Wednesday, November 30, 2022

Musk Issues a Bankruptcy Warning for Twitter as More Senior Executives Resign and Advertisers Leave

Elon Musk, the new owner of Twitter Inc., raised the prospect of the social media platform going bankrupt on Thursday, capping a chaotic day that included the United States privacy regulator’s warning and the departure of the company’s trust and safety leader.

On his first mass call with employees, Bloomberg News reported that the billionaire said that he could discount the possibility of bankruptcy after buying it for $44 billion, a deal credit experts say has jeopardized Twitter’s finances.

According to three people who saw the email and told Reuters that Musk sent it to the entire company, Twitter will not be able to “survive the upcoming economic downturn” if subscription revenue does not increase to balance out declining advertising revenue. Musk also stated that remote work is no longer allowed and that employees would be required to spend at least 40 hours weekly in the office.

According to Reuters, Yoel Roth, who oversaw Twitter’s efforts to combat hate speech, false Information, and spam on the service, resigned on Thursday.

Lea Kissner, Twitter’s chief information security officer, announced her resignation on Thursday.

Damien Kieran, Twitter’s chief privacy officer, and Marianne Fogarty, its chief compliance officer, submitted their resignations, according to an internal message posted on Thursday to Twitter’s Slack messaging platform and seen by Reuters.

Robin Wheeler, the company’s top ad sales executive, informed employees in a memo that she would stay on.

Following the resignation of Twitter’s three privacy and compliance executives, the United States Federal Trade Commission expressed “deep concern.” These resignations could put Twitter in violation of regulatory orders. In an email sent late Thursday, Musk attorney Alex Spiro assured some employees that Twitter would remain in compliance.

“We spoke to the FTC today about our continuing obligations and have a constructive ongoing dialog,” Spiro announced.

Musk warned Twitter employees in his first meeting with many of them on Thursday afternoon that the platform could lose billions of dollars next year, according to the Information.

Twitter, Musk, and Spiro declined to comment on the potential bankruptcy, the FTC warning, or the departures. After assuming control on October 27, Musk ruthlessly moved to scale down staffing. He claimed that the company is losing more than $4 million daily, primarily due to advertisers leaving after he took over.

Twitter is now $13 billion in debt, with interest payments totaling nearly $1.2 billion over the next year. The expenses exceed Twitter’s most recent cash flow, which was $1.1 billion at the end of June.

Musk told advertisers on Twitter’s Spaces feature on Wednesday that he hoped to turn Twitter into a force for truth and to combat fake accounts. However, more than his assurances are required.

Chipotle Mexican Grill announced on Thursday that it had suspended its paid and owned content on Twitter “while we gain a better understanding of the direction of the platform under its new leadership.” It joined other companies, such as General Motors, that have suspended their Twitter advertising due to concerns that Musk will relax content moderation guidelines.