Musk warns of Twitter bankruptcy amid flight of company executives

An impressive exodus, in the style of "the last one to turn off the light", describes the chaos that has settled in the control room of Twitter under the baton of the unpredictable Elon Musk.

Thomas Osborne
Thomas Osborne
10 November 2022 Thursday 22:32
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Musk warns of Twitter bankruptcy amid flight of company executives

An impressive exodus, in the style of "the last one to turn off the light", describes the chaos that has settled in the control room of Twitter under the baton of the unpredictable Elon Musk.

After the mass layoffs, at least half a dozen executives, responsible for areas as relevant as privacy and security, resigned in the last two days to continue in the company and did so citing fear for their future in the face of the tumultuous and volatile leadership of the new owner. It's as if they think it's better to leave than wait for the ship to sink.

Amid the warnings launched this Thursday by Musk that "the platform lacks enough money to survive" and where he even mentioned the term "bankruptcy" as a possibility, the massive march of managers made the regulators of The Federal Trade Commission (FTC) warned that they could intervene in the face of “deep concern” about the development of events.

Robin Wheeler, until now vice president of customer service, joined Musk on Wednesday in a conversation via Space with advertisers. The appointment was convened to try to calm them down at a time when they are also fleeing for fear that the social network will become an open bar for the dissemination of toxic content without any filter. Wheeler tried to get her boss to focus on security and content moderation issues, but he was only concerned with the product, its marketing and profitability.

The next day, Wheeler was one of three to resign. “Confidence is gone,” she noted. That same day he was followed by Kathleen Pacini, head of human resources, and Yoel Roth, head of security. Roth had become the public face of the company in its efforts to reassure users and advertisers that Twitter would not fall for the “anything goes” scenario. At the first meeting he had enough and slammed the door.

His resignation was preceded on Wednesday by three other resignations. They asked for the settlement Lea Kissner, director of information security; Damien Kieran, head of the privacy department; and Marianne Fogarty, head of the regulatory compliance office.

The three waived the day before a deadline for Twitter to submit a compliance report to the FTC that oversees privacy practices at the company as part of the settlement signed in 2011.

Thanks to this pact, the social network reviews its news for possible privacy problems prior to its release to users, which is a way to avoid sanctions from the aforementioned federal commission.

The FTC indicated that it is vigilant and ready to take action if the company does not comply with the agreement of the so-called "consent order", which forces the social network to apply privacy and security requirements due to past allegations of use improper data.

This is also the second warning in two days. US President Joe Biden responded on Wednesday that Musk's relations with other countries "deserve a deep examination." The Tesla tycoon maintains very good relations with China for his electric cars.

“No CEO or company is above the law and companies must follow our consent decrees,” Douglas Farrar, director of public relations for the FTC, said in a statement Thursday. “Our revised consent order gives us new tools to ensure compliance and we are prepared to use them,” he added.

However, given the rapidity in product development under Musk's leadership, Twitter's privacy managers consider that engineers may be forced to self-certify these innovations, "on which pressure and risk rests," according to a post. of a network employee revealed by the journalist Casey Newton, founder of the publication Platformer. "All this is very dangerous for our customers," said that employee in his internal message.

He further wrote that the new owner only cares about recovering the losses it is incurring as a result of failing to break its binding obligation to buy Twitter.

At Thursday's meeting, Musk assured that the company had a negative cash flow of several million dollars, without specifying. In this context he mentioned that resorting to bankruptcy or insolvency "is not out of the question." He added that he recently sold $4 billion worth of Tesla stock to save the platform from the chirping bird.

Twitter has lost money for eight of the last ten years and its revenue growth, 90% of which comes from fleeing or scared advertisers, has not been as substantial as that of its competitors. Musk also loaded the company with a debt of 13,000 million for the purchase and faces the obligation to pay one billion annually in interest. He once said that the platform loses four million dollars a day.

His diagnosis is that without revenue from subscriptions ($8 a month for online account authenticity tags), "the company won't survive the next recession."