Elon Musk warned he is not ‘above the law’ as Twitter takeover descends into chaos
Elon Musk has been told he is not “above the law” as his $66 billion Twitter takeover turns into a “circus show” and he is urged to step away.
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On Thursday, game maker Nintendo posted on Twitter an image of its beloved Mario character – rudely giving customers the bird.
The next day on Twitter, pharmaceutical giant Eli Lilly announced it had good news for those with diabetes. Insulin was now free. The company’s shares immediately plunged sharply, before recovering somewhat.
The same day Tesla, Elon Musk’s car company, said on Twitter that a “second Tesla had hit the World Trade Center”.
All of these tweets included Twitter’s blue check mark which for years has indicated that the accounts were genuine. Yet none of them came from the company they purported to be.
The authentic looking but fake Eli Lilly Insulin tweet was liked by more than 10,000 people.
never seen a company respond so quick in my life pic.twitter.com/06iUOv5wUQ
— derek guy (@dieworkwear) November 10, 2022
Can't imagine why all the advertisers are pulling out of Twitter lmao pic.twitter.com/pg55WXkxhS
— Jason Schreier (@jasonschreier) November 9, 2022
All examples of the chaos that’s erupted since Mr Musk splurged $66 billion (US$44 billion) on Twitter.
Misinformation has risen, advertisers have fled, it’s risking billions in fines, and Mr Musk has warned the company could go bankrupt. It’s one way to spend the equivalent of the annual GDP of Lithuania.
On Friday, US time, a regulator pointedly warned Mr Musk that when it came to Twitter he was not “above the law”.
More than one commentator has said Twitter could now be in a “death spiral,” all of Mr Musk’s making.
‘The boy who cried wolf’
Furious Tesla investors have dubbed Elon Musk “the boy who cried wolf” for claiming multiple times that he would not sell stock.
In the past few days Mr Musk sold US$4bn (A$6bn) in Tesla shares to help fund his acquisition of Twitter.
Mr Musk had previously claimed Tesla would be worth more than Apple and Saudi energy giant Aramco combined.
But his selling spree left investors fuming.
“The Twitter circus show has been an absolute debacle from all angles since Musk bought the platform,” Dan Ives a technology analyst from US wealth management firm Wedbush Securities told Fortune magazine.
He added the furore over Mr Musk’s social media buy could affect confidence in Tesla.
“This Twitter madness needs to end now.”
Mr Musk tweeted on Wednesday that Twitter will do “lots of dumb things” as it seeks to work out a way to make money. But on Friday he blamed the “media elite” for his woes, which he said would “try everything to stop that from happening”.
What isn’t the “media elite” is the US Federal Trade Commission (FTC).
The consumer protection watchdog is concerned that Twitter may have fallen foul of its consent orders.
If Twitter breaches those regulations it could be liable for billions of dollars worth of fines.
“We are tracking recent developments at Twitter with deep concern,” FTC’s director of public affairs Douglas Farrar said.
“No chief executive or company is above the law, and companies must follow our consent decrees.”
Key staff walk out
The comments came after two senior members of Twitter staff involved with privacy and compliance, who hadn’t been laid off in the mass firings last week, left the company.
A post in an internal network from a company lawyer, seen by website The Verge, said they understood Mr Musk liked risk and was “not afraid of the FTC”.
But, they added: “All of this is extremely dangerous for our users. The FTC can (and will!) fine Twitter BILLIONS of dollars (which is), extremely detrimental to Twitter’s longevity as a platform.
“Our users deserve so much better than this.”
Spooked by what is happening inside Twitter, scores of companies have at least temporarily stopped advertising, including General Motors, Volkswagen and United Airlines.
— Elon Musk (@elonmusk) November 8, 2022
Hectic first fortnight for Musk
Mr Musk has only owned Twitter for two weeks. Most takeovers involve a period of, well, not a whole lot.
New owners may have big plans but the first priority is to keep everything ticking along smoothly while they work out how to implement any new strategy with the minimum of fuss.
Not so, Mr Musk. On the first day the top layer of management left and then the board; at the end of the first week he booted out 3700 staff; and in the second week he revamped the Twitter Blue subscription service giving anyone who wanted one a checkmark, the blue tick, in exchange for $8.
It’s not going well. Some staff have been hired back. And Twitter Blue was suspended.
Inevitably some people who joined Twitter Blue and received the checkmark are now passing themselves off as others – either in jest for more nefarious motives.
Twitter blue tick plan in strife
On Friday, users reported it was no longer possible to sign up to Twitter Blue and newly received blue ticks had vanished.
An internal note seen by website Platformer said this was “to help address impersonation issues”.
Last week, Twitter said it was going to add a grey official tag to notable accounts, such as companies, to indicate they were who they said they were.
Then Mr Musk backtracked.
“Apart from being an aesthetic nightmare when looking at the Twitter feed, it was simply another way of creating a two-class system,” the Tesla CEO was reported as telling advertisers by Fortune magazine.
“It wasn’t addressing the core problem.”
Now, with a deluge of misinformation, an official mark is back on the table.
Except that was the whole point of the blue tick. If a separate official mark appears, it’s difficult to see why anyone would pay $8 a month for a tick which only signifies you’ve paid $8 a month.
Mr Musk has tried to reassure nervous advertisers by flagging a “content moderation council”.
But enabling users to impersonate advertisers right now while the vague council is still in planning hasn’t bolstered confidence. He has railed against what he sees as too many fake accounts on Twitter and yet appears to be encouraging them.
Then there’s the danger of the provocative brand Elon becoming enmeshed with brand Twitter.
Last week Mr Musk urged people to vote Republican at the midterm elections. Overt party political statements like that scare advertisers who worry about alienating customers.
To independent-minded voters:
— Elon Musk (@elonmusk) November 7, 2022
Shared power curbs the worst excesses of both parties, therefore I recommend voting for a Republican Congress, given that the Presidency is Democratic.
Mr Musk then threatened a “thermonuclear name & shame” for advertisers that dropped Twitter. He walked that back and asked the firms to “give it a minute” before they decided to quit. It’s exhausting.
Twitter could go bankrupt
On Thursday, Mr Musk warned Twitter’s remaining staff the company could go bankrupt if more cash didn’t start coming through the registers.
Banks are jittery. Following the takeover, Twitter is heavy with debt and needs to cough up around $1 billion a year to investors for the privilege of being bought by Mr Musk.
Twitter hasn’t made a profit since 2017. Back then the economy was far more buoyant than now.
With advertisers still wary, that means Twitter Blue is even more important.
Mr Musk is also keen on adding financial services to the platform to widen its appeal.
For the world’s richest man, the current carnage at Twitter could well be par the course of him turning the company around.
He has trumpeted that following his takeover, users and engagement with Twitter has soared. Move away from the all the noises, he is saying, and where it matters is going swimmingly.
Usage of Twitter continues to rise. One thing is for sure: it isn’t boring!
— Elon Musk (@elonmusk) November 10, 2022
But others aren’t so sure.
Writing on The Verge, Elizabeth Lopatto said a single minded focus on cash at any cost could do untold reputational and financial damage to Twitter.
While everyday users were unlikely to cough up for a blue tick and their tweets popping up more often, “people shilling newsletters, crypto scams, and other annoyances will”.
That, said Ms Lopatto, could “degrade the site” and lead active users to trot off to another network.
“You can see how that turns into a death spiral pretty quickly.”
Originally published as Elon Musk warned he is not ‘above the law’ as Twitter takeover descends into chaos
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