The Washington Post is reporting that corporate documents show that Elon Musk plans to cut 75% of Twitter’s 7,500 strong workforce after he completes his $44 billion takeover of the company. That would leave the company with just over 2,000 employees, which some experts are saying will devastate the company’s ability to police misinformation and fake news.
The company spent $1.5 billion on personnel the previous year, and management had already sought to reduce that by over half, to around $700 million. Management also was seeking to cut back on the social media giant’s infrastructure, eliminating excess datacenters, and reducing the technical redundancy which keeps Twitter fully operational for an estimated 200 million users per day.
Twitter executives have denied there are any hard plans for downsizing. General Counsel Sean Edgett issued a statement to employees to ignore the ‘tons of public rumors and speculations’ they will hear as the closing of the takeover nears. Presently the judge in the lawsuit filed against Elon Musk by Twitter has only paused the proceedings, requiring the deal be closed by October 28th.
In a statement to Bloomberg, he added, ‘Since the merger agreement has been in place, there have been no plans for companywide layoffs.’
In addition to its $1.5 billion in personnel costs, Twitter also spends hundreds of millions on firms the company contracts, to monitor the platform’s users and review reports of hate speech, child pornography, and rule-breaking content.
Musk has indicated he wishes to ease the platform’s content moderation standards, allowing all speech which is not illegal, and even restoring the account of former President Donald Trump, whose account was suspended indefinitely after the January 6th riots.
The major problem Musk faces with Twitter from a business perspective is the company has never figured out how to monetize its users. The company has long lagged behind other social media companies such as Meta or Snap in profitability.
Musk has indicated to fix this he intends to begin by radically reducing overhead by laying off excess staff, and reducing the effort expended on content moderation. He then has indicated he hopes to add some form of subscription service, though employees have panned that idea as not feasible, and possibly harmful to the company’s business model.
He has also indicated he will bring in a form of employee performance rating called stack raking, which will grade all employees on a curve, so some employees are always being judged unsatisfactory. Employees have registered complaints regarding this, but experts say it is a common practice among companies in the tech sector.
Musk has reportedly promised investors he will double revenue in three years, and he will triple the monetizable users in that time.
Since Musk began his takeover, it has been revealed the company was falsifying its monetizable daily user numbers, the number of users advertisements can be presented to.
Twitter leadership has maintained it has 237.8 million monetizable active daily users (MDAU), however in the course of the lawsuit, a document was revealed with indicated the actual number is far lower, with Musk maintaining that fewer than 16 million users would be able to see the vast majority of advertisements. Additionally, over 2021 the time the users were spending on the site dropped by 10%.
On Thursday, Twitter was trading at $52.44 having risen over 11 percent over the month. However it was still almost 13 percent lower than its price last year.
