Musk warns of Twitter bankruptcy as more senior executives resign
Nov 10 (Reuters) – Twitter’s new owner Elon Musk on Thursday hinted at the possibility of bankruptcy for the social media platform, ending a chaotic day that included a warning from a U.S. regulator and departures of senior executives seen as future leaders.
The billionaire told Twitter employees that he could not rule out bankruptcy, Bloomberg News reported, two weeks after buying it for $44 billion — a deal that credit experts say left Twitter’s finances in a precarious position.
Two executives – Yoel Roth and Robin Wheeler – who moderated a Twitter Spaces conversation with Musk on Wednesday as he tried to assuage advertisers’ concerns, have resigned, a person familiar with the matter told Reuters.
Roth and Wheeler did not immediately respond to requests for comment. Bloomberg and tech site Platformer were the first to report the exits.
Earlier Thursday, Twitter’s head of security, Lea Kissner, announced on Twitter that she had resigned.
Chief privacy officer Damien Kieran and chief compliance officer Marianne Fogarty also resigned, according to an internal message sent to Twitter’s Slack messaging system on Thursday by a lawyer from its privacy team and seen by Reuters.
The US Federal Trade Commission said it was viewing Twitter with “deep concern” after the three privacy and compliance officers resigned. These resignations potentially put Twitter at risk of violating regulatory orders.
In his first meeting with all Twitter employees on Thursday afternoon, Musk warned that the company could lose billions of dollars next year, the Information reports.
Twitter did not respond to requests for comment about the potential bankruptcy, the FTC warning or the departures.
Wheeler was the face of Twitter’s advertising after Musk took over. Roth, who was head of security and integrity at Twitter, said Twitter has reduced views of harmful content in search results by 95 percent compared to before Musk’s acquisition.
Musk, who relentlessly moved into clean house after downloading The $44 billion Twitter said on Oct. 27 that the company was losing more than $4 million a day, largely because advertisers began fleeing when he took over.
Musk saddled up Twitter, with $13 billion in debt, faces interest payments totaling close to $1.2 billion over the next 12 months. The payments exceed Twitter’s most recent cash flow, which was $1.1 billion at the end of June.
Musk announced plans to cut in half its workforce promised last week to stop fake accounts and is charging $8 a month for the Twitter Blue service that will include blue check verification.
“We are following the recent developments on Twitter with deep concern,” Douglas Farrar, the FTC’s director of public affairs, told Reuters.
“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’re ready to use them,” Farrar said.
In May, Twitter agreed to pay $150 million to settle FTC allegations that it misused private information, such as phone numbers, to target advertising to users after telling them the information was collected only for security purposes.
In the internal memo cited above, the lawyer mentioned hearing from Twitter’s head of legal team, Alex Spiro, that Musk was willing to take “a tremendous amount of risk” with Twitter. “Elon is throwing rockets into space, it’s not afraid of the FTC,” attorney Spiro was quoted as saying.
Twitter did not respond to a request for comment on the lawyer’s note or the departures. Spiro did not immediately respond to a request for comment.
The Twitter buyout raised concerns that Musk, who has often waded into political debates, could face pressure from countries trying to control speech on the Internet.
This prompted American President Joe Biden to say on Wednesday that Musk’s “collaboration and/or technical relations with other countries are worth considering.”
ADVERTISERS NOT CONVINCED
Musk told advertisers on Wednesday, speaking on Twitter’s Spaces page, that he aims to turn the platform into a force for truth and stop fake accounts.
His assurances may not be enough.
Chipotle Mexican BBQ (CMG.N) said Thursday that it was withdrawing its paid and owned content from Twitter “as we gain a better understanding of the direction of the platform under its new leadership.”
Musk sent his first email to Twitter employees on Thursday, saying telecommuting would no longer be allowed and that they would be expected to work at least 40 hours a week, Bloomberg News reported.
Reporting by Katie Paul in Palo Alto, Calif. and Paresh Dave in Oakland, Calif.; Additional reporting by Jeffrey Dustin in Palo Alto, Diana Bartz in Washington and Yuvraj Malik in Bengaluru; Writing by Sayantani Ghosh; Editing: Arun Koyyur, Shounak Dasgupta, Bill Berkrot and Deepa Babington
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