Elon Musk raises possibility of bankruptcy at Twitter, as entire privacy and compliance team resigns prompting FTC warning
Twitter’s new owner Elon Musk has raised the possibility of the platform going bankrupt during his first mass email with the platform’s remaining staff.
Bloomberg reported that during his first staff interaction, he warned the workforce about lost perks (Musk has already banning working from home) and the prospect of 80-hour weeks.
Meanwhile mass resignations among Twitter’s privacy and security teams, prompted a spokesperson for the Federal Trade Commission (FTC) to say the federal agency is closely watching Elon Musk’s moves at Twitter with “deep concern”.
On Thursday, Musk in his staff email raised the possibility of the social media platform going bankrupt, reportedly telling staff that “bankruptcy isn’t out of the question”.
“Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn,” Musk reportedly said in the email. “We need roughly half of our revenue to be subscription.”
It comes as major advertisers pause or withdraw their advertising spend with Twitter, amid concern at recent developments at the firm and Elon Musk’s free speech approach, which they fear will allow for unsuitable content to appear alongside their advertising.
This is a serious issue for the platform, as currently 90 percent of Twitter’s revenue reportedly stems from advertising fees.
Musk earlier this week confirmed that advertising spending at Twitter was “massively down.”
YouTube it should be remembered was in 2019 hit hard, after big name brands pulled their advertising from the platform over concerns ads were being displayed alongside extremist content. YouTube rapidly resolved the issue.
Credit experts also point out that as Musk purchased Twitter for $44bn, that deal has left Twitter’s finances in a precarious position, Reuters reported.
Thursday began with the news that three top security officials – chief information security officer Lea Kissner, chief privacy officer Damien Kieran and chief compliance officer Marianne Fogarty, had all resigned.
Their resignations prompted a warning from the Federal trade Commission (FTC) – more on this below.
After those resignations, Yoel Roth, the head of safety and integrity who since the Musk takeover had been deputised to publicly address concerns advertisers and users had about the platform, became the latest executive to leave the company.
This was a surprise as Roth had emerged as part of Musk’s new leadership team. He oversaw Twitter’s response to combat hate speech, misinformation and spam on the service,
But he resigned on Thursday, two people familiar with the matter told Reuters. In his Twitter profile on Thursday, Roth described himself as “Former Head of Trust & Safety” at the company.
Meanwhile it has been reported that Twitter’s head of client solutions, Robin Wheeler, had also handed in her resignation, but had been persuaded to stay by Musk himself.
She later tweeted “I’m still here.”
I’m still here.
— Robin Wheeler (@robinw) November 11, 2022
It was speculated online that all of these resignations allegedly came from the team that would have had to certify “personally” that Twitter was complying with the privacy protections required by the FTC, and they weren’t willing to do that and therefore all of them had resigned.
This resulted in the Federal Trade Commission issuing a very public statement, stating it is closely watching Twitter’s moves under Elon Musk.
That May FTC settlement had built on a 2011 agreement binding the company to install reasonable privacy safeguards and be accountable for an information security program.
In May 2022, when Twitter agreed to pay a $150 million penalty for allegedly deceiving users about how their phone numbers would be used to sell ads, the FTC gained new concessions. Under that order, Twitter reportedly agreed to install an enhanced privacy program and information security program with specific requirements.
If Twitter doesn’t comply with that agreement, the FTC can issue fines reaching into the billions of dollars, according to a lawyer’s note to staff.
In the note posted to Twitter’s Slack and viewable to all staff that was obtained by The Verge, the lawyer on the company’s privacy team wrote, “Elon has shown that his only priority with Twitter users is how to monetize them. I do not believe he cares about the human rights activists. the dissidents, our users in un-monetizable regions, and all the other users who have made Twitter the global town square you have all spent so long building, and we all love.”
Amid all this, the FTC said it was watching Twitter with “deep concern” after the three privacy and compliance officers quit. Those resignations potentially put Twitter at risk of violating regulatory orders.
“We are tracking recent developments at Twitter with deep concern,” an FTC spokesperson was quoted by CNBC as saying in a statement. “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.”
Musk attorney Alex Spiro meanwhile reportedly told some employees in an email late on Thursday that Twitter would remain in compliance.
Last month (before Musk assumed control of the platform), Twitter alleged that US federal authorities were investigating the “conduct” of Elon Musk during his on, off, on again acquisition of Twitter.
That was denied at the time.
But earlier this week when asked whether Elon Musk posed a threat to national security, President Joe Biden said that the billionaire’s “relationships with other countries is worthy of being looked at