Twitter Facing Dire Problems On Multiple Fronts

Jack Dorsey, co-founder of TwitterTWTR
Inc. must be having a number of very bad hair days. After agreeing to roll his completely liquid shares of Twitter worth almost $1 billion into the new private company, Elon Musk has managed in less than two weeks to:

· Alienate a number of major advertisers;

· Lay off almost half of its staff;

· Tell workers they can no longer work remotely;

· Possibly violated an agreement with the Federal Trade Commission (FTC) which has the ability to issue billions of dollars in fines;

· Sent out a very bleak outlook for the company on Wednesday, one day prior to a town hall meeting in which he said the company was bleeding billions of dollars and could end up filing for bankruptcy.

This came just one day after Musk emailed staff on Wednesday that, “the economic picture ahead is dire.” He added that he planned to end Twitter’s remote work policy and come into the office at least 40 hours per week.

This will likely drive more employees away who have moved to an area with a lower cost of living. With interest rates still climbing, this is not a good time to be looking for a new mortgage.

The bankruptcy issue, while seemingly an off-the-cuff remark, is likely to make numerous bankers squeal who loaned Twitter billions of dollars and planned to unload the debt to secondary markets. With interest rates soaring, bankers would have had to take a huge hit even before the alarming comment by Elon Musk. However, according to Dealbook, investors are only offering the banks 60 cents on the dollar for the Twitter debt.

One of the most shocking things about Elon Musk’s numerous financial moves at Twitter was the news, first reported by Bloomberg on 11/17, that Musk fired more than 90% of Twitter’s staff in India, which has notoriously cheap labor.

In another odd move, he has authorized several department heads to invite some people who were fired to return back to their job, a move which was too late for the team which was decimated that had previously been covering and making sure there was no disinformation regarding the 2022 mid-term elections which occurred on November 8.

Apart from labor woes, Musk is suffering from an exodus of major advertisers. Musk called a meeting with them last week and tried, unsuccessfully, to get them to embrace Twitter as an ad platform.

Lou Paskalis, the president of MMA Global tweeted after the meeting, “I think we are seeing a tale of two Elon’s. The Elon that I met on a group call on Thursday was charming, measured and seemed to understand the important role advertisers play in Twitter’s financial viability. Subsequent to that we’ve seen a very mercurial and reactive Elon. Paskalis later found that his Twitter account was blocked after he asked a series of pointed questions.

A widely respected technology podcaster with 1.4 million followers tweeted that chief marketing officers paused and/or shifted their budgets during the Musk call because of the uncertainty.

Other complaints from advertisers are that there is no Chinese wall in place to protect advertisers data from Tesla making it to the Twitter team. There is clearly a lot of comingling of Tesla employees with Twitter employees which just makes the possibility of leaked information more likely.

As if employee and advertiser issues are not enough, Elon Musk made changes to Twitter which bypassed its standard data governance processes. That’s a definite no-no following the settlement reached with the Federal Trade Commission, FTC, after Twitter was caught using personal user info to target ads.

This was very ill timing—The Wall Street Journal reported on November 11 it plans to expand its use of a century-old statute allowing it to bring more lawsuits against companies it believes are using anticompetitive practices.

A Twitter lawyer is now telling any employees who feel uncomfortable about what they are being asked to do to seek whistleblower protection. Chief Privacy Officer Damien Kiernan, Chief Information Security Officer Lea Kissner and Chief Compliance Officer Marianne Fogarty have all resigned, “The Verge” has confirmed.

An attorney on the Twitter privacy team wrote on a public Slack page viewable to all staff “Elon has shown that his only priority with Twitter users is how to monetize them. I do not believe he cares about the human rights activists, the dissidents, our users in un-monetizable regions, and all the other users who have made Twitter the global town square you have all spent so long building and we all love.”

In all likelihood the attorney sought whistleblower protection prior to posting the inflammatory note. Others are likely to follow suit after Musk’s legal department asked engineers to “self certify”that they are in compliance with FTC rules and other privacy laws. The FTC consent order requires the company to do privacy reviews before making any changes to the product.

After The Verge published its story, an unnamed FTC spokesperson issued a statement that said the FTC was “tracking recent developments at Twitter 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 prepared to use them.”