Twitter bankruptcy ‘not out of the question’ as senior execs flee
Several high-profile resignations, following a halving of the company's workforce and reported cash flow issues, calls Twitter's immediate survival into question
Twitter has sustained an exodus of senior company officials, amidst growing concerns about the direction of the company under the management of CEO Elon Musk, alongside questions around the company's financial viability.
Staff who have reportedly resigned include Twitter’s chief information security officer (CISO) Lea Kissner, chief privacy officer, Damien Kieran, chief compliance officer, Marianne Fogarty, and head of trust and safety, Yoel Roth, prompting concerns about an absence of crucial safety leadership at the company.
In recent weeks, Roth has aimed to be a voice of calm, tweeting regular updates on the work Twitter has been doing to reduce hate speech and defending the widely-criticised introduction of paid verification, which comes as a feature of the $8 per month Twitter Blue subscription tier. His unexpected resignation, alongside many of his colleagues, speaks to the current volatility within Twitter.
Within the same 24 hours, Musk is understood to have been frank about the unstable financial situation of the company on an all-hands call with Twitter employees. Zoë Schiffer, managing editor at Platformer, tweeted that “Musk just told Twitter employees he’s not sure how much run rate the company has and ‘bankruptcy isn’t out of the question’”.
Just a week prior, Musk fired 50% of Twitter’s employees, later tweeting an explanation that “unfortunately there is no choice when the company is losing over $4M/day [sic]”. At the same time, Reuters reported Musk had ordered employees to find $1 billion in Twitter infrastructure savings immediately, indicative of the company's urgent financial status.
Companies could also pull their advertising from the platform, as paid verification makes reputational damage by imposter accounts easier than ever. A number of high-profile company Twitter accounts have been convincingly-imitated since the change was made, including Apple TV, Nintendo and pharmaceutical firm Eli Lilly and Company. Although some seek only to confuse users and satirise company comms, others are using their convincing fakery to promote cryptocurrencies, or push phishing links.
General Mills, Pfizer, and General Motors are understood to have paused advertising already, cutting into a key source of revenue for Twitter — advertising accounted for 91% of all the company's revenue in Q2 2022.
With key security officials now having left the company, the Federal Trade Commission (FTC) is reported to be watching the resignations closely, and monitoring the continued adherence of the company to regulatory orders. In May, the FTC issued an order to Twitter, requiring the firm to pay a $150 million fine for using its users’ phone numbers and email addresses to serve targeted ads.
The order also required Twitter to implement an improved information security programme, and required the company to allow independent third-parties to carry out privacy and security assessments.
"We are tracking recent developments at Twitter with deep concern," Douglas Farrar, director of public affairs at the FTC, told Reuters.
"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.”
Another high profile figure reported to have resigned was Robin Wheeler, VP Twitter client solutions, who is directly charged with ad sales and the company’s relationship with advertising customers. However, these reports were apparently premature, with Wheeler having tweeted “I’m still here,” indicating her continued presence at the company on the evening of 10 November.
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It has been widely reported that Musk also sent employees an email on the morning of resignations, stating that employees would no longer be given the choice to work from home. In audio obtained by ABC News, Musk is heard saying: “If you can show up at an office and you do not show up at the office: resignation accepted. End of story."
Implementing this new policy would face significant challenges if applied in the UK, according to Kevin Poulter, employment partner at law firm Freeths.
“Employees may have previously varied their working practices, in writing or by custom and practice," Poulter told IT Pro. To change that unilaterally, with Musk as the only arbiter, will not sit well. It also undermines the right all employees with 26 weeks’ continuous employment have to request flexible working and for it to be granted unless there are limited reasons to refuse.
“It is doubtful that this approach will do anything to improve the prospects of a progressive and collegiate culture at Twitter, or stem the voluntary flow of resignations already announced by employees on the very platform from which they are departing.
“This was underlined by a warning, if not a threat, to employees that ‘bankruptcy is not out of the question’. It is important for employers to be open and transparent with staff, but it is only helpful when there is an already established relationship of community and trust. Leading on a threat is not likely to build confidence in the already significantly reduced workforce and may, in and of itself, be the reason Twitter falls.”
The news comes just a week after a wave of redundancies at Twitter, attributed to cost-saving measures. Employees had been notified the evening prior to the announcement they would find out the status of their employment by the next morning via email. But some such as company machine learning (ML) and algorithmic bias expert Rumman Chowdhury, became aware of their newfound redundancy beforehand as they lost access to their company email, or were remotely logged out of their Twitter Slack accounts or had business laptops remotely wiped.
Will Oremus from the Washington Post tweeted a copy of the notice, which was notably signed “Twitter”. In the hours following the redundancies, Musk faced criticism for failing to attach his name at the bottom, as has been the case with other recent cases such as Meta’s mass-firing of 11,000 employees.
Musk acquired Twitter on October 27, and quickly fired CEO Parag Agrawal and chief financial officer Ned Segal. In the weeks since this event, the social media platform has undergone a series of changes, such as the aforementioned introduction of paid verification, as well as the brief use of a secondary ‘official’ tag to separate known public figures from those who have paid for a blue tick.
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