Elon Musk on Thursday urged Twitter employees to prepare for “tough times,” warning that the company could go bankrupt if it doesn’t find new ways to make money.
According to a report by Platformer and Bloomberg, Musk said at a staff meeting Thursday that Twitter was losing money and that “bankruptcy is not out of the question.”
The revelations marked another turbulent day since Musk took control of the social media platform.
Late Wednesday night, Musk sent his first email to employees, urging them to stop working from home and show up at the office Thursday morning, reversing the work-from-anywhere policy implemented by Twitter during the pandemic.
“Sorry this is my first email to the entire company, but there’s no way to whitewash the message,” Musk wrote, before describing a poor economic climate for companies like Twitter, which rely almost entirely on advertising .
“Without significant subscription revenue, there’s a good chance Twitter won’t survive the upcoming economic downturn,” Musk said. “We need about half of our subscription revenue.”
The following day, Musk called his first “all hands” meeting, at which he gave a somber assessment of the company’s finances and outlined the necessities of personal work.
Musk said that while “exceptional” workers would be allowed to work remotely, others who didn’t want to could quit, said an employee at the meeting, who spoke on condition of anonymity out of concern for job security. Musk himself is known for putting in grueling workweeks and has claimed to have worked 120-hour weeks, including all 24 hours of his 47th birthday.
“He wasn’t a fan of remote work to begin with,” MarketWatch reporter Andrew Keshner told CBS News.
Elon Musk fires top executives after Twitter takeover 02:21
Layoffs, then layoffs
Half a dozen high-profile executives left Twitter this week after about 3,700 layoffs, or half of Twitter’s workforce, were devastated last week.
Departures include Twitter Chief Privacy Officer Damien Kieran; its Chief Compliance Officer, Marianne Fogarty; and its Chief Information Security Officer, Lea Kissner, who tweeted Thursday, “I have made the difficult decision to leave Twitter.”
Recent resignations include that of Twitter’s head of trust and safety, Yoel Roth, a previously little-known executive who became the public face of the company’s content moderation after Musk acquired it. An executive confirmed to colleagues Roth’s resignation on an internal message board viewed by The Associated Press.
Roth’s resignation is a “huge loss” to Twitter’s reliability and integrity, his former colleague and friend Emily Horne said.
“He has worked incredibly hard under very challenging circumstances, including personal attacks from some of the most vicious trolls active on the platform,” said Horne, who oversaw global political communications at Twitter until 2018. “He persevered through all of this because he believed so strongly in his team’s work to foster a public conversation and improve the health of that conversation.”
Twitter is urging dozens of former employees to return days after massive layoffs at 6:11 a.m
Since the layoffs, Twitter has urged some of the laid-off employees to return. Meanwhile, experts say the drastically reduced headcount will likely make it more difficult for the platform to meet its legal obligations to ensure user privacy.
Cybersecurity expert Alex Stamos, a former Facebook security chief, tweeted Thursday that there was a “serious risk of breach with drastically reduced staffing,” which could also put Twitter at odds with a 2011 Federal Trade Commission order that it required to take serious action data security expires.
“Twitter has made great strides toward a more rational internal security model, and a backslide will land them in trouble with the FTC and other regulators in the US and Europe,” Stamos said.
FTC is watching
The FTC said in a statement Thursday that it was “following recent developments on Twitter with great concern.”
“No CEO or company is above the law, and companies are required to follow our consent regulations,” the agency’s statement said. “Our revised Consent Order gives us new tools to ensure compliance and we stand ready to use them.”
The FTC declined to say whether it is investigating Twitter for possible violations. If so, she has the authority to request documents and dismiss employees.
In an email to staff seen by the AP, Musk said, “Twitter will do everything it can to comply with both the letter and the spirit of the FTC consent decree.”
“Everything you read to the contrary is absolutely wrong. The same goes for all other government regulatory affairs that Twitter engages in,” Musk wrote.
Twitter was fined $150 million in May for violating the 2011 Consent Order. The updated version introduced new procedures that required the company to implement an enhanced privacy program and improve information security. The new procedures also require the company to provide an exhaustive list of disclosures that Twitter is required to make to the FTC when it introduces new products and services — particularly when they involve personally identifiable information collected about users.
“If Twitter even sneezes, they have to do a privacy review first,” tweeted Riana Pfefferkorn, a Stanford University researcher who said she previously deployed Twitter outside of legal process
MoneyWatch: Twitter delisted from the New York Stock Exchange 06:51
Musk is fundamentally revamping the platform’s offerings and it’s unknown if he’ll be telling the FTC. Twitter, which gutted its communications department, did not respond to a request for comment from the AP on Thursday.
The lucrative CEO, who has been fined in the past for reckless tweets, has a history of taking on regulators. “I don’t respect the SEC,” Musk said in a 2018 tweet, citing the Securities and Exchange Commission.
The consequences of failing to meet FTC requirements can be dire — like when Facebook was fined $5 billion for data breaches.
Appeal to fleeing advertisers
Musk’s memo and staff meeting echo a live-streamed conversation on Twitter Spaces on Wednesday, in which Musk sought to reassure advertisers who have fled Twitter, citing a spike in hate speech on the platform since late last Month had taken control of it and fired its top executives.
Advertisers such as Oreo maker Mondelez, Allianz, Audi, General Mills, GM, United Airlines and Pfizer have paused their ads on the platform, causing a major liquidity crisis for the company. More are to follow.
In his live stream, Musk claimed that hate speech on the platform has declined since his acquisition, asking advertisers to be patient, warning them the company will be doing “a lot of stupid things” in the coming weeks.
“If we don’t take bold steps, how can we make big improvements? We have to be adventurous here and I think we’ll make really big leaps,” he said.
Currently, Twitter relies solely on advertising to generate revenue. Musk’s goal is to cut that amount in half while raking in more money through subscriptions. In Thursday’s email, Musk told employees that the “priority in the last 10 days” was to develop and launch Twitter’s $8 monthly subscription service, which has a blue tick next to the name of the includes paying members – the mark was previously only awarded to verified accounts.
The project had a bumpy rollout as newly purchased fake accounts this week attempted to impersonate high-profile figures such as basketball star LeBron James and drug company Eli Lilly.
In a second email to employees, Musk said the “absolute top priority” in the coming days is to ban “bots/trolls/spam” that are exploiting the verified accounts system.
On Friday, the rollout of new subscription service Twitter Blue, a flood of fake accounts was frozen by the company, according to Tech Reporter Zoe Schiffer.
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