
Monday also saw Musk claim that Twitter users were at an all-time high, possibly in response to the MIT Technology Review publishing research in which it found nearly one million Twitter users had deactivated their accounts since Musk purchased the platform in late October. Twitter says it has about 237 million daily users who are monetizable.
Misinformation on Twitter also surged earlier this week in the lead up to the US midterm elections, which may not have happened had Musk not been in charge of the platform.
On Tuesday, news emerged 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 Musks’ big plans to make more money at 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 checkmark. Blue subscribers’ tweets also appear higher than non-subscribers in searches and replies, turning Twitter into a fee-speech platform.
That paid-for blue checkmark would not come with any actual verification process, and news of the plan caused blowback as people were concerned about the potential for impersonation, like what happened over the weekend that caused Musk to ban “impersonators.”
On Wednesday, Twitter began using the “Official” account label to differentiate paid verification check marks from those that had earned it, but only in certain instances, like high-profile brands.
As that news settled over 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 for earning the trust of advertisers. During the call Musk revealed that he was also considering turning Twitter into a payment platform, taking him back to his PayPal roots. Overall, the call didn’t go great based on what came next.
Wednesday evening and into Thursday morning, Marianne Fogarty, Twitter’s Chief Compliance Officer, Lea Kissner, Twitter’s Chief Information Security Officer, Damien Kieran, the Chief Privacy Officer, and Yoel Roth, head of trust and safety, all walked out, leaving Twitter with little in the way of security or compliance leadership.
Rumors were briefly swirling that Wheeler had also departed, but she has since said she’s still with the company.
The reason for the team’s departure may have to do with the FTC’s eyes turning back toward Twitter, which it has been under an agreement with since 2010 when it was found to have shoddy 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 posted a section of the FTC’s agreement with Twitter that points out the social media platform has to notify the regulator any time it makes product changes. Something that perhaps hasn’t 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 lawyer to Musk, Alex Spiro, allegedly said of compliance concerns that “Elon puts rockets into space, he’s not afraid of the FTC.”
Engineers, the letter said, were being 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 detrimental to Twitter’s longevity,” 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 remote work policy and would force everyone to be in the office “at least” 40 hours a week, beginning the next day.
Regarding that bankruptcy threat, bear in mind Twitter made a $513 million profit in the first quarter of 2022, largely from the sale of MoPub, and a $270 million loss in the second quarter, finishing that period with $2.68 billion in cash equivalents.
President Biden also said the foreign investment that made the Tesla tycoon’s purchase of Twitter possible was “worth being looked at.” Prince Al Waleed bin Talal Al Saud and Qatar Holding, as well as Oracle’s Larry Ellison and others, pitched in funds to support the takeover.
Thursday saw the disappearance of the Official label, and the rollout of the new Twitter Blue program that allowed people to buy a verified checkmark for $8 a month. Twitter also said the blue check would remain for users who were verified under the “legacy” verification system.
Chaos ensued, with brands being impersonated, politicians being parodied as cannibals, and fraud running amuck, just as predicted. Someone with a paid-for blue tick impersonated insulin maker Eli Lilly on Twitter to say the drug was now free, causing the pharmaceutical giant’s stock price to drop six percent after the bogus claim went viral.
Musk also met Twitter staff for the first time yesterday, reportedly telling them much the same that he said in email communications with staff the day prior: Twitter’s finances are in bad shape, the company could collapse, and everyone needs to work harder.
The letter also attempted to answer questions about the state of Twitter’s compliance with FTC mandates. According to Musk, “Twitter will do whatever it takes to adhere to both the letter and the spirit of the FTC consent decree. Anything you read to the contrary is absolutely false.”
Musk’s own lawyer also reportedly tried to reassure staff, saying none of them would be going to jail, regarding 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 “Original” labels were back on select accounts.
Users who earned blue checks by subscribing to Twitter Blue reported them missing, and app watcher Jane Manchun Wong said she no longer saw Twitter Blue verified purchasability in the Twitter API.
As of writing, the option to subscribe to Twitter Blue also appears to have been removed from the app, whereas earlier today it was present, but showed an availability error. Musk has also threatened to take away verified check marks from non-subscribers in the next few months.
It’s reported more than 140,000 accounts had signed up for the latest Twitter Blue suite of features, which nets $13.4 million a year. About 420,000 accounts had verified blue ticks prior to Musk’s takeover. Twitter’s annual revenue was $5 billion in 2021. Let that sink in.
What’s 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, saying “Twitter HQ is great.”
The photo, which Musk said was taken in Twitter’s video arcade and bar area, was tweeted without context before he clarified the location. “Humor” aside, those sorts of jokes aren’t likely to inspire confidence in wary advertisers or eagle-eyed government officials.
One thing is for certain: Musk’s purchase of the company saddled it with $13 billion in debt, making Twitter responsible for $1 billion in interest payments annually. If it seems like Musk is flailing, those financial obligations and the unhappy banks attached to them might be part of the reason. That said, a growing risk of insolvency probably won’t make the world’s (for now) richest man act in a calm, collected manner – expect more flailing.
Now, who’s ready for a nice, quiet weekend? ®