Elon Musk has wasted no time in making drastic changes to Twitter. A week after the deal closed to buy the company, Musk laid off half of its global workforce including the majority of the Twitter Australia team, as reported by Nine papers.
He’s also expanding the platform’s verification system — a feature that gave accounts belonging to people of public interest what was anecdotally called a “blue tick” to indicate their authenticity — to anyone who will stump up US$8 monthly for Twitter Blue (which also includes a handful of other perks). Social media experts have warned this change could imperil the platform by allowing more misinformation and scams.
So, how will it change? There have been endless attempts to decipher Muskology as told through the mercurial billionaire’s tweeting about vague free speech platitudes and (sometimes literal) shitposts. Even before Musk had been officially handed the keys, some had flocked to the platform in anticipation of the new regime; others fled. Major advertisers have paused their spending as they wait to see how the platform changes. His track record of inflated promises, backflips and contradictions makes it hard to predict his next move, let alone sketch out a coherent ideology.
The key to understanding Musk’s plans for Twitter is one simple number: US$1,000,000,000. That’s reportedly the amount that Twitter must now find to pay the annual interest on the loans Musk took out to buy the company.
Historically, Twitter has never made a lot of money. The company only turned a modest profit in two out of the past 10 years of operation. Now, Musk has to find US$1 billion on top of operating costs just to service the US$13 billion in loans taken out to pay for the company’s (rather inflated) price tag of US$44 billion. For context, last year the company brought in US$630 million in operating cash flow and paid about US$50 million in interest.
That’s an enormous additional sum of money just to keep the company afloat. And if the stakes of bankrupting a crucial platform weren’t already enough, Musk’s loans are reportedly borrowed against his Tesla stock, meaning any failure to pay could also imperil his hold over the electric car company.
In short, Musk has a lot riding on being able to transform a social media money pit into an ATM amid increasingly gloomy economic conditions. That’s why he’s willing to fundamentally alter the platform’s mechanics and fire crucial staff — not because of ideology but out of desperation.
Whether you believe Musk when he says he bought Twitter to “help humanity” or because he’s a billionaire who loves the attention the platform has given him, it’s clear he valued what Twitter was. Ironically, his decision to buy the company will fundamentally change his favourite social media platform — if it survives, that is.
