Elon Musk warns Twitter could face bankruptcy as top executives leave

Elon Musk told Twitter staff on Thursday to prepare for “difficult times ahead” and warned that the company could go bankrupt if it doesn’t find new ways to make money.

Speaking at an all-employee meeting on Thursday, Musk said Twitter was losing money and that “bankruptcy is not out of the question,” according to reports from Platformer and Bloomberg.

The revelations marked another post-Musk whirlwind took control of the social media platform.

Late Wednesday night, Musk sent his first email to employees, asking them to stop working from home and report to the office Thursday morning, reversing the work from anywhere policy Twitter implemented during the pandemic.

“Sorry this is my first email to the whole company, but there’s no way to cover the message,” Musk wrote, before describing a tough economic climate for businesses like Twitter that rely almost entirely on advertising.

“Without significant subscription revenue, there’s a good chance Twitter won’t survive the coming economic downturn,” Musk said. “We need about half of our revenue to be subscription.”

The next day, Musk called his first all-hands meeting, where he gave a bleak assessment of the company’s finances and expanded the personal work requirement.

Musk said that while “great” employees could work remotely, others he didn’t like 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 grueling work weeks and has claimed to have worked 120 hour weeksincluding all 24 hours of his 47th birthday.

“He’s never been a fan of remote work to begin with,” MarketWatch reporter Andrew Keshner told CBS News.


Elon Musk lays off top executives after Twitter acquisition

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Layoffs and then resignations

Half a dozen high-profile leaders quit Twitter this week after the carnage of about 3,700 layoffs last weekor half of Twitter’s capital count.

The departures include Twitter’s chief privacy officer, Damien Kieran. Head of Compliance, Marianne Fogarty. and Chief Information Security Officer Lea Kissner, who tweeted Thursday that she had “made the difficult decision to leave Twitter.”

The latest resignations also include that of Yoel Roth, Twitter’s head of trust and security, a previously little-known executive who became the public face of the company’s content oversight after Musk took over. An executive confirmed Roth’s resignation to colleagues on an internal message board seen by The Associated Press.

Roth’s resignation is a “tremendous loss” to Twitter’s credibility and integrity, said his former colleague and friend Emily Horn.

“She has worked incredibly hard under very difficult circumstances, including personally targeting some of the most vicious trolls active on the platform,” said Horne, who oversaw Twitter’s global policy communications until 2018. “She stuck through it all. because he believed so deeply in the work his team was doing to advance a public conversation and improve the health of that conversation.”


Twitter is asking dozens of former employees to return days after mass layoffs

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After the layoffs, Twitter asked some of those laid off to return. In the meantime, experts say the dramatically reduced headcount will likely make it harder for the platform to meet its legal obligations to ensure user data privacy.

Cybersecurity expert Alex Stamos, Facebook’s former security chief, tweeted Thursday that there is a “serious risk of a breach with drastically reduced staff” that could also bring Twitter into conflict with a 2011 order from the Federal Trade Commission that required to address serious data security gaps.

“Twitter has made huge strides toward a more streamlined internal security model, and backing down will put them in trouble with the FTC” and other regulators in the U.S. and Europe, Stamos said.

The FTC is watching

The FTC said in a statement Thursday that it is “following the recent developments on Twitter with deep concern.”

“No CEO or company is above the law and companies must follow our consent decrees,” the agency’s statement said. “The revised consent order gives us new tools to ensure compliance, and we are ready to use them.”

The FTC would not say whether it was investigating Twitter for potential violations. If he was, he has the power to demand documents and remove officials.

In an email to employees seen by the AP, Musk said that “Twitter will do whatever it takes to comply with both the letter and the spirit of the FTC’s consent decree.”

“Anything you read to the contrary is completely false. The same goes for any other government regulatory issue where Twitter operates,” Musk wrote.

Twitter paid a $150 million fine in May for violating the 2011 consent order. Its update established new procedures requiring the company to implement an improved privacy program as well as strengthen information security. The new procedures also require the company to include an exhaustive list of disclosures Twitter must make to the FTC when it introduces new products and services — particularly when they affect personal data collected about users.

“If Twitter sneezes this much, it needs to do a privacy check beforehand,” tweeted Riana Pfefferkorn, a researcher at Stanford University who said she previously provided Twitter outside of legal advice.


MoneyWatch: Twitter delisted from New York Stock Exchange

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Musk is essentially revising the platform’s offerings, and it’s not known if he’s telling the FTC. Twitter, which disbanded its communications division, did not respond to a request for comment from the AP on Thursday.

Mercurial’s CEO, who has been fined for cavalier tweets in the past, has a history of tangling with regulators;. “I have no respect for the SEC,” Musk said in a 2018 tweet, referring to the Securities and Exchange Commission.

The consequences for not complying with the FTC’s requirements can be severe — like when Facebook had to pay $5 billion for privacy violations.

Appeal to absconding advertisers

The memo and meeting of Musk’s staff echoed a live chat on Twitter Spaces on Wednesday, in which Musk sought to reassure advertisers, who have leaving Twitter, citing an increase in hate speech on the platform after taking over late last month and firing its top executives.

Advertisers included Manufacturer of Oreo MondelezAllianz, Audi, General Mills, GM, United Airlines and Pfizer have stopped advertising on the platform, leading to major cash crunch for the company. More are expected to follow.

In his live stream, Musk argued that hate speech has decreased on the platform since he took over and asked advertisers to be patient, warning them that the company will be doing “a lot of dumb things” in the coming weeks.

“If we don’t make bold moves, how are we going to make big improvements? We have to be adventurous here and then I think we’re going to make really big leaps,” he said.

Currently, Twitter relies solely on advertising for revenue. Musks goal is to cut that amount in half while bringing in more money from subscriptions. In Thursday’s email, Musk told employees that a “priority over the last 10 days” was to develop and launch Twitter’s $8-a-month subscription service, which includes a blue checkmark next to the name of paying members — previously the only verified accounts were badged.

The project has had a bumpy ride as new fake accounts this week tried to impersonate high-profile figures like 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 stop “bots/trolls/spam” exploiting the verified account system.

On Friday, the development of the new subscription service, Twitter Blue, a flood of fake accounts had been frozen by the company, according to the technology reporter Zoe Schiffer.

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