Nov 10 (Reuters) – Twitter Inc’s new owner Elon Musk raised the possibility of the social media platform’s bankruptcy on Thursday, capping a tumultuous day that included a warning from the U.S. privacy regulator and the departure of the company’s trust and safety chief.
In his first mass call with employees, the billionaire said he could not rule out bankruptcy, Bloomberg News reported two weeks after buying it for $44 billion — a deal that debt experts say left Twitter’s finances in a precarious position.
Earlier in the day, Musk warned in his first company-wide email that Twitter “will not be able to survive the coming economic downturn” if it fails to increase subscription revenue to offset falling ad revenue, three people who saw the news said. Reuters.
Yoel Roth, who oversaw Twitter’s response to combating hate speech, misinformation and spam on the service, resigned on Thursday, two people familiar with the matter told Reuters.
On his Twitter profile Thursday, Roth described himself as the “former head of trust and safety” at the company.
Roth did not respond to requests for comment. Bloomberg and tech site Platformer first reported his departure.
Earlier on Thursday, Twitter’s Chief Information Security Officer Leah Kisner tweeted that she was stepping down.
Chief privacy officer Damien Kieran and chief compliance officer Marianne Fogarty also resigned, according to an internal message posted on Twitter’s Slack messaging system on Thursday by a lawyer on its privacy team and seen by Reuters.
Robin Wheeler, the company’s top ad sales executive, told employees in a memo that he was staying with the company, a person who saw the news said, diverging from earlier media reports that he too was leaving.
“I’m still here,” Wheeler tweeted late Thursday.
The US Federal Trade Commission said it viewed Twitter with “deep concern” after the departure of three privacy and compliance officers. The resignations could put Twitter at risk of violating regulatory orders.
Musk attorney Alex Spiro said in an email to some employees late Thursday that Twitter would be compliant.
“We spoke with the FTC today about our continuing obligations and have had a constructive ongoing conversation,” Spiro wrote.
He said only Twitter can be held liable against these orders, not individual employees.
“I understand that employees are commenting that they (go) to jail if we don’t comply on Twitter, which doesn’t even work in the FTC case — that’s not how it works,” he wrote.
In his first meeting with several employees on Twitter on Thursday afternoon, Musk warned that the company could lose billions of dollars next year, according to reports.
In an email to workers, Musk said remote work would no longer be allowed and that they would be required to be in the office at least 40 hours a week.
Twitter, Musk and Spiro did not respond to requests for comment about the potential bankruptcy, FTC warning or departure.
Musk moved to ruthlessly clean house after taking over on October 27, and said the company was losing more than $4 million a day, largely because advertisers began leaving as soon as he took over.
Twitter has $13 billion in debt after the deal and will have to pay a total of $1.2 billion in interest over the next 12 months. The payment was more than Twitter’s most recently disclosed cash flow, which stood at $1.1 billion at the end of June.
Musk has started charging $8 a month for the Twitter Blue service, which includes blue check verification.
warning
“We are following the recent developments at 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 decree gives us new tools to ensure compliance, and we stand ready to use them,” Farrar said.
In May, Twitter agreed to pay $150 million to settle allegations by the FTC that it misused personal information, such as phone numbers, to target advertising by telling users the information was collected only for security reasons.
Twitter’s privacy lawyer on Thursday noted in an internal memo that Spiro said Musk was willing to take “a huge amount of risk” with the company. “Elon puts rockets into space and he’s not afraid of the FTC,” the lawyer quoted Spiro as saying.
Twitter’s purchase has fueled concerns that Musk, who frequently engages in political debates, could face pressure from countries trying to regulate online speech.
That prompted US President Joe Biden to say on Wednesday that Musk’s “collaborative and/or technological relationships with other countries should be addressed.”
Advertisers are not guaranteed
Musk told advertisers Wednesday that he aims to make the platform a force for truth and stop fake accounts, speaking on Twitter’s Space feature.
His assurances will not be enough.
Chipotle Mexican Grill (CMG.N) On Thursday, Twitter said it was pulling back paid and owned content, saying “we are getting a better understanding of the platform’s direction under its new leadership.”
It joined forces with other brands including General Motors (GM.N) Musk has suspended advertising on Twitter since taking over, worried he would loosen content review rules.
Reporting by Katie Paul in Palo Alto, California and Paresh Dave in Oakland, California; Additional reporting by Jeffrey Dustin in Palo Alto, Diane Bartz in Washington, Yuvraj Malik and Fanny Botkin and Hyunjoo Jin in Bangalore; Written by Sayantani Ghosh; Editing by Shaunak Dasgupta, Bill Bergrod, Deepa Babington and Sam Holmes
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