Kasturi warns of Twitter bankruptcy as more senior executives quit

Nov 10 (Reuters) – Twitter Inc’s new owner Elon Musk on Thursday raised the possibility of the social media platform going bankrupt, capping a chaotic day that included warnings from U.S. privacy regulators and the exit of the company’s trust and security chief.

The billionaire in his first mass call with employees said he could not avoid bankruptcy, reported Bloomberg News, two weeks after the purchase of $ 44 billion – a deal that credit experts say has left Twitter’s finances in a precarious position.

Earlier in the day, in the company’s first email, Musk warned that Twitter could not “survive the coming economic downturn” if it failed to boost subscription revenue to offset declining advertising revenue, three people who saw the message said. Reuters.

Yoel Roth, who oversaw Twitter’s response to combating hate speech, misinformation and spam on the service, resigned on Thursday, two people familiar with the matter told Reuters.

On his Twitter profile on Thursday, Roth described himself as “Former Head of Trust & Safety” at the company.

Roth did not respond to a request for comment. Bloomberg and tech site Platformer reported it out first.

Earlier Thursday, Twitter’s Chief Information Security Officer Lea Kissner tweeted that she was out.

Chief Privacy Officer Damien Kieran and Chief Compliance Officer Marianne Fogarty also resigned, according to an internal message posted on Twitter’s Slack messaging system on Thursday by a lawyer on its privacy team and seen by Reuters.

Robin Wheeler, the company’s top ad sales executive, told employees in a memo that he was staying at the company, people who saw the message said, a departure from earlier media reports that he too would be leaving.

“I’m still here,” Wheeler tweeted late on Thursday.

The US Federal Trade Commission said it was looking at Twitter with “deep concern” after three privacy and compliance officers. This resignation potentially puts Twitter at risk of violating the regulatory order.

Musk’s attorney Alex Spiro told several employees in an email late Thursday that Twitter would remain in compliance.

“We are speaking to the FTC today about our continuing obligation to have a constructive dialogue,” Spiro wrote.

He said that only Twitter, not individual employees, could be held responsible for the order.

“I understand that there are employees at Twitter who are not even working on the FTC issue commenting that they could (go) to jail if we don’t comply – that’s not how this works,” he wrote.

The Twitter app is seen on a smartphone in this illustration taken July 13, 2021. REUTERS/Dado Ruvic/Illustration//File Photo

In his first meeting with many employees at Twitter on Thursday afternoon, Musk warned that the company could lose billions of dollars next year, Information reported.

Kasturi added in an email to workers that remote work would no longer be allowed and that they would be expected to be in the office at least 40 hours a week.

Twitter, Kasturi and Spiro did not respond to requests for comment on the potential bankruptcy, FTC warning, or departures.

Kasturi ruthlessly moved to clean house after taking over on Oct. 27 and has said that the company was losing more than $ 4 million a day, largely because advertisers began to flee once he took over.

Twitter has $13 billion in debt after the deal and faces interest payments totaling close to $1.2 billion over the next 12 months. The payments exceed Twitter’s most recently disclosed cash flow, which totaled $1.1 billion at the end of June.

Musk has started charging $8 a month for the Twitter Blue service which will include blue check verification.

WARNING

“We are tracking the latest developments on Twitter with close attention,” Douglas Farrar, the FTC’s director of public affairs, told Reuters.

“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 ready to use them,” said Farrar.

In May, Twitter agreed to pay $150 million to settle allegations by the FTC that it misused personal information, such as phone numbers, to target ads to users after saying the information was collected only for security reasons.

Twitter’s privacy lawyers on Thursday said in an internal memo that Spiro had said Musk was willing to take “a significant amount of risk” with the company. “Elon put rockets into space, he’s not afraid of the FTC,” Spiro’s lawyer said.

Twitter’s buyout has sparked concerns that Kasturi, who has often waded into political debates, may face pressure from the state trying to control online speech.

That prompted US President Joe Biden to say Wednesday that Musk’s “collaboration and/or technical relations with other countries are worth looking into.”

TRAITORS ARE NOT ACCEPTED

Musk told advertisers on Wednesday, speaking in a Twitter Spaces feature, that he is trying to make the platform a force for truth and stop fake accounts.

Assurances may not be enough.

Chipotle Mexican Grill (CMG.N) said on Thursday that it had withdrawn the payment of content ownership on Twitter “while we gain a better understanding of the direction of the platform under its new leadership.”

It joins other brands including General Motors (GM.N) who has paused advertising on Twitter since Kasturi took over, concerned that he will loosen the content moderation rules.

Reporting by Katie Paul in Palo Alto, California and Paresh Dave in Oakland, California; Additional reporting by Jeffrey Dustin in Palo Alto, Diane Bartz in Washington, Yuvraj Malik in Bengaluru and Fanny Potkin and Hyunjoo Jin; Written by Sayantani Ghosh; Editing by Shounak Dasgupta, Bill Berkrot, Deepa Babington and Sam Holmes

Our standards: Thomson Reuters Trust Principles.

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