Big tech facing big troubles

• Endless growth turns out to be not so endless after all
• Some 118,000 tech company firings so far this year with more to follow, according to Layoffs.fyi
• Companies demand endless unquestioning fealty of staff, but don’t return it
• Musk says Twitter could go bankrupt, but scare tactics could make things worse
   

The combination of the global downturn, rising interest rates, stagnating wages, price rises, the legacy of Covid-19, Putin’s war against Ukraine and China’s increasingly aggressive utterances and actions are having a big effect on the giant big tech companies. Meta’s overlord, Mark Zuckerberg, admitted during a company internal video call leaked earlier this week that he had expected the endless growth that has powered Silicon Valley for so long to continue indefinitely.

He made plans accordingly and now has to face up to the fact that he has overextended his company to the point that he has had to fire 11,000 staff after spending US$88bn to date on a metaverse that doesn’t work very well and nobody wants to enter. Meanwhile, Facebook’s advertising revenues, the tail that wags the metadog, look vulnerable – yet Zuckerberg seems unfazed. Obsessed as he is with his virtual world and legless avatars, he is neglecting the goose that lays the golden eggs.

That’s bad, but things are even worse at Twitter, where new owner Elon Musk continues compulsively to keep on hammering nails into the $44bn Twitter-shaped coffin that, at the most, might have been worth half the amount he paid for it. The company is saddled with $13bn of debt and must pay $1.2bn between now and next October just in interest, never mind paying off any of the capital. The payments are so high that they are bigger than Twitter's last reported quarterly revenues of $1.18bn for the second quarter of this year. 

Just a week ago, Musk summarily (and, in many cases, possibly illegally) sacked half the company’s staff. It was done in a brutal but such haphazard and arbitrary way that within days Musk discovered he had fired people who actually kept the wheels of the bus turning, and was calling them and asking them to come back. Word has it that the only ex-staff who took up his offer were mainly Indian engineers in the US on alien visas, and they likely only went back to the sweatshop because they would probably face deportation  proceedings if they didn’t go back to their sponsoring company. That took the total number of tech layoffs this year to more than 118,000, according to Layoffs.fyi.

Then on Thursday, in a move guaranteed not to re-motivate the demoralised remaining employees, Elon Musk issued a Twitter diktat (a Twi-e-Kat Perhaps? Like the chocolate bar but rather more bitter) telling staff that working from home is now banned and all staff will be expected to be in a Twitter office working for “at least” 40 hours a week. It seems acceptance of working unpaid overtime is now a condition of employment at what is left of Twitter. 

The only exceptions to the diktat are staff members who have been given written individual permission by Elon Musk – him and only him. In a staff email leaked to Bloomberg News, the CEO, sole board member and sole owner all in one person (the blessed corprate Trinity) told staff that “there are difficult times ahead.” As Raymond Chandler’s private eye, Philip Marlowe, so succinctly observed, “No shit, Sherlock.”

Chaos attracts the attentions of US regulator… and the US president

Musk added that the company will be unable to “survive the upcoming economic downturn” unless it rakes in subscription money to offset rapidly declining revenues as advertisers take the money and custom elsewhere. Currently, Twitter is losing about $4m a day. On Friday morning, at the end of a week of unprecedented blood-letting and chaos watched with increasing concern by the market, advertisers, users and regulators, Musk, not known for his ability to guard his tongue, publicly speculated that Twitter could go bankrupt.

Meanwhile, Twitter’s privacy regulator, the U.S. Federal Trade Commission (FTC), announced, through Director of Public Affairs Douglas Farrar, that it is observing the shenanigans with “deep concern" in light of the resignations and abrupt departures of Yoel Roth, the Trust & Safety Officer, Lea Kissner, the Chief Information and Security Officer, Damien Kieran, the Chief Privacy Officer, and Marianne Fogarty, the Chief Compliance Officer. The FTC inclines to the possibility that the serial defections by such senior staff could put Twitter in breach of legally-required compliance with its regulatory obligations. 

Douglas Farrar pointedly added that "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 are prepared to use them.” It was only in May this year (before Elon Musk bought the company) that Twitter paid $150m to settle claims that it used the data of private individuals to target advertising to them, despite having assured them that the private information had been collected only for ‘security purposes’ and would never be used for any other reasons.

On Wednesday, US president Joe Biden said that as Musk is now the owner of Twitter, his "co-operation and technical relationships with other countries is worthy of being looked at": Biden was referring to Saudi Arabia, Russia and China.

Elsewhere in the Muskosphere, Elon has sold a further 19.5 million shares of electric car manufacturer Tesla for $3.95b. Since he first told a gobsmacked world that he was going to buy Twitter, then he wasn’t, and then he was again because he had to to avoid some serious lawsuits, Musk has raised almost $20bn from selling Tesla stock. The company’s share price has fallen by more than 50% since January this year.  

There is a sliver of silver lining for Twitter, though: Robin Wheeler, the vice president of US Twitter Client Solutions, the company’s top advertising executive responsible for all commercial teams, including supply and demand, marketing and analytics, has let it be known that she is staying in her post and will not be leaving.

Given that more and more advertisers have either permanently or temporarily withdrawn their ads from Twitter, she’s going to have her work cut out. But hey, 100-hour weeks will be but naught provided she follows her gratuitous, tweeted platitude to the workforce. It is: “You are repressed by your own repressed power. Bust out and unleash it!” 

Something's going to burst out of me in a minute. Pass the barf bag.