Mass layoffs at Twitter lead to concerns, also among the advertisers that Musk desperately needs

How are things on Twitter?

Businessman Elon Musk this week cut the workforce of the social medium he recently owns and also runs day-to-day operations. A blunt and cold knife, that is: no less than half of the 7,500 employees have been laid off. This was done by e-mail, although some could no longer log in to their work account before they had received a message. The New York Times even describes how someone got kicked out of the systems in the middle of a video meeting. Some expelled employees have gone to court to challenge Musk’s brusque behavior.

Why are these layoffs causing concerns about Twitter?

While every organization will undoubtedly have employees who can be fired without major consequences, another story is firing half of your employees. It is inevitable that such a drastic reduction has consequences. For example, for protection against hacks and data leaks.

There were already signs that it left something to be desired: for example, the platform hired Peiter Zatko as a cyber security expert in 2020 after the accounts of hundreds of celebrities were hacked. He had to put things in order, but was expelled again this year, after which he declared in the US Congress that the state of Twitter’s security is abominable in his eyes. The fear is that the security situation deteriorates if less staff is involved.

Furthermore, the teams concerned with human rights and ethical use of algorithms and artificial intelligence have been almost completely fired, according to a former employee of these teams. Coupled with the curtailment of the moderation teams, who oversee the content of the posts on the platform, this fuels the idea that under Musk, disinformation, hatred and incitement are getting a lot more space on Twitter.

Musk himself insists that the social medium remains sharp on the content of its platform. Yet a growing group of companies don’t trust him, from carmaker Audi to pharmaceutical company Pfizer: they will stop advertising on Twitter, at least until they have a better picture of the platform’s future.

This is a problem for a company that gets 90 percent of its revenue from advertising. There is already talk of a ‘huge drop in turnover’, Musk admitted himself on Friday. According to Musk, his platform loses 4 million dollars (more than 4 million euros) per day and the mass layoffs are therefore insurmountable.

But was it necessary to lay off so many people?

It is clear that Twitter had resorted to large-scale layoffs anyway, revealed The Washington Post two weeks ago. According to the plans, it would have involved a quarter of the staff – exceptionally, but a lot less than Musk fired.

Twitter was already in trouble before Musk’s takeover. The company’s turnover appeared to have fallen in the latest quarterly figures. From an internal investigation, seen by news agency Reuters, it appears that the platform is becoming less and less interesting for advertisers due to a decrease in the number of ‘heavy’ users. This group of Twitterers, who send by far the most tweets, also earn the most from advertisements.

Are other tech companies also having problems?

Secure. For example, transport service Lyft and Stripe, which grew up with payment software, announced layoffs this week. This is about 700 and about 1,000 people respectively, in both cases more than a tenth of the workforce. Tech giant Amazon will stop hiring new people for a few months, was announced on Thursday.

Meta, the parent company of Facebook and Whatsapp, among others, is also trying to reduce costs by at least 10 percent by firing staff, among other things, reported The Wall Street Journal in Sept. Microsoft, Spotify, Uber, Alphabet (Google’s parent company): all recently turned people away or decided to hire fewer staff than planned.

The challenges the companies face are different everywhere, but the tech sector as a whole also faces some setbacks. During the first year and a half of the pandemic, the world was forced to turn to all kinds of digital services and means of communication, resulting in unprecedented growth figures. With the end of the lockdowns, the golden two years for these companies also ended.

High inflation and an unpredictable war in Ukraine meanwhile are making investors more hesitant, while advertisers are less eager due to all the economic uncertainty. Patrick Collison, chief executive of Stripe, wrote in Thursday a message to his staff on the layoffs that he hired too many people during the pandemic: “We were too optimistic.”