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Elon Musk Reportedly Plans to Cut Nearly 75 Percent of Twitter’s Workforce

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Twitter’s workforce is likely to be hit with massive cuts in the coming months, no matter who owns the company, interviews and documents obtained by The Washington Post show, a change likely to have major impact on its ability to control harmful content and prevent data security crises.

Musk told prospective investors in his deal to buy the company that he planned to get rid of nearly 75 percent of Twitter’s 7,500 workers, whittling the company down to a skeleton staff of just over 2,000.

Even if Musk’s Twitter deal falls through — and there’s little indication now that it will — big cuts are expected: Twitter’s current management planned to pare the company’s payroll by about $800 million (roughly Rs. 6,625 crore) by the end of next year, a number that would mean the departure of nearly a quarter of the workforce, according to corporate documents and interviews with people familiar with the company’s deliberations. The company also planned to make major cuts to its infrastructure, including data centers that keep the site functioning for more than 200 million users that log on each day.

The extent of the cuts, which have not been previously reported, help explain why Twitter officials were eager to sell to Musk: Musk’s $44 billion (roughly Rs. 3,64,500 crore) bid, though hostile, is a golden ticket for the struggling company — potentially helping its leadership avoid painful announcements that would have demoralized the staff and possibly crippled the service’s ability to combat misinformation, hate speech and spam.

The impact of such layoffs would likely be immediately felt by millions of users, said Edwin Chen, a data scientist formerly in charge of Twitter’s spam and health metrics and now CEO of the content-moderation start-up Surge AI. He said that while he believed Twitter was overstaffed, the cuts Musk proposed were “unimaginable” and would put Twitter’s users at risk of hacks and exposure to offensive material such as child pornography.

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“It would be a cascading effect,” he said, “where you’d have services going down and the people remaining not having the institutional knowledge to get them back up, and being completely demoralized and wanting to leave themselves.”

Twitter and Musk are expected to close the purchase by next Friday. Planning for the closing is moving forward in apparent good faith after months of legal battles, say people familiar with the negotiations who spoke on the condition of anonymity to discuss internal deliberations. If the deal closes, Musk would immediately become Twitter’s new owner.

Twitter did not immediately respond to request for comment.

“The easy part for Musk was buying Twitter and the hard part is fixing it,” said Dan Ives, a financial analyst with Wedbush Securities. “It will be a herculean challenge to turn this around.”

Nell Minow, a corporate governance expert who is vice chair of ValueEdge Advisors, said Musk was likely shopping ambitious plans to potential investors but will face challenges in implementing his proposals.

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“He’s got to be able to show if he makes those cuts, what happens next?” she said. “What’s he gonna replace it with, AI?”

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Company executives have repeatedly told employees that there are no immediate layoff plans during town hall meetings. In the one town hall that he attended, in June, Musk was pointedly asked a question about layoffs. He answered that he didn’t see a reason low performers should remain employed.

But the new details, which reflect conversations over the last few months, highlight the extreme nature of Musk’s planned transformation of Twitter amid the challenge of making the long struggling company more profitable. Twitter has never achieved the profit margins or size of other social sites like Meta and Snap. And Musk’s plan to take the company private — freeing it from having to please Wall Street — was a key reason former CEO and co-founder Jack Dorsey got behind Musk’s bid.

Musk and his representatives did not respond to requests for comment.

The months-long roller-coaster saga of Musk’s on-again off-again bid for ownership — coupled with a tense legal battle — has left Twitter battered and bruised. It faces significant worker attrition, slowed hiring, stalled projects and a volatile stock price.

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Recently Andrea Walne, a general partner at Manhattan Venture Partners, a firm that has invested in the deal, told Business Insider that she thinks Twitter is worth only $10 billion (roughly Rs. 83,000 crore) to $12 billion (roughly Rs. 99,400 crore) and that other partners were trying to get out. Musk himself said that he and his investors were “obviously overpaying” for the site during Tesla’s earnings call on Wednesday. Walne did not respond to requests for comment.

Musk has suggested he’ll loosen content moderation standards and favors restoring former president Donald Trump’s account (on Tuesday he posted a meme of himself, Kanye West and Trump each holding a sword for the social media company he owns or is in the process of purchasing).

Musk has told investors that he plans to double revenue in three years, and would triple the number of daily users that can view ads in the same period, though he’s offered scant details on how he would accomplish those goals.

Twitter estimates that its monetizable daily active users (MDAU), defined as the number of users eligible to see ads, is 237.8 million, up 16.6 percent compared with the same quarter last year. But documents that have emerged in Twitter’s court battle with Musk point to far lower numbers, with Musk’s side claiming, using Twitter’s own data, that fewer than 16 million users see the vast majority of ads.

Moreover, the time those users spend browsing Twitter declined 10 percent over the course of 2021 and only recovered slightly in the first quarter of 2022, according to the interviews.

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Gutting and then reshaping the workforce through rehiring chosen people is a huge part of Musk’s ambitions, according to interviews and documents. Though Musk has previously indicated he would be open to cutting staff — legal filings show that he agreed with a friend over text that the company’s head count wasn’t justified by its revenue when compared with other tech companies — he has not offered specific numbers publicly.

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In presentations prepared for investors and other interested parties, Musk’s optimistic business projections were fueled in part by steep jobs cuts across what was termed a “bloated” organization. One prospective investor, who spoke on the condition of anonymity to candidly describe Musk’s proposals, likened them to leveraged buyouts, where companies are made profitable through devastating cuts to labor and operations.

But Musk has told associates he thinks that dramatically slimming down the company is the first step to executing a turnaround strategy that would then involve bringing in more effective workers and profitable innovations. Those include expanding on new services that he has claimed could bring in more revenue, such as a subscription business where people pay to subscribe to exclusive content from powerful figures and influencers. (Twitter is currently experimenting with such a model, called Twitter Blue).

But Twitter’s own data has found that subscriptions may not bring in significant new revenue, according to the interviews. That’s because the users who view the most ads — roughly the top 1 percent of users in the US — are also the ones most likely to join a subscription service. If they began paying a monthly subscription and went ad-free, the program could cannibalize the most lucrative part of Twitter’s current ad business.

Twitter’s budget for head count — roughly $1.5 billion (roughly Rs. 12,400 crore) last year — includes many highly paid ad salespeople and several thousand engineers. The company also spends hundreds of millions on contracting firms that pay people to review reports of hate speech, child pornography, and other ugly and rule-breaking content on the internet. Some of the planned cuts were put on hold pending the sale to Musk, which was announced in April.

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The company is instituting a performance review system called stack ranking that requires managers to grade employees on a numerical curve, so that a set percentage of workers will always be marked as low performers, according to one of the company documents obtained by The Post. The move has been protested by staff members, but Twitter says other tech companies have the same practices.

Human resources staff at Twitter have told employees that they aren’t planning for mass layoffs, but documents show that extensive plans to push out staff and cut down on infrastructure costs were already in place before Musk offered to buy the company. Musk would then have built on those plans by first targeting low performers — people the company’s human resources system designated as “not on track” or receiving below a 3 out of 5 rating — before moving to other phases of downsizing.

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For weeks leading into the acquisition announcement, Musk and his attorney Alex Spiro pitched a who’s who crowd of elite investors in Silicon Valley and Wall Street on a deal that was billed as a chance not only to transform underperforming Twitter, but to work with the celebrated Musk. Not all potential investors received the same details from Musk’s team.

Some of Musk’s biggest partners in the deal, including Oracle co-founder Larry Ellison and Sequoia partner Doug Leone were also Trump supporters and self-proclaimed believers in the type of free speech ideology Musk promised to bring back to the platform. (Leone is no longer a Trump supporter but is said to take an expansive view of free speech). Hedge fund manager Kenneth Griffin, a Trump supporter and the second largest GOP donor in the current midterm cycle, also committed a smaller amount — under $20 million (roughly Rs. 165 crore) compared with $1 billion (roughly Rs. 8,300 crore) from Ellison — to the deal, The Post has learned.

But many potential notable funders passed.

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Private equity giants T. Rowe Price, TPG and Warburg Pincus, who collectively control more than $1.4 trillion, all decided not to invest after being approached by Musk’s representatives, according to people familiar with the process.

And other prominent Silicon Valley heavyweights said no as well. LinkedIn founder Reid Hoffman helped connect Musk with Microsoft CEO Satya Nadella as part of the money-raising process, but decided not to invest himself, according to people familiar with the situation. Hoffman is a major Democratic donor, and Musk at the time was already talking about restoring Trump.

Founders Fund, the Silicon Valley venture firm founded by billionaire Republican donor Peter Thiel, also said no. Thiel first worked with Musk in 2000 when the two merged their companies to form PayPal, and Thiel’s associates have said he is a fan of Musk running Twitter.

It’s unclear whether these parties didn’t buy into Musk’s lofty projection, or didn’t want to be involved politically.

Some passed after the company’s finances and Musk’s own predicament began to look less attractive.

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One person who lost interest told The Post that he was alarmed after the market downturn and the cost of the deal began taking a toll on Musk’s finances and the crown jewel of his portfolio, Tesla.

It hasn’t helped that Musk relentlessly attacked Twitter and its leadership after announcing his takeover, pushing down its stock price. Musk’s latest turnabout only added to the sense of chaos.

“[It’s] like you bought a new car, you decided you didn’t want it, and then you crash it,” the person said. “And then you’re like ‘I’ll keep it.’”


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Mark Zuckerberg Calls Apple’s App Store Moderation Rules a ‘Conflict of Interest’

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Meta Chief Executive Officer Mark Zuckerberg said that Apple’s App Store presents a conflict of interest, adding his voice to a flurry of criticism of the iPhone maker’s software policies. “It is problematic for one company to be able to control what app experiences end up on a device,” Zuckerberg said Wednesday in an interview at the New York Times DealBook conference. The “vast majority of profits in mobile ecosystem go toward Apple,” he added.

App Store policies and fees implemented by Apple, and to a lesser extent Google parent Alphabet, have long been a point of contention for technology companies looking to reach broad mobile audiences. Billionaire Elon Musk added to the chorus after his acquisition of Twitter, sending a flurry of tweets this week denouncing Apple’s fees and restrictions on what apps can be sold.

Zuckerberg echoed some of Musk’s points. He called Apple’s content moderation rules for apps a “conflict of interest” since they are often pointed at rivals. It makes Apple “not just a governor looking out for people’s interests.” Revenue at Meta, which owns social networks Facebook and Instagram, has taken a hit since Apple tightened its privacy policies to restrict how users can be tracked and targeted with advertising.

Though Zuckerberg seemed to back up his objection to Apple’s policies, Musk on Wednesday walked back some of his criticism of the iPhone maker, saying he met with CEO Tim Cook at the company’s headquarters and had a “good conversation” that resolved a “misunderstanding” about Twitter’s place in the App Store.

As for Musk’s approach to running Twitter, Zuckerberg hedged his comments — he said he guesses that some approaches will work and others won’t. “I think it’ll be very interesting to see how this plays out,” he said.

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On whether Meta would allow former US President Donald Trump back onto Facebook, Zuckerberg didn’t answer, but pointed to prior guidance the company has gotten from its external Oversight Board, weighing in on difficult content decisions. Meta is expected to make a decision in January.

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Wall Street has become increasingly bearish on Meta’s investment in its money-losing virtual reality business amid slowing ad revenue. Earlier this month, Zuckerberg said the company would slash more than 11,000 jobs, and took personal responsibility for decisions that led to the need to cut costs. In April, Meta reported its first-ever quarterly revenue drop.

The interview Wednesday began with a recorded conversation between Zuckerberg and the moderator as avatars in the immersive digital world the company calls the metaverse. Still, Zuckerberg said the idea that Meta is wholly focused on the metaverse is “basically wrong.” Messaging program WhatsApp will be his next major monetization target, he said, as that platform is “largely untapped.”

He cited progress in Reels, the company’s short video feature, saying some estimates show it has half the traffic of viral video-sharing app TikTok outside of China.

Zuckerberg also raised the issue of TikTok’s ownership by Beijing-based ByteDance, adding that there are “real questions” about the influence of China’s government on TikTok. “In a lot of countries, all data goes to the government,” the CEO said.

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© 2022 Bloomberg L.P.


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Twitter Faces Ban Over Content Moderation, EU Chief Warns Elon Musk: Report

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The European Union has threatened Elon Musk’s Twitter with a ban unless the billionaire abides by its strict rules on content moderation, setting up a regulatory battle over the future of the social media platform, the Financial Times reported on Wednesday.

EU industry chief Thierry Breton made the threat during a video meeting with Musk on Wednesday, the FT reported, citing people with knowledge of the conversation.

Breton told Musk he must adhere to a checklist of rules, including ditching an “arbitrary” approach to reinstating banned users and agreeing to an “extensive independent audit” of the platform by next year, according to the report.

Twitter and the EU did not immediately respond to Reuters’ requests for comment.

Breton had previously urged Musk to comply with landmark EU rules against online hate speech and disinformation. The European Commission’s justice chief Didier Reynders had also voiced similar comments.

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Reuters reported in October that Elon Musk had assured the European Commission that Twitter will continue to abide by tough European rules on illegal online content policing now the social network has passed under his ownership.

The assurances from Musk appeared to suggest a pragmatic attitude from the CEO of electric car maker Tesla, who has previously expressed his desire to see Twitter have fewer limits on content that can be posted.

In May this year, EU industry chief Thierry Breton met Musk in Texas and the two signalled agreement on EU digital media regulation ahead of Musk’s purchase of Twitter.

The previous meeting came weeks after the world’s richest man clinched a deal to buy the social media company for $44 billion (roughly Rs. 3,40,270 crore) in cash.

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In a video with the two men posted on Twitter by Breton, the EU official tells Musk that he explained the Digital Services Act to Musk. “It fits pretty well with what you think we should do,” Breton tells Musk in a tweet that included the hashtag #DSA.

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“I think it’s exactly aligned with my thinking,” Musk responds.

The two did not go into detail on the new law, which levies hefty fines on companies if they do not control illegal content. The rules ban advertising aimed at children or based on religion, gender, race, and political opinions, for example.

© Thomson Reuters 2022


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Twitter Not Safer Under Elon Musk Leadership, Says Former Head of Trust and Safety

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Twitter’s former head of trust and safety Yoel Roth on Tuesday said the social media company was not safer under new owner Elon Musk, warning in his first interview since resigning this month that the company no longer had enough staff for safety work.

Roth had tweeted after Musk’s takeover that by some measures, Twitter safety had improved under the billionaire’s ownership.

Asked in an interview at the Knight Foundation conference on Tuesday whether he still felt that way, Roth said: “No.”

Roth was a Twitter veteran who helped steer the social media platform through several watershed decisions, including the move to permanently suspend its most famous user, former US President Donald Trump, last year.

His departure further rattled advertisers, many of whom backed away from Twitter after Musk laid off half of the staff, including many involved with content moderation.

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Before Musk assumed the helm at Twitter, about 2,200 people globally were focused on content moderation work, said Roth. He said he did not know the number after the acquisition because the corporate directory had been turned off.

Twitter under Musk began to stray from its adherence to written and publicly available policies toward content decisions made unilaterally by Musk, which Roth cited as a reason for his resignation.

“One of my limits was if Twitter starts being ruled by dictatorial edict rather than by policy … there’s no longer a need for me in my role, doing what I do,” he said.

The revamp of the Twitter Blue premium subscription, which would allow users to pay for a verified checkmark on their account, launched despite warnings and advice from the trust and safety team, Roth said.

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The launch was quickly beset by spammers impersonating major public companies such as Eli Lilly, Nestle and Lockheed Martin.

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Roth also said Tuesday that Twitter erred in restricting the dissemination of a New York Post article that made claims about then-Democratic presidential candidate Joe Biden’s son shortly before the 2020 presidential election.

But he defended Twitter’s decision to permanently suspend Trump for risk of further incitement of violence after the riot at the US Capitol on January 6, 2021.

“We saw the clearest possible example of what it looked like for things to move from online to off,” Roth said. “We saw people dead in the Capitol.”

Musk tweeted on November 19 that Trump’s account would be reinstated after a slim majority voted in favour of the move in a surprise Twitter poll.

© Thomson Reuters 2022

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