According to media reports, during an appearance in front of employees on Thursday, he warned that Twitter’s balance sheet could face a billion-dollar gap next year. If, under these circumstances, it is not possible to bring in more money than is spent, “insolvency cannot be ruled out,” Musk said.
Twitter was already in the red before the takeover. After the deal, Musk lamented a slump in sales because some major advertisers suspended ads on the platform. They worry that if Musk relaxes the content rules, as announced, their ads could appear alongside offensive tweets.
Loan of $13 billion
The loan of around $ 13 billion that Musk took out for the purchase also weighs on Twitter. According to media reports, servicing this debt costs around one billion dollars a year. The entrepreneur wants to supplement the advertising revenue, which has so far accounted for 90 percent of revenue, with a subscription business. The launch of his new subscription with a verification check mark initially caused chaos because some users imitated celebrities and companies with deceptively real-looking fake accounts.
Musk had previously warned employees of difficult times in an email. The economic situation is “bad”, especially for a company that depends on advertising revenue. In the memo, Musk also announced new guidelines for working from home – in the future, working from home will only be permitted with his express personal permission. According to the memo, which the US media unanimously quoted from, employees must be in the office at least 40 hours a week.
Musk as an opponent of the home office trend
Before the takeover, Twitter’s employees were allowed to work from anywhere. Musk is considered an outspoken opponent of the home office trend, which he had already made clear at his electric car company Tesla.
Last week, Musk cut about every second of the approximately 7,500 jobs on Twitter. According to the reports, he now said that the company still had too many employees in some cases.
According to media reports, four other key executives left the company on Thursday: Yoel Roth, who was responsible for filtering out objectionable content, Robin Wheeler, who was recently responsible for advertiser relations, data protection officer Damien Kieran and compliance chief Marianne Fogarty. They follow the resignation of Lea Kissner, the former head of information security, who announced her resignation in a tweet early Thursday afternoon.
Trade Commission with concern
The US Trade Commission (FTC) said it was watching Twitter with great concern because three employees in the areas of privacy, information security and compliance had resigned. “No CEO or company is above the law, and companies must abide by our consent resolutions,” Douglas Farrar, director of public affairs at the FTC, told Reuters.
Back in May this year, Twitter agreed to pay $150 million to settle previous FTC allegations. At the time, Twitter is said to have misused private information such as telephone numbers in order to send targeted advertising to users. However, the company assured the FTC that the information was only collected for security reasons.