Musk warns of Twitter bankruptcy as executives quit
November 11, 2022
Tesla tycoon Elon Musk says Twitter is bleeding $4 million every day and that it could face the threat of bankruptcy. Meanwhile, key security executives resigned from the platform — drawing a warning from US regulators.
In an email calling for his first "all-hands" meeting, the billionaire warned employees that Twitter would not survive for long if they didn't find new ways to make money.
"Sorry that this is my first email to the whole company, but there is no way to sugarcoat the message. Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn," Musk said.
According to a Bloomberg report, Musk told his employees that he could not rule out bankruptcy only two weeks after he bought the social media company for $44 billion (€43.2 billion).
What's been happening at Twitter?
Some of Twitter's advertisers — its main source of revenue — have stayed away from the company since Musk took over, driving down revenue.
Meanwhile, features such as an $8 subscription for the coveted blue tick, along with a new grey official badge for high-profile accounts, have run into problems.
The subscription model led to an increase in fake accounts posing as known figures such as James LeBron and former British Prime Minister Tony Blair. Musk scrapped the grey badge almost immediately.
The social media platform is losing $4 million every day, Musk told employees.
The social media giant is currently $13 billion in debt, which demands a $1.2 billion interest payment in the next 12 months. That is higher than Twitter's most recent cash flow of $1.1 billion, according to financial documents, as of June 30.
Yoel Roth, Twitter's head of trust and safety resigned via Slack, just a day after defending Musk's content moderation policies to advertisers. The string of exits includes Twitter's Chief Privacy Officer Damien Keiran and Chief Information Security Officer Lea Kissner. The latter tweeted her decision on Thursday.
Robin Wheeler, a key executive who connected Twitter to advertisers and was seen as one of Musk's biggest supporters in the company, was initially reported to have left. However, she later tweeted that she was staying.
Warning from regulator
Twitter is once again in the crosshairs of the US Federal Trade Commission (FTC) — a regulator whose key role is to protect customers. In a statement on Thursday, the body said it was "tracking recent developments at Twitter with deep concern" and that "No CEO or company is above the law."
It further pointed out that companies must follow the regulator's consent decrees or risk steps to ensure compliance. The FTC has not announced an official investigation into Twitter's recent moves yet.
In May, Twitter paid $150 million for violating an agreement with the FTC which requires it to ensure user privacy protection and provide more information on security. It is not clear if Musk has been disclosing information about Twitter's new features to the FTC.
Former Facebook security chief Alex Stamos raised similar concerns in a tweet. "There is a serious risk of a breach with drastically reduced staff," he wrote.
Musk reportedly denied any decree violation in an internal letter cited by the AP news agency.