On Tuesday, the Tesla boss announced a new payment service: For eight dollars a month, users can have their accounts verified with a blue tick (previously this was free), see only half as much advertising and can use additional functions such as longer video messages. They should also be able to bypass the payment barriers on news sites that work with Twitter.
Elon Musk has since moved into Twitter, literally: at the company’s Market Street headquarters in San Francisco, he and his closest advisors – lawyers, venture capitalists, engineers from his other companies, as well as Twitter employees who were once fired – have moved into a “war room” from which from which they conduct discussions with employees and work out the further strategy.
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Layoffs are likely to come first in the talks. The “New York Times” reports 50 percent, the “Washington Post” 25 percent of the workforce to leave. Managers make lists of their most productive and least productive employees. “It seems like there are ten managers for every programmer here,” Musk tweeted Saturday.
In fact, Twitter’s workforce has doubled in the past six years, also due to acquisitions. Several top managers have left voluntarily since the takeover on Thursday, including the head of marketing and the contact person for advertising customers.
Contrary to media reports, however, Musk apparently did not try to cheat numerous employees out of their money by firing them shortly before November 1st – the deadline on which many employees could exercise their stock options. Musk said the reports were false. The responsible office in San Francisco, which should have been informed in advance about such mass layoffs, was not aware of any such plans before the deadline.
Musk has appointed himself CEO
However, Musk is trying to save money by robbing former Twitter executives of their severance pay. The four top executives Musk fired on day one are jointly entitled to $122 million in stock options and other payouts. Musk now accuses them of not doing their job properly; litigation is likely to follow.
The 51-year-old has a completely free hand in all these decisions: the Twitter board of directors was dissolved on Monday and Musk has appointed himself CEO – alongside Tesla and SpaceX, this is his third CEO position, and he also owns the companies Neuralink and Boring Company.
In the first few days as the new boss, Musk initially tried to appease critics. Addressing advertisers, he assured that the platform remains a good environment for ads. “Twitter strives to be the most respected advertising platform in the world, strengthening your brand and growing your business,” he wrote.
He himself wants to transform Twitter into a public marketplace where different opinions can be discussed in a healthy way without violence.
This should be guaranteed by a newly created supervisory body, which will in future decide which content is permitted on the platform and which is not (content moderation). The social network Facebook works in a similar way. The members of this body should “represent very different views,” Musk announced.
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Accordingly, Musk has not yet decided whether he will let Donald Trump back on the platform as announced. For his part, the former president said he was “very glad that Twitter is now in good hands”.
Advertisers are losing patience with Musk
But as is so often the case with Musk, the noble promises did not last long. Musk himself caused a stir over the weekend when he spread false information about the attack on Democratic politician Nancy Pelosi’s husband.
Specifically, he shared with his 113 million followers on Twitter an article from a website notorious for its conspiracy theories that the attacker was in fact the homosexual lover of Pelosi’s husband. “There may be more to the story than meets the eye,” Musk wrote; after an outcry, he deleted the tweet a few hours later.
Likewise, numerous right-wing nationalist users are now testing the limits of what is now permitted, for example by posting more posts with racist abuse against African Americans on Twitter. Yoel Roth, who is responsible for safety and integrity, spoke of a “sudden increase in hateful content”. We are working on taking action against them.
However, several advertisers already seem to be losing patience. Two of the world’s largest advertising companies, Havas Media and Interpublic Group (IPG), advised their clients to Temporarily suspend advertising on Twitter and wait and see how the platform evolves under Musk. “At this time, we cannot say with certainty that Twitter is a safe place for brands,” IPG told clients, according to the Wall Street Journal.
IPG’s customer base includes corporations such as Johnson & Johnson and Coca-Cola; the company’s advertising budget is $40 billion. “Now, if Twitter becomes the home of dimwits, advertisers won’t run away, they will sprint,” advertising market expert Bob Hoffman told the New York Times.
Automaker General Motors (GM) has already announced that it will temporarily suspend its ads on Twitter while “we try to understand the new direction the platform will now take under new leadership.” However, GM is also in direct competition with Musk’s electric car company Tesla.
Twitter has been making losses for years
This week, Musk is meeting with several advertisers in New York for talks. In fact, he cannot afford to alienate advertisers, because advertising is the main artery of Twitter: it has accounted for 90 percent of sales for years; In 2021, that was about $4.5 billion with total sales of $5.08 billion.
Even without a feud with advertisers, Musk faces the Herculean task of making Twitter profitable. Founded in 2006, the company has made a loss in eight of the last 10 years, and the privatization has added $13 billion in debt to the company. Interest on the new debt alone is likely to cost $1 billion annually. By comparison, last year Twitter paid just $50 million in interest on borrowed funds.
In addition, the current market environment is not the easiest for a company as dependent on advertising as Twitter: In view of the looming recession in the USA, many companies are cutting their marketing budgets. New players such as the Chinese platform Tiktok are stealing advertising dollars from the existing social networks.
Musk is considering a comeback for short-video platform Vine
In addition to the new payment service, Musk is considering revitalizing the short video platform Vine. Twitter acquired Vine in 2012 for $30 million on the assumption that Twitter users would like to tweet short, six-second videos as well. However, the service was discontinued in 2016.
The success of the Chinese short video platform TikTok now shows that this was possibly the wrong decision; Youtube and Meta have also recently created their own successful short video formats with Youtube Shorts and Instagram Reels.
“Shall we bring Vine back?” Musk asked his 113 million Twitter followers on Sunday night. More than two-thirds said yes.
According to US media, Musk has now given his programmers a deadline of a few weeks to revive Vine – otherwise they would be fired. In general, Musk seems to be increasing the pressure on the workforce: The employees are required to work twelve hours a day, seven days a week, the broadcaster CNBC reported.
The example shows the pace Musk is now showing on Twitter. Things are unlikely to get any quieter in the next few weeks.
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