Elon Musk Will Lay Off All Twitter Employees Upon Taking The Company Helm?
Elon Musk is said to have plans in place that would mean laying off 75% of the Twitter workforce once he completes purchase of the social media platform.
Elon Musk plans to eliminate almost 75% of Twitter’s employees as part of his deal to take over the social media company. The move, which was revealed to prospective investors last week, would likely cripple the platform’s operations by reducing its ability to moderate content and ensure users’ security. But, according to The Washington Post, the job cuts in the coming months are expected no matter who owns the company.
Before the Elon Musk deal, company bosses planned to reduce its payroll by approximately $800 million. That’s a relatively modest 25% reduction of Twitter employees that would only see around 1,900 people left without work. The social media giant also plans to close data centers and make major infrastructure cuts, amid a wider economic downturn in the tech industry which forced several companies to freeze hiring and retrench workers.
Speaking about the layoffs, Edwin Chen, a Data Scientist formerly in charge of Twitter’s spam and health metrics, said Elon Musk’s cuts would be unimaginable. “It would be a cascading effect where you’d have services going down and the people remaining not having the institutional knowledge to get them back up,” he told The Washington Post. They would also be completely demoralized and want to leave themselves.
When asked about potential layoffs at a Twitter Town Hall meeting in June, Elon Musk spoke in favor of firing Twitter employees. He argued that there was no logical reason for low-performing workers to remain employed. The billionaire has also advocated for loosening content moderation restrictions on the platform and allowing formerly banned accounts to be reactivated. He is also considering potentially turning the platform into a subscription-based profit model.
Meanwhile, Elon Musk’s acquisition drama has fostered low morale of its own, leading employees to quit in droves. Twitter has been involved in a legal battle with the 51-year-old for months after he tried to walk away from the $44bn takeover deal. The billionaire changed his mind again earlier this month, saying he would go through with it after all. This lack of stability has left the company on a downward spiral and it might take a while before it recovers.
Elon Musk is now securing funding to close the purchase before the October 28th deadline, by which time a judge has said the transaction must be finalized. But the Twitter deal could leave banks stuck with $13 billion in debt. People familiar with the situation told The Wall Street Journal that lenders helping to fund the $44 billion acquisition, including Morgan Stanley, Bank of America, and Barclays, do not plan to sell the debt immediately to avoid losses of at least $500 million.
Choosing this option means that banks could sell the debt at a higher value when prices rebound. These banks agreed to provide financing to Elon Musk before investors had been found, which is customary in leveraged buyouts. Banks hope to sell some of the debt in early 2023, assuming the deal closes and market prices improve, sources told the publication.
