[vc_row][vc_column][dfd_spacer screen_wide_spacer_size=”100″ screen_normal_resolution=”1024″ screen_tablet_resolution=”800″ screen_mobile_resolution=”480″][/vc_column][/vc_row][vc_row][vc_column][dfd_heading subtitle=”” enable_delimiter=”” title_font_options=”tag:h2″ subtitle_font_options=”tag:div”]
Twitter’s Transformation.
[/dfd_heading][/vc_column][/vc_row][vc_row][vc_column][dfd_heading style=”style_11″ subtitle=”” delimiter_settings=”delimiter_style:solid|delimiter_width:80|delimiter_height:1″ title_font_options=”tag:h2″ subtitle_font_options=”tag:div”]
Background.
[/dfd_heading][/vc_column][/vc_row][vc_row css=”.vc_custom_1694010799065{margin-top: -70px !important;}”][vc_column][dfd_spacer screen_wide_spacer_size=”100″ screen_normal_resolution=”1024″ screen_tablet_resolution=”800″ screen_mobile_resolution=”480″][vc_column_text]Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams launched Twitter in 2006. Based out of San Francisco, California, Twitter operates as a microblogging platform and social network, allowing users to post and interact with 280-character messages known as tweets.
As Twitter became a public company in November 2013 at an estimated valuation of $14 billion, its social network has expanded into an influential global platform with over 540 million monthly active users as of July 2023. In November 2022, Elon Musk delisted Twitter and bought back all the shares from shareholders. The company is private and controlled by Elon Musk’s X holdings. Twitter also was rebranded to X Corp.
X corp. generates most of its revenues through the sale of advertising services, the sale of data licensing and other services, and the recently incorporated Blue subscription. In 2023, Musk estimates 3 billion in total revenue, down from 5.1 billion in 2021. Twitter lost about 50 percent of its ad revenue and suffers from a heavy debt load. Since X generated most of its revenue (90%) through advertising services in 2022, Musk and his team are searching for other revenue streams.
While establishing itself as an essential global social media player, X still faces pressure to improve profitability and fully monetize its platform – finding new paths of user growth and advertising revenue could determine its fate in the future.[/vc_column_text][dfd_spacer screen_wide_spacer_size=”100″ screen_normal_resolution=”1024″ screen_tablet_resolution=”800″ screen_mobile_resolution=”480″][/vc_column][/vc_row][vc_row][vc_column width=”1/3″][dfd_pricing_block title=”Twitter Net Income” subtitle=”” currency_symbol=”” payment_amount=”” time_interval=”” ic_dfd_icons=”dfd-socicon-twitter” content_description=”” 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The Twitter takeover.
[/dfd_heading][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Musk offered to purchase Twitter for $54.20 per share in April 2022; Twitter’s board accepted his bid. Shortly after that, he started having second thoughts about the deal, alleging Twitter misled him regarding aspects such as fake/spam accounts and withholding data.
Musk attempted to end his acquisition deal with Twitter officially by sending them a letter in early July 2022 stating the purchase agreement had been canceled due to “material breaches” by them in terms of providing user data. Twitter denied Musk’s claims and responded by filing suit to force him to complete the deal. Twitter claimed Musk was using bots as an excuse to exit a contract. He just had buyer’s remorse over the following market downturns. That set off a legal battle between Twitter’s lawyers and Musk’s legal teams, wherein Twitter sought to force Musk to keep his commitments. As the October trial date approached, Musk recognized his weak case and realized the possibility of an adverse ruling requiring him to pay billions to Twitter even if he opted out altogether.
Early in October 2022, Musk proposed following through with his original offer pending court resolution of his court case at an initial price of $44 billion. This deal officially closed later that month at its initial value.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][dfd_heading style=”style_11″ subtitle=”” delimiter_settings=”delimiter_style:solid|delimiter_width:80|delimiter_height:1″ title_font_options=”tag:h2″ subtitle_font_options=”tag:div”]
Musk’s reforms.
[/dfd_heading][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Elon Musk has implemented several significant reforms and changes since purchasing Twitter:
- Layoffs: Musk fired Twitter’s CEO, CFO, and various senior managers before disbanding its board of directors and cutting 80 percent of employees. Currently the company has a new CEO, Linda Yaccarino , and only has 1500 employees. (Down from 8000 employees)
- Content Moderation Restructuring: He has proposed relying more heavily on automated algorithms instead of human reviewers for content moderation and loosening restrictions, yet details remain vague.
- Blue Checkmark Changes: Twitter Blue subscriptions now feature verified checkmarks, making verification accessible to anyone willing to spend $8/month.
- X Verified organizations: X introduced a verified Organizations subscription for $1,000/month. This allows businesses to get a gold checkmark, and indicated affiliates on the platform. Moreover, organizations can also display job listings.
- Working from Home Ban: Elon Musk has banned remote work and requires all employees to spend at least 40 hours weekly in the office or face termination. Musk has announced several pending feature changes, such as end-to-end encrypted direct messages (DMs), long-form tweets, and the inclusion of payments into tweets.
- Restoring Banned Accounts: Accounts banned due to repeated violations like Donald Trump have now been restored onto the platform.
- Upcoming features: Musk confirmed that video and phone calls are coming to the platform, along with a payment system on Twitter.
Musk wants to transform X into all encompassing application like WeChat, created by Tencent. WeChat is a super application which allows users to play games, chat, call, share media, message, shop, do payments and book services. Whilst modifying, and extending the core capabilities of X corp. , X corp. is also trying to cut costs to ensure future profitability.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][dfd_heading style=”style_11″ subtitle=”” delimiter_settings=”delimiter_style:solid|delimiter_width:80|delimiter_height:1″ title_font_options=”tag:h2″ subtitle_font_options=”tag:div”]
Problems with the FTC
[/dfd_heading][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]The FTC is a federal agency established in 1914 that protects consumers by enforcing antitrust and consumer protection laws. Led by five commissioners and headquartered in Washington, D.C., the FTC has increased scrutiny of social media firms because of the importance of social media platforms in society. In 2021, Lina Khan became the chair of the FTC. The FTC under Khan has increased scrutiny of social media firms, signaling stricter privacy enforcement, reviewing acquisitions, promoting data portability, broadening authority to police deceptive practices, protecting whistleblowers, and imposing transparency requirements. Lina Khan is shaping up to be an influential figure in the government’s regulation of Big Tech companies.
In 2011, X Corp settled FTC charges that it deceptively misrepresented its user data protection practices by entering into an administrative order prohibiting misrepresentations and requiring data security measures. In 2022, the FTC issued a new complaint against X Corp. to the U.S. Department of Justice. The FTC alleged that X Corp. violated the 2011 Administrative Order. The FTC claimed that X Corp. misled users about its collection of telephone numbers and email addresses. X Corp. claimed it collected this contact information only for security purposes. In reality, X Corp. also used the data to target user advertisements. X Corp. agreed to settle the allegations by paying a $150 million civil penalty and consenting to modifications of the FTC’s 2011 Administrative Order against X Corp. The FTC modified the 2011 order to expand privacy and data security requirements for X Corp. The 2022 Administrative Order imposed new requirements for X Corp. to implement a comprehensive privacy and data security program, including risk assessments, access controls, and third-party assessments.
Since Musk took over at X Corp., he has been implementing radical changes, including massive layoffs, restructuring, and launching new services. These developments prompted concerns by the Federal Trade Commission (FTC) about whether X Corp was continuing to adequately protect user data under a 2022 consent order with the agency. During multiple layoffs and resignations at X Corp, the Chief Privacy Officer, Chief Information Security Officer, and Chief Compliance Officer left the company. According to depositions of former employees, this led to gaps in responsibility for privacy and security controls. These employees testified that Musk’s changes had impaired X Corp’s ability to properly restrict the use of user data and implement required privacy protections per the consent order. As X Corp’s new CEO, Musk personally assumed responsibility for overseeing privacy and security under the order. However, his hurried conduct raised alarms among employees: he brought in an outside journalist and directed they get expansive system access, necessitating staff intervention to limit privacy risks; he ordered an executive assistant be granted access exceeding their role, pressuring staff to comply; he had servers with user data moved uncompressed between data centers, violating company security policies; and he rushed the launch of a new premium service without adequate review, leading to suspensions after impersonations occurred. Overall, Musk’s hasty changes and hands-on management style called into question X Corp’s continued ability to comply with the user data protections required under the FTC consent order, according to depositions of former senior employees.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][dfd_heading style=”style_11″ subtitle=”” delimiter_settings=”delimiter_style:solid|delimiter_width:80|delimiter_height:1″ title_font_options=”tag:h2″ subtitle_font_options=”tag:div”]
Political Divisions.
[/dfd_heading][vc_column_text]In 2022, researchers from Northwestern, Harvard, Rutgers, and Northeastern universities conducted three surveys of more than 21,000 American adults about how they use and perceive Twitter. The COVID States Project conducted surveys before and after Elon Musk’s acquisition of Twitter to assess how Americans’ usage and perceptions of the platform changed. Twitter usage declined from 32.4% before the acquisition to 29.5% after. This drop was driven by Democrats, whose usage fell from 38% to 33%, while Republican and independent usage did not significantly change. Despite this, Democrats’ use of Twitter as a news source did not decline. Republican use of Twitter for news increased slightly from 10% to 14%. Republicans are much more trusting of Elon Musk than Democrats: 53% trust him to do what is right, compared to 24% of Democrats. Before Musk took over Twitter, 39% of Democrats trusted the platform, versus 24% of Republicans. After the acquisition, trust in Twitter converged at 34% among both parties. Perceptions of Twitter’s political bias shifted as well. Republicans saw decreased bias against conservatives and increased neutrality after Musk took over. Democrats saw increased bias against liberals and decreased neutrality. Comparisons to 2021 show similar trends.
In January 2021, 30% of Republicans saw Twitter as biased against conservatives versus just 9% who saw it as biased against liberals. Among Democrats, 19% saw bias against liberals, compared to 6% who saw bias against conservatives. In late 2022/early 2023, 27% of Republicans saw anti-conservative bias, and 7% saw anti-liberal bias. For Democrats, 21% saw an anti-liberal bias, while 5% saw an anti-conservative bias. More Republicans and Democrats now see Twitter as neutral but still view other platforms like Facebook, YouTube, Instagram, and TikTok as more neutral than Twitter. Overall, the COVID States Project report indicates Twitter has become a more divisive platform along partisan lines since Elon Musk’s takeover. Usage and trust declined among Democrats but improved for Republicans. Both parties saw Twitter as more biased against their side than before. These changes happened quickly after Musk took control of Twitter, underscoring his impact on the site’s reputation and Americans’ relationship with social media.
Republican support for X Corp. has increased because Elon Musk endorsed the Republican Party for the midterms in 2022.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][dfd_heading style=”style_11″ subtitle=”” delimiter_settings=”delimiter_style:solid|delimiter_width:80|delimiter_height:1″ title_font_options=”tag:h2″ subtitle_font_options=”tag:div”]
Former Employees
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In November 2022, Elon Musk laid off roughly 50% of Twitter’s staff shortly after acquiring the company. By December, over 2,200 of these laid off employees had filed individual arbitration demands against Twitter alleging the company did not provide proper notice before the mass terminations, as required by federal and state laws. The employees had first filed an in class action lawsuit, but their employment contracts required the employees to settle disputes in arbitration. By enforcing employees to arbitrate, negotiations and settlements are kept out of the public eye and have less chances of influencing opinions of current and future employees.
Several lawsuits were claiming Twitter failed to pay out all accrued paid time off, final paychecks in a timely manner, and other wage-related violations such as severance pay, and unpaid bonuses. Moreover, many employees claim they were discriminated against.
After leaving the employees in limbo for a year, X corp. finally agreed to mediate.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][dfd_heading style=”style_11″ subtitle=”” delimiter_settings=”delimiter_style:solid|delimiter_width:80|delimiter_height:1″ title_font_options=”tag:h2″ subtitle_font_options=”tag:div”]
Case Questions
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- Who are the key stakeholders in this case and what are their interests?
- What conflicting goals exist between the stakeholders? Whose interests should Twitter prioritize if they conflict?
- How can Twitter rebuild trust with skeptical stakeholder groups?
- How can Twitter use proactive stakeholder management to ensure future success?
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][dfd_spacer screen_wide_spacer_size=”70″ screen_normal_resolution=”1024″ screen_tablet_resolution=”800″ screen_mobile_resolution=”480″][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Join the Canva Classroom:
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