The arrival of Elon Musk at the helm of Twitter has plunged the company into a chaotic period. While many advertisers have decided to leave the platform, thousands of workers, who sometimes work in key sectors of the company, are being laid off. The situation is such that the American authorities could be involved.
Executives, employees, self-employed … Thousands of departures
After buying Twitter for $ 44 billion, Elon Musk came to the company headquarters very brazenly and made radical changes directly. In addition to firing several executives of the platform, he has also separated half of his staff, often in divisions related to security or moderation on the social network.
Now, this wave of layoffs is also hitting freelancers who are employed by Twitter on a fixed-term basis. According to CNBC, some 4,400 of Twitter’s 5,500 contract workers were fired under questionable conditions, as they simply realized that their access to the platform’s computer systems had been cut off. Some employees fired by Musk suffered the same misfortune: they realized they were fired because they could no longer access their work inbox or the company’s internal systems.
Upstream, many leaders have decided to leave the company. These include important executives such as Lea Kissner, head of IT security or Yoel Roth, head of customer trust and emblematic figure of Twitter. In addition, the company also lost its Chief Privacy Officer, Damien Kieran, and its Chief Compliance Officer, Marianne Fogarty.
Advertisers are cutting their spending
These many starts are causing great concern among advertisers, who are increasingly likely to pause their advertising campaigns on social networks and prefer to invest in rivals such as TikTok or Instagram. This is the case, for example, of Chipotle, General Mills, General Motors, Volkswagen, Mondelez or even United Airlines.
Worse still for Twitter, one of the world’s largest ad agencies, Omnicom, which represents giants like Apple, PepsiCo, or McDonald’s, is now advising its customers to cut back on the platform. GroupM, the largest ad buying agency in the world, further told its clients that Twitter is an investment for ” high risk “In question, the numerous layoffs and departures, as well as the multitude of verified accounts usurping the identity of the brands. The latter element comes from the modification of the Twitter Blue subscription offer, which now offers the blue dot, normally provided for authenticate an account, to anyone who signs up to the platform for $ 8 a month. In the end, Musk wants this system to account for half of the social network’s revenue.
The new Twitter Blue has already caused a stir on Twitter when a verified account posing as the pharmaceutical company Eli Lilly posted a tweet stating its “ insulin is now free The post went viral and remained on Twitter for at least two hours before being removed. The company saw its share price mistreated.
These drawbacks fall very badly: We are entering a pivotal time of year for Twitter, during which it is negotiating long-term contracts with its largest advertisers. They generate more than 30% of the company’s advertising revenue in the United States, reports the Wall Street newspaper. In 2021, advertising provided 89% of Twitter’s $ 5.08 billion in revenue.
For his part, Elon Musk is trying to reassure the brands and certifies that the number of active users of the platform is at the highest in its history, but for the moment his efforts seem in vain. Additionally, SpaceX, another billionaire-run company, has just acquired one of the largest advertising offerings available on Twitter for $ 250,000. The goal of the campaign: to promote Starlink in Spain and Australia. This order is rather unusual for the company, as Twitter faces the exodus of its largest advertisers.
The use of Twitter continues to grow. One thing is certain: it’s not boring!
– Elon Musk (@elonmusk) November 10, 2022
Elon Musk wants to turn Twitter into a payment system
The current situation does not seem to reassure Elon Musk who, in his first email sent to employees, mentioned a possible bankruptcy as well as an economic situation ” terrible For these reasons, the entrepreneur no longer wants Twitter to depend so much on advertising. In addition to the subscription system, imagine a future where the platform would be a super application like WeChat in China.
Last week, Musk sat down with his employees and detailed his vision of Twitter, which he also wants to transform into a means of payment with debit cards and bank accounts linked to the service. ” I think there is this transformation opportunity in payments. And the payments are really just an exchange of information. Informationally, there isn’t much difference between, say, sending a direct message and sending a payment. […]. So this is a direction we will take, allowing Twitter users to send money anywhere in the world, instantly and in real time. We just want to make it as useful as possible “, he has declared.
These words are not surprising; on several occasions Musk has confessed his admiration for Chinese super-applications, and has also spoken of his desire to develop an application ” able to do anything called X. Presumably, Twitter would be integrated into this. Many regulatory hurdles must first be overcome by the platform before achieving such a result, and it must also stand up when the current environment is not quite favorable to it.
The FTC is lurking
Musk may also face another problem in the coming months. In a statement, a representative of the Federal Trade Commission (FTC) explained that the agency was keeping an eye on the actions of the leader and Twitter: ” We are following recent Twitter developments with deep concern. 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 ready to use them “.
The FTC is referring here to a deal made with Twitter in 2011 after the company was accused of misleading users about how their phone numbers were used to sell ads. Subsequently, the company committed to implementing privacy protection measures and reporting on an information security program by presenting all its new features to the authorities prior to implementation.
The departure of many leaders worries the authorities, who believe that Twitter risks not respecting this agreement anymore. According to a media survey CNBCinternal employees fear that the FTC will impose significant fines on Twitter that could amount to several billion dollars.
For now, the weather is far from good on Twitter. It is not yet clear whether Elon Musk will be able to keep the social network afloat and transform it as he sees fit. If his experience in entrepreneurship works in his favor, the situation remains very complex and his evolution almost impossible to predict.